Cloquet City Council finds middle ground on tax abatement requestIn the end, the city compromised. Rather than agreeing to a request by the new-to-Cloquet SpecSys Inc. for a return of all property taxes on its building at 1111 Cloquet Ave., the Royal Building, for a period of 15 years, the city found a win-win solution.
By: Jana Peterson, Pine Journal
In the end, the city compromised.
Rather than agreeing to a request by the new-to-Cloquet SpecSys Inc. for a return of all property taxes on its building at 1111 Cloquet Ave., the Royal Building, for a period of 15 years, the city found a win-win solution.
Rather than abating the full $20,097 -- the city’s portion of the SpecSys property taxes -- the council agreed to abate only the increase in taxes resulting from improvements to the property, a grand total of $5,702 over a 15-year period, or $380 a year. However, the city’s Economic Development Authority also agreed to restructure one of two $100,000 loans made to the company to make $14,395 of the loan forgivable. Add the two numbers, and SpecSys owners get the amount they asked for, just not specifically the way they requested it.
“They still get the value of the full tax abatement but it doesn’t spread the burden to other taxpayers,” said Community Development Director Holly Butcher, explaining that full tax abatement may relieve the business entity, but the tax deduction is typically redistributed to other taxpayers.
In return, SpecSys must fulfill certain job and wage creation requirements as agreed with the city, including five current full-time engineering jobs -- which have already been created -- and an additional five new full-time jobs by 2014 for designers and engineers. If the jobs are not created or the company leaves Cloquet, the abatement and forgivable loan agreements end.
It’s not the first financial assistance the city has offered the contract engineering firm, which came to Cloquet as the result of a business attraction package and because the southeast Minnesota contract engineering company was having trouble attracting engineers to its facilities there. That package included the two $100,000 loans -- one for office equipment, the other for building rehab -- as well as offering the company a blighted city-owned property at below-value cost and a $12,000 Commercial Small Cities grant to help pay for fixing up the blighted property.
City Councilors and Mayor Bruce Ahlgren unanimously approved the compromise solution after listening to a presentation by Butcher and city financial advisor Todd Hagen of Ehlers Financial Advisors.
So far, SpecSys has made a number of improvements inside and out, including tearing off the 1960s-era exterior, revealing the original brick below. The front of the building was then covered in “dryvit” stucco material. Butcher said future plans include roof repairs and tuck pointing the remaining brick walls or extending the stucco exterior.
The city also plans to landscape and pave the parking lot to the west of the Royal Building later this summer.
Butcher said SpecSys has also requested full tax abatement from the Cloquet School District and Carlton County. The hearing on the increased value tax abatement request from the school district -- valued at $4,581 for the 15-year period -- is set for 6 p.m. Monday, June 10. “The county has stated it is not participating,” Butcher said.
In other matters Tuesday, the Council and Mayor did the following:
+ Approved the promotion of Cloquet Police Officer Thomas Hallfrisch to the rank of Sergeant effective June 5. Hallfrisch replaces Sgt. Tory Cawcutt, who left the CPD to take a position with the Carlton County Sheriff’s Department. Hallfrisch is an 18-year veteran of the Cloquet Police Department. A number of police officers and family members attended the meeting.
+ Authorized Adam Bailey and the Lumberjack Lounge LLC to sell beer at Veterans Park during this year’s July 4th celebration under The Jack’s current license provisions. In addition, councilors agreed unanimously to waive the city code regulation requiring a fenced-in area around the beer tent. The code requirement for two police officers to be paid $45 an hour each to work at the event was modified, to call for Bailey to pay one officer to work from 5-10 p.m. and the city will pay for a second officer to work the same hours that day. In the past, City Administrator Brian Fritsinger explained, the city allowed beer sales at Veterans Park for the Centennial celebration and the old Lumberjack Days.
+ Heard updates on the city’s wellhead protection plan and expected impacts on the city budget of actions taken by the state legislature during the recently concluded session.