Farmington Council rejects developer request
Economy drives decision
On a 3-2 vote, Farmington City Council members rejected a developer’s proposal, and city staff’s recommendation, to relocate a $2.2 million city assessment.
James Seed, representing Astra Genstar Partnership, requested the city move part of an assessment for the 195th Street project from the northern portion of property it intends to develop in about 25 years to the southern portion it hopes will be developed soon.
The Seed family had planned housing on all the acreage in June 2008 when they agreed to a development plan that included an 11-year schedule to repay $4.6 million in property assessments, starting in 2013.
The city would use the money to help repay bond debt for the 195th Street project.
But the floundering economy left the property undeveloped, and with city approval, last year the Seeds sold the northern property to local businessman David Finnegan.
The Seeds intend to buy the land back in the future to develop it, but assessments are contractually forbidden on that property.
“We have a contractual obligation to spare David Finnegan from any exposure to the special assessment,” Seed told council members at their April 2 meeting.
Seed proposed moving the assessment to the southern portion of the property and paying its scheduled $441,144 assessment payment as planned in 2013.
If the council refused, Seed said they must prepay the full $2.2 million of the assessment for the northern portion of the property, thereby cutting $179,543 interest money the city would have received.
Moving the assessment to a smaller portion of property also decreases the city’s collateral, although City Engineer Kevin Schorzman said the remaining property is currently valued at about $1 million more than the total amount of assessments.
Council Member Julie May, a banker, said they need to protect taxpayers from potential loss, noting land values are dropping.
Schorzman said the city’s second safety net in case of default is to use state funds for road projects to repay bond debt.
Council members Terry Donnelly and Jason Bartholomay agreed with May’s assessment that if they depended on those funds to repay the bond, the city would be short cash for other road projects and it could become a taxpayer burden.
“The reasons for those funds is not to make bond payments,” Donnelly said.
Seed said nothing would impede them from making the payments, even if they had no land.
He said land values have stabilized in the last few years, and although others have “gone down” in the tough economy, the Seed family has survived the recession.
“The bridge wouldn’t be there, and the east-west thoroughfare would not be there except for the landowner cooperation, and now the landowner wanting to pay his part,” Seed said.
Mayor Todd Larson and Council Member Christy Jo Fogarty supported the proposal, citing the Seeds’ 50-plus year history of business integrity.
Bartholomay said while he appreciates the Seeds’ cooperation and positive relationship with the city, the right decision is based on finances.
The majority of council members also said they want to avoid getting the city into a situation like the one at Vermillion River Crossing.
For that development, the city bonded $5.5 million in 2006 to build a road, entryway and bridge, but most of the property remains undeveloped.
A subsidized senior housing project is being built there now, and city officials hope it will spur development.
Even if the land sells, assessments on the property total $1.97 million, not enough to repay the bond, said City Finance Director Teresa Walters in an interview with Sun Thisweek.
At the meeting, Fogarty expressed concern that the Seeds would pay for another developer’s mistakes.
“This is frustrating for me,” she said. “Because this is the reason to me why cities get reputations of being difficult to deal with.”
Fogarty called it “terrible” to assume the Seeds, who have “always been great partners,” would default when they never have before and that the land would not be valuable enough to support the loss.
Larson said Seed has done everything the city has asked without hesitation, and business deals start with integrity.
“It’s been a long time since I’ve seen anyone stand up at a meeting and show the amount of integrity that you and your family have shown,” Larson said. “To me, that means a lot.”
May said many nice, smart people have not survived.
“For a lot of them it wasn’t for any fault of their own,” she said. “That’s why the decision today, for me, is based on risk.”
After the vote against the proposal, Seed said in an interview with Sun Thisweek that he was “extremely disappointed” in the decision.
“I feel abused, honestly,” Seed said. “I don’t think we asked for something unreasonable.”
He said he would work with city staff to explore other options.
“We’ll see if there’s a second chapter here,” he said.