City-owned building has one tenant

By Robert Williams

Editor

The Frazee City Council approved the Economic Development Authority’s recommendation of an issuance of a temporary refinancing of the downtown retail building in the amount of $1,566,000.

The current financing of the building expires on Feb. 1.

“The EDA has chosen to do another temporary issue, a three-year temp, basically, that allows for the EDA to finish out the building and hopefully, get it leased,” said city financial advisor Jason Murray of David Drown Associates. “Last week, the EDA looked at the strategy of long-term ownership or potentially selling it.”

The EDA also considered a longer term 20-year financing option.

“One of the challenges to get a strong proposal from a financial institution was the majority of the building remaining unleased at this point,” Murray said. “Over the next three years, the focus for the EDA is going to be lease and what I call stability, getting it fully leased and stabilized.”

By Feb. 1 of 2027, or prior, the goal is to get the building fully leased or sold outright to pay off the temporary bond, according to Murray, or lock in a 20-year financing term.

By approving, the new bond is issued for the next three years.

“In a nutshell, a refinancing of your original one, but because it’s a temporary issue we’re just restructuring it as you’re paying off that first one and structuring as another three-year term,” Murray said. 

By law, there can only be two temporary issued bonds making this the last one available to the EDA.

One of the benefits of the temporary issue is it is callable at any time.

“If the EDA would get an offer on March 1 of 2024 to sell this thing, they basically can proceed then and pay this off at any time once that closing happens,” said Murray.

In regards to a longer-term financing plan, most of the financial institutions wanted to lock in a seven-year call period, which would stick the EDA with the building for that length of time before a sale or refinance could be applied.

The council passed the resolution unanimously. Mayor Mark Flemmer voted via teleconference as he was not present in-person.

“We’ll continue to work with the EDA on a strategy and hopeful we can find a tenant for the 4,900-square feet,” said Murray.

According to City Administrator Stephanie Poegel, there are a couple potential future tenants and the EDA is fairly confident that they will have a business in the building by the end of 2024.

The city council meetings have been rescheduled for 2024 as well. The meetings will be held the second and fourth Wednesdays of the month at the Event Center.