The New City Garage Conversation-- Explained

In the past week I have been receiving many phone calls (as well as other Councilors) and have read the letters to the editor in the paper concerning the City's plan to purchase the "Tomteboda" property also known at 1800 W Hwy 61 for the construction of the City's new garages. I wanted to take this moment to apologize for not writing about the conversations the City has had earlier and to explain the thinking that caused the decision we made.


Why rebuilt the garages in the first place?

There are two answers to this:
1.) The garages are inadequate for the City's Streets/PUC/Park Departments to use. They are very old, very inefficient, and in a location that causes problems for Rec. Park users both in noise and safety concerns. It has been on the City's "to do" list for many years to rebuild these garages in another location to free up the space on the Shore.
2.) The MN DNR is working with/for the City to get around $2 million in bonding money for a project to renovate the boat launch in the Rec. Park, create additional parking, create a nature trail, create safe pedestrian pathways, etc. A summary of this project can be found here:
http://www.grandmaraisrecreationarea.com/grand-marais/documents/GrandMaraisParkside82715.pdf
The City's part of this plan is to get the garages out of there so that the work can be done.
*This project has not been funded yet, the City is choosing to move on the confidence that it will and the fall back fact that the garages need to be rebuilt because of location/condition concerns.
*If this project gets funded, the DNR, not the City, will hold the bonds, so the City will be making no payments on the project, we will simply be maintaining it.


What locations have been considered?

Several locations have been considered over the past 10+ years for this project. Other Councils have identified this as a need and have taken steps to work on it.

There was a brief conversation several years ago between the City, County, MN DOT about reconstructing a joint garage location between all of these organizations. This conversation quickly showed that the different entities probably couldn't share a facility due to rules and regulations as well as the fact that the joint space would be larger than any existing parcel of land available near the City... So that one was scrapped by past Councils.

One location that was identified was the County Garage located near the school bus garages. This would meet our needs and is already set up for the uses we would need... problem is that it is currently in use by the County and will be for the foreseeable future, so it really isn't an option.

The second conversation about location aimed at the EDA Business Park. Past Councils identified a location for the garage structure, created design drawings, and got building estimates put together. The proposed garage facility in the EDA Business Park was estimated to cost the City $3-4 million. When the current Council heard these numbers we were put back a bit at the number and took a closer look. The numbers accounted for the expense in a number of ways:

Reasons for High Expense:
1.) Purchase of the Business Park lots. The Cook County/Grand Marais EDA owns the Business Park and thus a purchase would have to be arranged for the City to possess and build on land in the Business Park.

2.) Based on the size of the garage facility (10,000 sq. ft. of garage space and 15,000 sq. ft of flat cold storage space as well as driveways, set-backs, etc) the City would have to purchase 4-5 Business Park lots, which are currently listed for sale for $50,000 or $45,000. Immediately we have a nearly $200,000-$250,000 price tag building up. Could the City get a deal on the lots? Probably, but remember that the City and the County have bonding on the Business Park. Bonding that is to be paid off from the proceeds of the sale of Business Park lots...

3.) Developing 4-5 Business Park lots for one project is significantly more expensive than developing 1 lot for a project. To create a 25,000 sq. ft site disturbance in the form of flat area in the Business Park (which isn't that flat) would require nearly $1 million in landscaping (filling, grading, wetland mitigation, etc). If a business wanted to develop one lot for their own purposes, the cost would be significantly lower and easier to manage. This was a big consideration for the Council. We would rather see small businesses in the business park paying taxes and contributing to the economy in lots that are more accessible to them than to have the City take up 1/7th of the Business Park if there is a better/cheaper option.

4.) Building Size: the design for the Business Park included two structures, one for heated storage of vehicles/equipment, and one for cold storage. Ideally these two structures could be combined for construction savings, but in the Business Park design there wasn't a large enough location for a combined structure, so two buildings would be built on a terraced location.


**After looking at these things, the Council decided to look at other options; to see if there were any other locations that could potentially fit our needs for less money.  The comment was made about the Tomteboda property and the investigation began.


Tomteboda Conversation:

When we began the conversation we discovered that the North Shore Federal Credit Union owned the property and was very interested in selling it. The City Council did some quick estimates about building on that site and came back with the following:
1.) Most of the necessary utilities are already in place and serviceable.
2.) The location is flat and easily accessed.
3.) The location has no wetland mitigation problems.
4.) The location is large enough to easily accommodate the needs of the City Departments.
5.) The location is available with a motivated seller.

We then began the conversation about how much would we be willing to pay for the property, as it was being offered for a sum that the Council was not willing to pay. The conversation went back and forth and the asking price that we offered was agreed upon. I cannot go into detail about the conversation because that would be in violation of the closed meeting rule, which is in place to protect the negotiating ability of public entities...

We submitted this offer and then had a Phase 1 study done on the land to find out if there were any unforeseen hazards that would disqualify this property from consideration. The Phase 1 study showed no direct contamination, but potential for soil contamination from migrating contaminations from neighboring properties and potential contamination from a buried fuel tank. These were taken into consideration, but did not disqualify the property from consideration as the potential cleanup costs would be trivial compared to the landscaping bill at the other location.

**So that is how we got to our conclusion. I hope that this has answered some of your questions.  I would like to also directly answer some questions that I have received directly for your consideration:


1.) Why take Hwy 61 property off of the tax roll for a City Garage?

Wherever the City moves the garage, which has been identified as a necessity, there will be a tax shift. The Council saw that we could lessen the tax impact by leaving the commercial rate property in the Business Park, thus freeing up the sale of those lots to pay back the bonding on the property instead of attempting to buy those lots for less than market value, thus short-changing the bonding agreement.

2.) How will this impact the appearance of Grand Marais as you roll into town?

Concerns have been shared about the presence of an industrial garage building not being what they want to see as you roll into town. Understandable. The City Council has not yet developed a site plan, but preliminary conversations have led to an emphasis on maintaining curb appeal either by locating the garage structures toward the back of the property, or the possibility of the City re-selling a commercial lot on the highway if there is adequate space.

3.) What about lodging properties?

This is a hard question to answer. I honestly don't have an answer. I do know, however, that the lodging property that is currently operating at the top of the hill struggles to get business and that something needs to happen up there to change that. What is that change? I don't know, but I hope that a reinvestment by the City up there can make some difference. The Tomteboda property itself is realistically beyond its tenure as a lodging property and future developments of that property were unlikely. I admit that I cannot see the future, so I understand if some of your disagree with this assessment.

4.) What about neighboring property owners and noise?

This is also a hard question to answer. I have not talked with neighboring property owners to the property in question and would not like to put words into their mouths. I would encourage any of those owners to contact me if they have any concerns about this.
*As a property owner near the Hwy 61 corridor, I feel that the noise that comes off of the highway itself will be much more significant than any noise produced by the garage facility, but again, I cannot say this for certain.
*Removing the garage facility from the Rec. Park will remove one of the complaints that is often brought up to the Rec. Park staff from seasonal users. I believe that to be a good thing.


**In closing, I am very interested in hearing your thoughts on this matter. Any expenditure by the City is a big deal and something that needs to be thoroughly considered. I hope that this blog post will help you to understand that the Council DID and WILL consider these decisions at length and felt that we were making a decision that would best serve the community by being the most cost effective, and would have the most positive long term impact.