TEDA and city council approves contract on harbor development
Thursday, January 12. 2017 — In back-to-back meetings the Tower Economic Development Authority (TEDA) and the Tower City Council conducted special sessions, Thursday, January 12, 2017, to approve a contract allowing developer Orlyn Kringstad to move forward on his planned 20-unit condominium project. TEDA and the Tower City Council, unanimously voted to accept the agreement recommended by its attorney, Christopher Virta, Fryberger, Buchanan, Smith & Frederick, P.A., a Duluth, Minnesota law firm. Although the city council met following the TEDA meeting, TEDA is fully comprised, at this time, of the members of the entire city council. Mayor Josh Carlson chaired both meetings.
Before conducting its unanimous vote, TEDA reviewed the final details of the contract with Christopher Virta, an attorney with Fryberger, Buchanan, Smith & Frederick, P.A., a Duluth, Minnesota law firm. Kringstad, representing his development company, Tower Vision 2025, LLC, outlined his concerns for the development authority
The original agreement called for the city to sell 2.5 acres of land south of the East Two Rivers harbor at a cost of one dollar. The size of the site has been increased and now Kringstad will have an option to develop 5.5 acres, according to TEDA’s attorney. “Once we see the final development site plan, when we know where everything will go, the city can convey title as the land is developed,” Virta said. This specification, to convey title piecemeal, as the developer is ready to build, will save a lot of legal expense and keep the city from having to complete a lot of back and forth title work, according to Virta.
Expressing his displeasure with delays in preparing the legal documents, Kringstad said, “this should have been ready four months ago.” The Tower City council gave its original approval to execute the land transfer on August 22. “I want to be sure these delays are noted on the record. This contract is more complicated than our original agreement, and I have reviewed it to the best of my limited legal experience,” Kringstad said. Minutes of past TEDA meetings have not been updated since 2013, according to Kringstead. He explained that he could not find any of the minutes for any meetings that have occurred since April of that year.
“I am working on six different projects in Tower, including the town homes, retail space and a restaurant at the harbor,” Kringstad said. He reported that he will have the business plan, for phase two, the retail development and phase three, the restaurant, when it is ready. “Which I may add, will be soon.”
Kringstad voiced his concerns that the wetland areas of the land parcel were larger than was originally represented. “We would also like to know if you are privy to any prior project which was not completed because of soil testing,” he said. “We will do our own due diligence, but if there is already information out there we need to to know that,” Kringstad told TEDA. He said that he had concerns about special assessments and ad valorem taxes. “Why would there be special assessments when all the prep work is being taken care of by the city?” Kringstad questioned. TEDA’s attorney explained that these costs, primarily paid through property taxes, were normal and routine for any property being developed and could include costs for establishing water and sewer connections. The city has also increased the maximum costs, from $5,000 to $7,500, that Tower Vision 2025 will be expected to pay to cover title searches, recording fees, publishing expenses, deed preparation and any closing costs and attorney fees.
“Is there any language, in this contract, which prohibits the developer from buying this property for one dollar and then turn around and sell it for two dollars?” Lance Dougherty asked. The contract calls for the development of the property into a town home development, along with limited retail and restaurant facilities and states that any changes, from this plan, need to be approved by the city. There is also a short window of opportunity to begin and complete the construction of town homes. The developer must commence construction of 10 of the housing units by October 1 of this year and must substantially complete that work by the end of 2018. Any subsequent phase to the harbor development must start by October 1, 2018.
Although he did not provide any specifics, Kringstad reported that he was very close to signing a letter of intent with a local developer and would be paying prevailing wages for work on the project. Buyers have signed letters of intent to purchase five units, and another five agreements are expected soon, Kringstad reported. He also said that he would like to break ground on the town home construction as soon as weather permits this spring. The delays which the city incurred in preparing the legal paperwork resulted in the loss of investors, Kringstad said. “Investors are skittish,” Kringstad concluded.
For live video of Orlyn Kringsted’s presentation Tower Vision 20/20Media has posted this video: Tower Vision 20/20 Media