$23M municipal campus plan takes off

The Northland Mall, now mostly empty, is the centerpiece of a mammoth project being eyed by the City of Forest Lake. (Illustration submitted)

Fast-tracked proposal to build city facility at Northland Mall clears initial hurdles, faces year-end deadline


Clint Riese
News Editor

Just when all the forums, endorsements and door-knocking were wrapping up, a local issue last week stole the spotlight from this Tuesday’s elections. It is an issue that has been simmering for years, may be boiling on the front-burner for several weeks and could remain on the plate of taxpayers for the next two decades.

A fast-tracked plan to build an estimated $23.5 million municipal campus at Northland Mall on Lake Street (Highway 61) has cleared its first two hurdles. Under review is a concept to build a 55,500-square-foot facility that would house Forest Lake’s police and fire departments as well as city hall.

The proposal would be financed with revenue bonds funded by a 23-percent increase in the city’s portion of the existing property tax levy. The additional taxes would be assessed for 20 years.

The current development agreement between the city and Pace Development, Inc. is contingent on a closing date prior to the end of 2012.

Negotiations between the two parties took place for most of this year. A development agreement full of contingencies last Thursday earned the vote of the city’s Economic Development Authority. This Monday, the City Council approved a minor provision of that agreement which needed advance attention, sending the full proposal back to the council for a thorough analysis on Nov. 13.

Undisputed Need

City officials, board members and residents who spoke at the two meetings were nearly unanimous in the need for new facilities.

The fire station, built in 1970 on Fourth Street SW, is plagued by electrical problems and a crumbling parking lot. The real issue, though, is space. The building has no room dedicated to storage, offices or equipment repair, and the meeting room is too small to seat the entire department. Also, fire apparatus continues to grow in size. The department stores some non-critical equipment at the Columbus fire station.

A fire station committee spent several months in 2004 formulating a needs assessment that was presented in 2005.

“This project for the fire department started in 2002-03 with us bringing it forward to say this facility is totally inadequate for our current use and for today’s modern equipment,” Chief Gary Sigfrinius told the council on Monday.

From a police perspective, space is also the prevailing concern. The station, which is connected to city hall at 220 N. Lake St., was built in the early 1960s to accommodate four full-time officers. An addition in 1988 brought the capacity up to 14, but the department has grown significantly since the city-township merger and now has 25 full-time officers and three office workers.

Several officers recently converted a closet into an office. The garage holds only two cars, meaning many more sit outside with expensive equipment exposed.

The garage is also used as the entrance for those in custody, and the route inside the main building includes a staircase. Police Chief Rick Peterson says he has been involved in several incidents where a suspect under the influence of alcohol or drugs has fallen with him down the staircase. The setup is grandfathered into state code, though a recent biannual review by the Washington County Sheriff’s Office and the state Department of Corrections reported “serious concerns” about liability and safety, Peterson said.

The station’s basement is susceptible to water entry and, besides the department’s detectives, is home to the evidence room and other critical information. Additionally, the station has only two holding cells, both smaller than now required, and the DWI processing room only fits two people, which can put an officer in a tough position.

“At every turn, there’s things that if you just quick look at you wouldn’t think of, but are not considered to be sufficient or up to code for those uses,” said City Administrator Aaron Parrish in an interview with the Times last week.

Structural problems are the main concern with the city hall building, originally constructed in the 1930s with upgrades in the ’70s and ’80s. The roof is nearing the end of its lifespan and there are issues with the foundation and air quality. The mechanical systems date from different eras and tend to fight each other.

The city’s public works, community development and building departments operate in a “south” building on Forest Boulevard while the administration and finance departments are held at city hall. The two-site approach leads to commutes for city employees and confusion for visitors.

Plan Unveiled

The new building would pull together each area except public works, Parrish and Mayor Chris Johnson explained in last week’s interview with the Times.

The city would purchase 13 acres on the 14-acre Northland Mall site for $1,950,000. It obtained an appraisal in February which estimated the property’s worth, including a residual building to be retained by Pace, at $3.1 million.

Pace would retain 30,000 square feet on the southern end of the current mall, consisting of Anytime Fitness, The Dance Factory and one empty, connected unit. The city would demolish the structure’s remaining 80,000 square feet and build a facility in the northwest corner of the property. Three outlots would be created along the eastern edge and marketed by Pace, which would retain 30 percent of the net proceeds from their sale or lease over the next six years. City officials expect the outlots, once filled, to generate more revenue for the city than the amount that would be taken off the tax rolls through the city’s purchase.

Of the estimated $14 million construction cost, roughly $11 million would go toward the police and fire aspects.

“We’re talking about a public safety facility first and foremost,” Johnson said. “The misconception is it’s more for government offices, and realistically the bulk of the project costs get down to those public safety functions.”

Nearly $4 million is estimated for site development and demolition. Design fees, construction inspection, legal costs and furniture and fixtures make up the rest of the costs. The construction and site development estimates include a 10 percent contingency.

The entire parking lot, which would accommodate over 800 vehicles, would be rebuilt, and the accesses off Highway 61 would be reconfigured. A controlled access for fire department use would be sought over the Hardwood Creek Trail to assist with prompt response times.

Owners of the adjacent movie theater and retail building to the immediate south of the parking lot have indicated interest in refacing their buildings with a design cohesive to the look of the new city facility.

The project would also include a stormwater management development benefitting Clear Lake. Installation of a pond on the north end of the property would treat water that is currently untreated and labeled as the dirtiest to drain into the lake. The Rice Creek Watershed District may partner in the effort and seek grant funding for a related improvement plan involving a nearby wetland and subdivision.

Johnson and Parrish pointed to the city’s good bond rating, a 30-year low in bond interest and a favorable window for construction costs as reasons to move forward quickly.

The most pressing factor, though, falls in Pace’s court. The Bemidji-based developer stands to benefit in the form of tax relief by gifting to the city the current mall building. To qualify, it needs closing to take place on or before Dec. 31.

“All of our terms are predicated on a year-end closing,” Parrish said. “If we don’t have a year-end closing, we’re sort of back to square one.”

Twenty-year lease revenue bonds would be issued by the EDA, which would own the property and building. The City Council would make lease payments to the EDA to cover the debt.

As alternate funding sources for essential municipal services are few and far between, the city would use a steep property tax hike to bring in the funds. The 23 percent increase equates to a first-year total of $180.70 for a residential property valued at $175,000, or $669.66 on a commercial/industrial property valued at $500,000.

Parrish said that amount should dip as the city grows, noting population projections from the Metropolitan Council.

Mayor Johnson said it is not good practice to put a project involving essential services to a referendum.

“The complexity of this issue would be hard to explain in a yard sign,” he said. “Ultimately, it’s not the right way to make a decision this big and complex, in my opinion. It’s regarding critical operations of the city.”

If the plan goes forth, the current fire hall could be used in conjunction with the city’s south building to ease space concerns of the public works department. City officials would like to see the current city hall property sold and transformed into a residential housing project that could help downtown businesses.

Gaining Approvals

The plan still faces several hurdles, but they will come in a quick manner if cleared, as the first two are.

The EDA voted 5-1 last Thursday to accept the development agreement. Jackie McNamara cast the dissenting vote, while Mark Finnemann abstained because his architecture firm is involved with the project.

The EDA in August instructed staff to put together a contract with Pace for review. At last week’s meeting, Mayor Johnson said he was surprised it took nine weeks to produce.

Despite the rushed timeframe that delay has brought about, EDA members were open to approving the agreement since it contained several contingencies.

“It’s been a deferred situation for many, many years,” said Mike Muske. “The fact is, it probably should’ve been handled a long time ago at a lower cost and it wasn’t, and if we defer it again it’s going to get larger.

“My thought is we have to do something, so let’s keep everything on the table.”

Blake Roberts voted in the majority but also expressed concern.

“That $23 million scares me,” he said. “That’s a tough number…Is it a $23 million Cadillac, or is it a Ford? Can that number be lowered a couple of million dollars?”

McNamara wanted to wait for the results of a comprehensive facility needs assessment currently in the works.

“We’re not being honest, we’re not being transparent, and I think we’re putting the cart before the horse,” she said.

This Monday’s City Council meeting was much more contentious, both among the board and the audience.

The council voted 3-2 to approve a portion of the development agreement, but not before 15 residents took the podium to oppose the plan. This Tuesday’s election will play a key role in the project’s fate, as City Council candidates Ed Eigner and Ben Winnick were among that group.

Eigner said it became clear during his campaigning that residents do not favor building a city facility at Northland Mall.

“I’ve talked to over 100 households and I’ve brought the situation of this city hall complex up, and I’m waiting for the first person to tell me they want it. Not one. Zero,” he said.

Winnick, who owns a business adjacent to the mall, found the project’s timing odd.

“Doing it all the day before the election, when this is the biggest issue in the election, it’s just wrong,” he said.

A third council candidate, Jeff Klein, said the solution falls between spending no money and spending $23 million.

“I’ve said it 100 times, I’ll say it again: Logic would indicate the answer is somewhere in the middle, but this town has a history of never looking for that answer,” he said. “We take an issue and polarize it and make it personal and we continue not to do anything.”

Park board member Karen Morehead praised the council for taking up the issue, but her support was echoed only by members of the police and fire departments. Otherwise, the council heard a barrage of criticism.

Forest Lake business owner Wes Ruddy said the local economy is not conducive to such a project.

“Right now I don’t think anybody catches on,” he said. “Things are rough right now. Everybody’s trying to hold their breath and see what’s going on and you guys are trying to spend $25 million. I think you’re losing it.”

Kevin Shoeberg, an attorney retained by several local residents and business owners to study the agreement, said it is irresponsible for the city to go along with Pace’s hurried schedule.

“What I would suggest to you is this: that Northland property is not going to be worth any more money on Jan. 1 than it is today,” he said.

Stev Stegner, former mayor of Forest Lake, does not agree with city officials who expect the project to spur redevelopment along the Highway 61 corridor.

“That was the same rhetoric we heard when we practically gave away the land in Headwaters for the government center,” he said.

Many of the speakers also called for a referendum and pledged to make their statements even clearer with their votes in the next day’s general election.

McNamara and Johnson mirrored their votes from EDA, leaving council members Jim Dufour, Mike Freer and Susan Young to come up with a majority one way or the other.

Freer voted against the agreement, citing the plan’s aggressive schedule as a main concern.

“It is moving way, way, way too quick,” he said. “I wish we would just slow down. If this deal falls off the table because of that, I’m sorry, [Pace] didn’t really want to sell it to us.”

Young regarded the matter as necessary in order to fully analyze the project’s merit.

“I’m not willing to make a decision yes or no on this property without knowing what’s there and getting some more information, and the only way I can get the information I need is by a purchase agreement with outs,” she said. “And if we’re out by Dec. 1, it doesn’t cost us anything.”

Dufour kept his comments brief.

“I’ve been supporting this for quite awhile,” he said. “It’s another option, we do have the outs. Let’s look at all our options.”

The proposal now moves to a City Council and EDA workshop set for 6:30 p.m. next Tuesday, Nov. 13. The results of the aforementioned facility needs review will be presented and incorporated both into the plan at Northland Mall and into alternative projects. The bodies will vote on whether to initiate project financing. As with the previous votes, the action is non-binding until final approval.

A public forum would follow on Monday, Nov. 26 and include tours of city facilities. If still under consideration at that point, the project’s ultimate fate would be decided at special meetings of the EDA and City Council on Monday, Dec. 3.