Abby to offer two acres in new industrial park
Abbotsford’s planning commission last week approved the general terms of an agreement to provide the owner of Abbotsford Appliance with about two acres of land just west of STH 13 so he can build a 10,000 square foot building.
The proposed project, if approved by the city council and the business owner, would be the very first development in the city’s new industrial park located on empty land west of STH 13 and north of Interstate 29.
Brandon Mueller, owner of Abbotsford Appliance, presented planning commission members with a layout of his proposed showroom and helped hash out the details of a developer’s agreement at the March 4 meeting.
Under the terms approved by the commission, Mueller would have until August 2022 to start construction and another year to finish the building. In exchange for getting the land at $1 per acre, he is committing to constructing a building with a minimum assessed value of $250,000.
Mueller said he hopes to start building in the spring of 2021, but he’s happy to have some flexibility to get started later if he needs to. He also has tentative plans to build 10 to 20 storage units on the site. The building would be constructed in the northeast corner of a 24-acre parcel of land the city purchased last year for $170,000. Later this year, the city is planning to extend the newly named “Opportunity Drive” about 250 feet west of the railroad tracks near O’Reilly Auto Parts.
Water and sewer lines will also be extended into the area west of the tracks as part of the first phase of the city’s business park development plans.
Because the land is located within one of the city’s TIF districts, Mueller will able to pay the city back for the cost of the two acres with annual property tax payments over the next 15 or so years. With tax incremental financing, taxes on new buildings that would normally be shared with the local school district and other taxing entities are kept by the city for development incentives.
According to an estimate from the city’s assessor, the assessed value of Mueller’s finished building would be in the range of $385,000 to $425,000 without the land value factored in. The 10 to 20 storage units he is proposing would be assessed at $28 per square foot, the assessor wrote in an email.
Based on these estimates, city administrator Dan Grady said Mueller’s building would more than satisfy the $250,000 minimum assessment and “almost double it.”
DPW Craig Stuttgen said, normally, the assessed value of a new commercial building is only 50 to 60 percent of what it actually costs to construct it.
“If he (the assessor) gave us a number of $400,000, he believes it’s going to cost you $800,000 to build it,” Stuttgen told Mueller. “If you can do it for less than that, great.”
Stuttgen said $250,000 of assessed property value will generate about $6,250 per year in taxes for the TIF district, which isn’t scheduled to close until 2036. If the building were on the tax roll for 15 years, it would bring in about $100,000 in taxes.
According to his current blueprints, Mueller’s building would run 144 feet east to west, and 72 feet north and south. The exact location still needs to be determined based on the city’s stormwater plans and wetland delineations.
As part of the proposed agreement, the city would cover the legal fees and the cost of a certified survey map, but if Mueller backs out of the deal, he will need to reimburse half those expenses.
The proposed terms of the agreement will be presented to the city’s attorney, who will draft a legal contract for the planning commission to review before recommending it to the city council for final approval.
Mueller said interest rates are “really, really good” right now, but he needs to have a commitment from the city on the land before he can move forward with securing financing and hiring contractors.
“I need to know I’ve got the land,” he told the commission.
The extension of Opportunity Drive won’t be done until August, Stuttgen said, so the city and Mueller still have time to hammer out the details.
Commissioner Jim Jakel agreed with Mueller that the city needs to provide a commitment on the land as soon as possible so he can proceed with his plans.
In the past, Jakel said the city has usually given developers about five years to get something built before taking the land back.
“We went out on these limbs before and gave it to people and got the land back,” Jakel said.
In a related matter, the commission voted to handle all future developer’s agreements on a case-by-base basis instead of establishing a minimum tax increment or other criteria for those looking to acquire city-owned land in the industrial park.
Future developments will have less time to pay back any incentives offered by the city, so other developers won’t get the same deal as Mueller, Stuttgen and Grady said.
“These numbers aren’t going to work in the future,” Stuttgen told the commissioners.
Grady said the city will have about $50,000 per acre invested in the industrial park land after road construction and utility extensions are completed this year. In order for the city to recoup its investment over the life of the TIF, Grady said developers need to construct a minimum of $125,000 in assessed value on each acre.
Grady said that shouldn’t be a problem, since it’s virtually impossible to build anything besides a parking lot for less than $125,000.
Jakel and other commissioners agreed that each new developer’s agreement will have to be negotiated separately.
“Every one that comes in here will be completely different,” Jakel said.
Stuttgen stressed that the city is not in any danger of losing money on its TIF district. With the taxes being generated by the Abbylands Foods sausage plant and the new Northside Apartments, plus several other business expansions, the city is already collecting $800,000 per year in TIF revenue, he noted.
“Financially we’re not going to fail. We’re going to be fine,” Stuttgen said. “We’re in a great spot.”
