Deadlock leads to public comment session Sept. 27
By Robert Williams
The village of Vergas has a problem. It is not a new issue; there is simply not enough space downtown. The city offices need more room. The liquor store needs more room and the two spaces are connected.
When 131 East Main Street suddenly came up for sale this month, the city jumped at the chance to purchase the building, which comes with a paid lease from the post office.
The Vergas City Council called an emergency city council meeting on Thursday, Aug. 17, to discuss the purchase. The council met in a closed session, ultimately entering into a purchase agreement. The motion passed unanimously.
The 2,170 square foot commercial property built in 1963 was recently listed for $175,000. It includes 950 square feet of unleased space, the remaining space houses the U.S. Post Office.
Multiple bidders were after the property. The city purchased the building for $197,501, having paid $5,000 in earnest fees, completed an inspection for $400 with a reduction in price of $600 due to needed electrical work.
Plans for the interior are to install five doors, add four walls, and add water to the meeting room area. Exterior plans include paint, removing boards to make a handicapped-accessible walkway and extending the railing from the post office to the ramp.
The city would be requesting bids for the remodel upon approval of the purchase.
The Vergas Economic Development Authority (EDA)/Housing Redevelopment Authority (HRA) discussed the purchase at length Tuesday, Oct. 5, with president Kevin Zitzow and member DuWayne Ditterich leading a spirited discussion centered around the need for any downtown space to be prioritized for retail business rather than government offices.
The EDA/HRA discussion was full of conflicts of interest being that members Joy Summers was involved in the city purchase as a realtor and fellow member Vanessa Perry was a bidding party on the building. Bruce Albright was wearing two hats also, as the city council’s liaison to the EDA/HRA.
All were in attendance at Tuesday’s regular city council meeting when Mayor Julie Bruhn asked for comments before voting on the purchase and approving requests for remodel bids.
Zitzow opened with the EDA/HRA purpose of boosting business in town and its flexibility in purchasing properties, especially in comparison to the city.
He also noted that he felt blindsided by the purchase and he listed the many issues the EDA/HRA had with the purchase which included the city paying nearly double the assessable value; the city competing with private entrepreneurs trying to buy the property at the same time; taking a business off of Main Street, needed ADA compliance work on top of the purchase.
Zitzow also brought up the alternatives discussed at the EDA/HRA meeting, which included remodel work that could be done at the Vergas Event Center to house the city offices. (See the Sept. 12 issue of the Frazee-Vergas Forum for full coverage of the Sept. 5 meeting)
“This building can be utilized substantially more,” he said. “We just think it’s a poor decision for the city to rush into that.”
Ditterich added additional comments.
“I’m not a big fan of governments buying up main streets and taking away private industry; if that business had been for sale for five years, that’s fine and dandy; that meant nobody ever wanted it. When something is up for sale for five days and they have multiple offers and a government comes in and buys it, above and beyond, it kind of defeats the purpose of having an EDA in our town. It looks like government is more important than business and if you think that you should probably step down from your position because without business and people you don’t need government. I’m fairly frustrated; I was on my way down to put an offer in so that we could make sure that…we could have another business in the downtown area.”
The building has been available to rent for more than five years, but the owners had limited any remodeling to what was there, basically limiting the building to be an office space only if rented or leased.
Ditterich also reiterated a point he made earlier in the month that he polled a handful of downtown business owners anonymously and got similar responses in that they were in favor of the building becoming another retail business, rather than government space.
“Every single one of them said it was a bad to horrible decision,” said Ditterich.
He summed up by stating his desire is to see Vergas succeed.
The EDA/HRA did agree and recognize that something needs to be done to improve the current office conditions for city staff and that was stated by Albright.
“We’re very limited and it’s going to take some hard work from planning and zoning and EDA,” he said. “If a business were to come to town today and say, ‘we want Vergas to be our home,’ where would we put them?”
The 131 East Main building is currently the only open space downtown.
Albright also noted that the city purchase does improve retail as it allows the liquor store to access the former city office to extend space that manager Kyle Theisen needs.
“We have a good thing happening and we need to work together,” said Albright.
A caveat the city has is the funding mechanism to purchase the building stems from the post office rent.
“Getting the rent from the post office makes a big difference in what our overhead is,” said Mayor Bruhn. “The fact that we would have money coming in was a big part of it.”
The mayor also noted the council looked at the businesses that could be coming in compared to needs that were established in last year’s comprehensive plan: a car wash, a pharmacy, bait and tackle.
“Some of those things weren’t comparable to that small of a space,” she said.
Bruhn also refuted the Vergas Event Center as a place for city offices, given its current usage of space and noted that the quick turnaround on the purchase agreement was dictated by the seller’s in trying to clarify answers to all of the issues raised.
Perry acknowledged the time crunch the city was in to make the purchase.
Financing the purchase has seen five different iterations with the likely road being a 15-year agreement via Vergas State Bank with an option to pay off without penalty after five years.
The income from the post office lease is $13,900 per year over a five-year contract with the amount going up $1,000 each year for the length of the term.
“It kind of pays for itself,” said council member Natalie Fischer.
Zitzow and Fischer had an exchange about the relative costs of remodeling compared to the purchase.
The city also has $264,492 of uncommitted funds in the city’s general fund reserves.
Bruhn made an attempt to stem the lengthy conversation by offering two options for a vote—approve the purchase or withdraw the agreement and lose the earnest fees.
After more discussion, which included City Attorney Thomas Winters, Bruhn again tried to call for a vote.
Council member Dean Haarstick interrupted after listening to the entire first hour of the discussion, noting that all options and relative costs should be investigated rather than make an immediate decision.
A third attempt by the mayor to get a vote, this time on an approval, withdrawal or to add time for further discussion before the Oct. 2 deadline on the purchase was interrupted by Zitzow’s advice to have a community meeting about the purchase.
A fourth request for a motion turned into an Albright question on what the latter option would entail, but Fischer moved forward with a motion.
“I would like to proceed with what we planned; I think it pays for itself; it’s way cheaper than doing anything else and will help the liquor store,” said Fischer.
There was no second.
“This discussion is all good and I know we can’t please everybody,” said Albright. “We’re a small town; we’ve got to hole up together. Whatever decision gets made, hopefully, we’re all on the same page as we promote and move this forward so Vergas can continue to be all that it is and more.”
A decision was finally made after Mayor Bruhn pressed again for a council decision and got a motion from Paul Pinke to have a public meeting about the purchase, seconded by Haarstick.
A public comment session will be held, with a special council meeting afterward on Wednesday, Sept. 27, 6:30 p.m. at the Vergas Event Center.