City sells property for $1
NEW ULM — The City Council narrowly approved the sale of the property at 1200 Water St. to Cala Contemporary Woodwork (CCW) for $1 following a public hearing Tuesday.
The city had approved the property sale on July 7 by a 4-1 vote, with councilor Lisa Fischer voting against. Fischer expressed concerns with sale price versus the land value. She also had concerns the property was not advertised as being for sale, preventing others from making an offer.
An additional public hearing was required by state statute because the difference in value between the sale price and the assessor’s value exceeded $150,000.
According to the most recent county assessor’s report, the property was valued at $174,400 but several city council members believe the value was lower. Community Development Director David Schnobrich said there is no other market value available.
CCW intends to use the property to operate a portable outdoor sawmill to manufacture furniture and woodwork products. The building would allow CCW to increase employment and business activities. The building is currently used for storage by the PUC but has been considered for demolition.
During the public hearing, two individuals voiced concern over the $1 sale price for the property.
Jerry Meniers asked if the city was so well off it could just give away property valued at $174,400 without listing it.
City Manager Chris Dalton said this property has been vacant for a long time and in the staff’s opinion has a negative value. Estimates for demolishing the building were $135,000. Since the city is the owner, no property tax is being paid on it and its only value to the city is as storage.
Dalton said people have offered land swaps for the property, but these deals fell through. Other businesses have expressed interest but none have moved forward with any plans.
CCW is willing to move into the building and take or risk fixing the infrastructure which includes removing the mold and upgrading electrical. The building is also in a floodplain, which raises the insurance rates.
“It is very limited on what one can go into that building at this time,” Dalton said. In addition, this sale will put the property back on the property tax rolls.
Community Development Director David Schnobrich said the property was sold to a glass etching business, but after a flood, the business ended. A second manufacturing business took over through a contract through DEED, but the business was unsuccessful. The city then repossessed the property. Over its history, the building was used for water filtration.
George Forst, the owner of a trucking business, commented that he spent a great deal of money to own property in New Ulm and was upset the council was giving it away. He objected to the $1 sale and demanded a right to bid on the property. He also requested to view the inside of the building before making a bid.
CCW owners Jamie and Harold Enamorado attended the hearing and clarified the conditions of this property and the work needed to fix it.
“I think a lot of the confusion comes from what [the building] looks like from the outside,” Jamie Enamorado said. “Even though we are purchasing it for a dollar it is going to put us in debt.”
Enamorado explained that to get electrical work in one room would cost $15,000, insurance was $500 because of the floodplain and the mold removal was $11,000.
“I want people to know this isn’t just a freebee,” Jamie said. “We still have to put a lot of work into this one section of the building to make it workable.”
Council President Charlie Schmitz was in favor of selling the property to CCW to get rid of it. He believes giving it CCW is great for the economy. He pointed out that the city has sold property for $1 before–including the National Guard Armory.
Councilor Larry Mack suggested having the county do a new appraisal of the property and allow additional bids in an effort to be fair.
City Attorney Roger Hippert suggested a deadline be placed on bids. In addition, the plan offered by CCW had job retention as a condition. A bid for $500 or $5,000 would not necessarily offer job retention.
Councilor Les Schultz was reluctant to delay the sale. He wanted to move on with the sale of the property to get new jobs in the community.
“This is not a lot sitting on Broadway,” Schultz said. “This is a very unique building with a lot of issues and concerns that people did not realize before. Once they understand that, it will be a lot different of a response.”
Schmitz added that this deal was saving the city $130,000 of the cost to tear it down.
Councilor David Christian said he did not believe the property was worth $174,400 and suggested it should be re-assessed by the county.
Attorney Hippert was uncertain the city could do an assessment in a reasonable amount of time and a private appraisal could still take six weeks and could cost $1,500.
Schmitz said an appraisal would only justify why the sale was happening.
Schultz made a motion to sell the property at 1200 Water St. for $1. Schmitz seconded the motion. The motion passed by a 3-1 vote with Mack voting against. Councilor Lisa Fischer was absent.
The council also approved a conditional use permit (CUP) for CCW to allow operation of a portable outdoor sawmill in an Agricultural Residence (R-A) zoning district. The planning commission recommended approval.
Conditions attached to the CUP include the sawmill operating between 8 a.m. and 6 p.m. Monday through Friday and 9 a.m. through 6 p.m. Saturday and Sunday and no equipment, vehicles, or other material be placed or stored in the designated easement areas of the property.
Schultz believes the only issue is the walking trail but believes the owners would keep it clear.
Jamie and Harold Enamorado said the wood used at the mill would be kept in a small stack to air dry, but would mostly be stored inside the building.
Mack made the motion to approve the CUP with a second from Christian. It was unanimously approved by the council.