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Downtown developer gets city OK

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Detroit Lakes Detroit Lakes, 56501
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Detroit Lakes Minnesota 511 Washington Avenue 56501

The Detroit Lakes City Council has voted to move forward with the first phase of the crescent redevelopment -- and DLM Downtown Properties LLC will be the developers.

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More than 18 months after putting out the first request for proposals, the city council voted 5-3 to sign a letter of intent with DLM. The next step will be approving a developer's agreement, which will take a majority two-thirds vote since it involves spending city funds for improvements.

In his amended motion to approve the letter of intent, Alderman Leonard Heltemes bumped up the cost of the land from $300,000 to $350,000 to cover unknown land costs the city will incur from an unrelated subject.

With the increase to $350,000, DLM partner Jeff Schlossman said it wasn't fair to raise the price "in the 11th hour." He said that the developers shouldn't be held responsible for the extra cost the city incurred from the property turn back.

During Tuesday evening's council meeting, a few community members voiced their concerns and support for the project.

Roger Price, owner or Price's Fine Jewelry, said that Goldmark Schlossman, who are behind DLM, also took on the Mac's building and the old White Drug building, and "you know what happened to the Mac's building, and White Drug is offices."

He said that he is all for the crescent redevelopment, but that maybe the city should wait a little bit and help fill the downtown buildings that are empty before building more.

A partner in DLM, Jim Buus said the group fully intended to develop the Mac's building when they first purchased it. After putting thousands of dollars into looking at the building and realizing it wasn't worth it, "we were embarrassed because it looked so terrible and had our name on it," he said.

It has since been torn down and will serve as the land for the new veteran park.

He continued that DLM spent over $700,000 renovating the White Drug building and brought 30 jobs to downtown Detroit Lakes.

"I'm not going to apologize for bringing this to town," he said of the office space.

Deanna Sinclair pointed out this is just the start of the crescent project and that there will still be more land in the redevelopment area to make more money for the city.

"We've been living in Highway 10 reconstruction limbo for five to six years," she said, asking the council to move forward on the matter.

Jon Riewer agreed that the "longer it drags out, the less interested" people are going to be in the project.

Bremer Bank President Jeff Grabow said, "if you got one (RFP) and it fits into your master plan, give serious consideration to move forward with it."

Alderman Bruce Imholte said he agrees with everyone else's vision for the redevelopment of the area -- which stretches from Washington Avenue to McKinley Avenue to Frazee Street -- but said his two main concerns are whether this is the right time to start and the low price on the land.

"If you push through too fast, you won't get what you wanted," agreed Alderman Ron Zeman.

Zeman has been a strong advocate for the city having final approval of which tenants DLM can rent to, trying to avoid relocations and office space. In the letter of intent, DLM agreed to have new businesses in the space -- except for the relocation of Miguels, which is part of a bigger redevelopment plan - and at least two nationally or regionally recognized businesses.

"Let's take our time and get it done right," Zeman said. "Like the old saying goes, 'haste makes waste.'"

Alderman Jim Anderson said the process has been going on for at least 18 months, it's not like it's been a fast process. With the added business, he said, "why not capture our portion (of taxes) right away?"

"We're headed down a slippery slope if we start telling who they can and can't rent to," he added.

Agreeing that the city should move forward, "we may look back and think we should have done this differently," Alderman GL Tucker said, "but shoulda, woulda, coulda."

Heltemes, Zeman and Imholte voted opposed to the letter of intent, and Dave Aune, Anderson, Tucker, Madalyn Sukke and Jamie Marks Erickson voted in favor of it. Walt Tollefson wasn't present for the meeting.

Getting to $350,000

When the Highway 10 realignment discussions started in 2001, the Minnesota Department of Transportation agreed to give the city clear title to the property in the area where Highway 10 once went through town. Now that it's all said and done, getting those titles is costing the city at least $44,000.

"The council felt they were going to get clear title," City Administrator Bob Louiseau said.

"Clear title and no cost," Imholte added.

Somewhere along the way though, eminent domain laws changed and it became a cost to the city rather than MnDOT.

"We've already got a lot invested, as does MnDOT," Imholte said, but now having to come up with more money for the project "kicks us in the gut."

MnDOT's Brian Bausman, District 4 right of way supervisor, said once the economic development perspective became clear, MnDOT had to step back.

"We thought that was too big of a risk for us to continue at that point," he said.

Heltemes disagreed, saying that since day one, MnDOT was selling the city on the idea of how great the area would be for economic redevelopment.

"The city got the rights (to the land) for free and some land for free, valued at well over $1 million," MnDOT's District 4 District Engineer Lee Berget said. "We cannot spend transportation dollars on economic development for the city. It's constitutionally illegal."

Imholte said he understands the state isn't going to write the city a $44,000 check, but suggested MnDOT "keep us in mind in the future" on other projects MnDOT could help the city out with.

Berget said MnDOT has already footed $50,000 for a transportation study that includes the city and has paid $75,000 for lighting along Highway 10 - "we've already done that," he said. "I don't think you're entitled to an IOU," he added.

"That's where we disagree," Imholte said.

Regardless what's been done in the past, he said he'd like some assurance that MnDOT would be there to help the city in the future.

"Think about us in a cooperative way in the future, that's what I'm asking for," he said.

"That's business as usual. I don't think anything needs to be said," Berget said.

Heltemes said he's going to be a little skeptical working with MnDOT now, wondering if the same thing might happen again.

"It's a pretty small price to pay for the benefit to the city," Berget said of the $44,000. "I don't see how you're coming out on the short end of the stick with this.

"If $44,000 is going to break this particular project (the crescent redevelopment), you shouldn't do it."

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