City passes on downtown moratorium

by Kurt Nesbitt
Contributing Writer
There will be no temporary suspension of redevelopment in downtown Elk River any time soon.

A proposed ordinance that would have temporarily prohibited conditional use permits or changes to the downtown zoning district failed Monday night after Elk River City Council members took no action on the proposal, but directed the city’s legal staff to look into that same issue.

The requested review centered around the soon-to-be former Elk River Area School District offices on King Street and Highway 10, which is listed for sale. The school district is in the process this week of moving its headquarters to the former home of the Minnesota School of Business on Highway 169 that it bought.

A District 728 employee sprayed weed killer on the sidewalk between Highway 10 and what used to be the District 728 offices. Employees have been moving to the district’s new headquarters in the former Minnesota School of Business by Highway 169.

It’s working to sell its Highway 10 office building. The district is asking for $899,999 for the 14,190-square-foot building, which is on a prime edge of downtown Elk River.

City Planning Manager Zack Carlton said Monday night that some of the recent developments in the downtown area have repeatedly brought up questions about whether they fit within the Mississippi Connections Plan, which is the city’s master development plan that was meant to outline and guide city officials’ decisions on how parts of Elk River can be developed.

Carlton said recent developments in the city, like the Housing and Redevelopment Authority’s purchase of property east of the railroad tracks and the Beaudry Oil and Gas expansion project on Proctor Avenue, have raised more questions about what fits in with the master plan. He said the downtown district is a “small portion of the plan” but “very important” since it hosts a lot of special events for the city.

Mayor John Dietz told the Star News two weeks ago that he asked for the school district’s real estate agent to make a presentation to the council after hearing about the possibility of “an out-patient clinic” from city staff, which raised his concerns about how that might affect downtown businesses. He invited an Otsego real estate agent to give a presentation about the property, which reportedly already has prospective buyers, at a City Council work session on July 3.

Several city agencies, like the Elk River Economic Development Authority and Housing Redevelopment Authority, looked at buying the building but neither the EDA nor the HRA is interested.

On Monday, the City Council considered the proposed temporary halt to all new applications for conditional use permits and re-zoning requests so city planning staff could have time to “complete an in-depth study concerning changes in official controls within the greater downtown area, and in the interim to protect the planning process and the health, safety, and welfare of the citizens of the community,” as city documents said.

Although City Council members generally agreed that the downtown district is very important to the city’s overall vision and plans regarding community development, and should be handled carefully, council members also felt that temporarily halting all new development downtown would hurt the district’s efforts and could also dissuade other potential developments, despite assurances from city staff that the moratorium could be lifted earlier if the council felt no changes were needed, and would not have affected approved uses within the downtown district, would only affect those that needed permission from the city, and would not actually affect the district’s ability to sell the building.
City Council Member Nate Ovall, who is on the EDA and HRA boards, said both of them decided not to pursue the building, since the HRA felt doing so is “too big for the funds we have” and the EDA decided the purchase was “inconsistent with (the EDA) charter.”

Dietz said that if the city did enact a moratorium, he felt it shouldn’t last any longer than 90 days, so it wouldn’t impact the school district’s ability to sell the property. He said he was still concerned that taking no action Monday night might “backfire” on city officials.

“We’re going to have something that downtown businesses aren’t going to appreciate,” he said. “That is my concern.”
Council Member Jennifer Wagner agreed with Dietz, but repeated her earlier concern about the moratorium handcuffing the school district.

“We’ve known all along about it,” she said “We should’ve done a better job being more proactive.”
City Administrator Cal Portner told Wagner that the action only applies to conditional use permits and zoning changes and doesn’t affect the actual sale of the building. Wagner replied that potential buyers “may see (the moratorium) and move on.”

Council Member Matt Westgaard disagreed with Wagner about that point because the district didn’t have a permanent superintendent when the building went up for sale. He told Wagner that the proposed action had more to do with whether the city wanted to get involved in the sale. He said he’d support a special City Council meeting to make the process move faster so the city wouldn’t hold it up.

Dietz asked the council if it wanted a moratorium or not, and if it did, for how long? Westgaard said that it should be short so it doesn’t impede the district’s efforts. Dietz said he wanted the city staff to go to work immediately so it doesn’t impact the sale.

Council Member Jerry Olsen wanted to know how long the property is on the market.

Brian Hardin of KW Real Estate of Otsego, who is handling the sale of the District 728 building and spoke at the council’s work session, said the property has been on the market for three weeks. Olsen said he doesn’t think the city has compromised that period and the time could be lengthened.

Hardin said he wanted the council to consider its development concerns but should also consider the impact its actions would have on his ability to sell the property.

Ovall said he thinks the building would be expensive to redevelop and the city has “a lot of buildings already.” He had a “hard time” seeing any city use for it and reiterated his and Wagner’s concerns about the usage as well as the impact a moratorium would have on the sale.

Westgaard said he felt that if the city has no interest in the building, then the council should “let it go.”
“I’m okay with that. I just hope it doesn’t backfire,” replied Dietz. Olsen shared Dietz’s concern, but also agreed with Westgaard about letting the property go.

City Attorney Peter Beck clarified the scope of the proposed action. He said it would not affect property uses that are already allowed; just conditional uses and zone changes. He said there isn’t much risk in not adopting a moratorium.
Wagner repeated her support for keeping downtown developments in step with the master plan, but also repeated her concerns a third time.

“I sure hope the school district makes a good choice of what is going into that very highly visible, very highly impactful building,” she said.

Westgaard again summarized the council’s general feeling, which was to do nothing about the moratorium and let the issue go. Olsen wanted a motion to direct city staff to explore the issue anyway, Dietz corrected him, saying a motion isn’t necessary to direct Peter Beck to look at the issue.