City discusses future of ‘old Energy building’

     Since the City of Monticello started working on a FEMA application to demolish the old Energy building owned by the Welter family, some new developments have taken place.

     During the Nov. 16 city council meeting, City Administrator informed the council about a potential building project.

     “There are purchase agreements in place between a developer and the property owners of the old Energy building and the home to the north,” Herman said. They have agreements in place to buy those properties. If they do that, we withdraw our FEMA application, and we (the city) won’t buy those buildings from FEMA. We let the private developer acquire it.”

     The plan would involve the demolition of the old Energy building and the house to the north, and construct a 27,500-square-foot building.

     “There have been a lot of rumors in town, a lot of talk about who that is, what company it is. It’s been made very very clear that we not use the name of the potential operator. They like to make their own announcements. If we put that name out there, they’ll probably pull out and not come to Monticello,” warned Herman.

     On Nov. 12, Herman, the realtor, the developer, and the person who would be in charge of demolition toured the Energy building. Herman said demolition is estimated at $400,000, much higher than the city anticipated on the FEMA application.

     “That is quite a building size-wise with the amount of concrete and the amount of steel,” Herman said.

     Herman reviewed the development agreements the developer has entered into with other communities, and they include 15-year rebates. That’s 15-year rebate agreements at 100 percent of the new taxes created that are abated.

     The company typically moves into communities with a population of under 5,500. (Monticello’s population is 3,800.)

     “The realtor and developer have some experience with Monticello and convinced them that we would be a good fit,” Herman said.

     In other communities, the company moved into an existing commercial building. In this case, a building has to be demolished and a new one built before anything can happen.

     “The developer has suggested this is probably a $6 million project,” noted Herman. “If the city council doesn’t participate in a similar way as these other communities from a development agreement standpoint, I can see them deciding not to come here.”

     When the City of Monticello enters into a development agreement, the minimum assessment is not always a consideration. Some of these other communities included that in the agreement, and Herman urged the council to, as well.

     “When you’re done, your building will be worth a certain amount of money,” he said. Herman’s initial estimate on the new building is a minimum of $1.25 million.

     If the city tax rate stayed the same, Monticello would get about $15,700 a year; $40,000 in three years. “But if we’re giving back the taxes in 15 years,” prefaced Herman, “it’d be about 18 years.”

     The land the Energy building sits on is valued at $90,300.

     “That would be the value that precedes their project,” noted Herman. “The taxes on that would still be distributed as normal. Those would not be rebated. Only the new value added by the building.”

     There are a lot of positives associated with a project like this: local contractor, local manufacturer, building materials purchased locally, 40 jobs created, an increase in local option sales tax, and saving money on a FEMA buy-out.

     “Going into this I had some concerns,” admitted Herman. “How does the city justify a 15-year agreement with everyone else at 10 years?

     “But the shear amount of money being put into this project, they’re getting rid of a building that we’d like to see gone, they’re giving us land for Parks and Rec’s trail extension, they’re creating a new building, probably create a new building elsewhere, bringing in a developer to town who might do other projects in town, a number of things that make this project unique that we could easily work with them. It’s a whole different level.”

     Mayor Brian Wolken added, “This is in our downtown footprint, when most of our other major development is in our industrial and commercial parks.”

     The next steps involve the developer going to the Planning and Zoning Board to re-zone the house to the north from residential to commercial.

     “That would be contingent on the project moving forward,” Herman said.

     In addition, the properties are not within the city’s urban renewal/TIF district.

     “We need to amend that to bring it in. We need to amend our urban renewal plan to make this an eligible project,” Herman said. “Monticello is growing.”