More than 30 gathered at the Pelican Rapids City Council chambers for the Aug. 27 public hearing, when the council voted 4-1 to reaffirm the tax abatement incentive for a 36 unit apartment complex. Controversy over the abatement gathered steam locally, after the Pelican Rapids School board withdrew its support in August.
Pictured are members of the audience, and the developer, Skip Duchesneau, D.W. Jones Company, who is at the podium.
These illustrations of a apartment complex in Glenwood were projected on the screen during the Aug. 19 Pelican City Council meeting. This complex is very similar to the project proposed in Pelican Rapids.
Some of the key aspects of the Pelican plan:
• 36 units, 19 garages
• 4 efficiency apartments, 12 one-bedroom, 17 two-bedroom, and three three-bedrooms.
• The project is a “market rate” development, meaning it is not government rent-subsidized.
• Patio, play area for children, community room.
• The management company limits the population to two-per-bedroom. This means that, at full occupancy, the residents could number between 36 and 111.
• D.W. Jones owns 35 buildings in Minnesota, and manages a total of 100. Total units managed is more than 3,000.

Hearing exposed range of views on city’s future
development 

A 36-unit apartment complex, with associated tax abatement incentives, was approved by the Pelican Rapids City Council August 26. 

The nearly-packed city council chambers were a strong indicator that there was more to the story than a simple tax break to promote additional rental housing.  

Beneath the surface was a complex set of issues and concerns over the future of Pelican Rapids, including future population and demographics;  the merit of tax breaks to outside developers; future single family home construction; and broader economic development objectives. 

More than 30 attended the session. 

The lone vote in the 4-1 Pelican city council tally was from Councilman Curt Markgraf, who has generally been somewhat skeptical of the incentives to developer. Further, Markgraf’s vote somewhat reflected a differing strategic view: That the city should concentrate on more single family housing, rather than multi-unit apartments. 

Arguments for and against were articulated (See accompanying story on testimony at the meeting).

On the table was a city tax abatement of about $472,000 as an incentive to developer D.W. Jones.  Pelican would gain a structure with taxable market value of about $3.8 million–but with the abatement, the complex wouldn’t generate any new tax revenue for the city’s coffers for about 10 to 13 years.  The added tax revenue is, in effect, “rebated” to the developer to subsidize construction costs until the abatement period expires.   

County officials joined discussion; emphasizing high housing demand        

A surprising turnout of Otter Tail officials, from across the county, was a reflection of how crucial the county views future housing demands.  

In addition to Pelican area county commissioner Wayne Johnson, there were two commissioners that do not even represent the Pelican-West Otter Tail area. County auditor Wayne Stein was even on hand. Well known as something of a work-aholic at the county government center, Stein made a somewhat rare appearance outside of the Fergus Falls county seat.  He was in Pelican Rapids to outline the tax consequences of abatement.  

Stein said abatements are intended to encourage development.  Present property owners are not impacted by the abatement itself, as the increased levy is applied to the developer. Other factors, such as county or city increase in the levy, or increased taxable value of individual properties, might affect taxes –the abatement itself does not increase residential or commercial real estate taxes.

The total abatement, combining city and county share, will be about $35,500 per year. 

Also in the audience, Otter Tail Economic Development officials Nick Leonard and Amy Baldwin.

The county voted unanimously to abate nearly $195,000 spread across 10 to 15 years. The Pelican Rapids School board, however, declined to approve its smaller share of the proposed abatement when it deadlocked with a 3-3 tie vote. The school’s share would have been less than $100,000.

County Commissioner Lee Rogness, even though he represents a district in the Fergus Falls area, attended the meeting to voice his support.  While abatement does not generate “new” tax revenue until the tax break expires, it has a nuetral affect on present taxes to property owners.  But, said Rogness, within 13 years or less, the added tax value of a 36 unit complex becomes a “gift” of increased tax revenues.  

“What a gift to the people who sit in your chairs in the future,” said Rogness to the council. 

Worker, housing shortage expected to amplify in Otter Tail County

Otter Tail County will need at least 1,500 workers within the next decade in to order to simply maintain its present workforce, said Amy Baldwin. With the decline due to aging and retiring workers, units of government need to “work together to address needs,” said Baldwin.

Through attrition and retirement, the county’s long range strategic planning has placed housing as one of its most crucial priorities. Commissioner Johnson said projections indicate 5,000 units will be needed countywide, in the coming years. 

“Pelican needs this in order to be viable,” said Johnson, who “implored” the council to approve the abatement “for the good of the entire area.”  He further described the need for housing as “desperate.”

The final vote by the council was 4-1, with Councilman Curt Markgraf opposed. Prior to his vote, Markgraf echoed concerns of several of the residents attending the hearing: Developers need to be held to maintenance and upkeep standards, to prevent deterioration and poor condition that are a potential with multi-unit residential rental complexes.  

“The building will look beautiful on day one…but what about 13 years from now?” said Markgraf.  

Concerns over condition of other apartments raised during hearing 

Several spoke in opposition to the Colony Apartment proposal, based on the steady decline in condition and appearance of other apartments in the community–such as the old Creamery and the Mill Pond View high rise.  Markgraf suggested that the council needs to consider doing the “homework” on developers to investigate their track record in other communities. 

Councilman Steve Strand said that the issue “sounds complicated, but it really isn’t.”  He emphasized that the project will be built on city land, which is not generating any tax revenue.  But after the abatement, it will bring new dollars to city coffers. 

It was also a fairly simple matter to councilman Steve Foster, who said that there are jobs in Pelican–and providing housing will accommodate those needed workers.  The West Central Turkeys plant is actually running a bus from Fargo to fill shifts, said Foster.  Some of those workers would consider moving to Pelican. “This is an opportunity, and we need to do it,” said Foster.

Hearing generated wide range of testimony on controversial apartment development

The public hearing on tax abatement for the proposed apartment complex nearly filled the Pelican Rapids City Hall Chambers August 27. 

Following is a representative sampling of the commentary, from both those in favor and opposed of the incentives offered to the apartment developer.   

“This is not a community asset,” said Jamie Stromberg, a former Pelican planning commission member who has closely followed the Colony Apartments project since his term expired.  Stating he was not in favor of the tax break for the complex, Stromberg believes the city’s best  strategy to increase housing inventory should focus on single family homes and transitional housing for retirement-aged residents. “We need to pump the brakes and ask some questions,” said Stromberg. 

Pelican resident Judy Tabbut, who has been active with the Pelican Chamber of Commerce retail sub-committee, encouraged the council to “move foward” with the tax abatement for the apartment development. 

Current Pelican planning commission member Ben Sytsma expressed concerns that there was a lack of openness and transparency in the council’s approach to the apartment development. He questioned whether the project proceeded through proper channels, including the planning commission, since it was first proposed in 2016.  

As one of the larger employers in the  Erhard-Pelican Rapids area, Dave Ripley of the Ripley Inc. contracting firm, stressed the need for more housing.  Employers throughout the area are suffering from a shortage of workers.  “We don’t have the housing to take care of them,” said Ripley, who also serves on the Otter Tail County Development Commission. 

Resident Lee Livdahl said he is concerned about existing apartments and rental houses that are old and “rundown….I don’t want to see that happen with these apartments.” Further, said Livdahl, he questioned the entire development area in northwest Pelican because of its proximity to the wastewater treatment lagoons. The periodic odors could be a detriment to future development of residential lots, he noted.  

Expressing concerns over ongoing maintenance of the complex, such as overflowing toilets; as well as traffic concerns, Judy DeWald said she was opposed to adding another apartment complex.  

Stressing the need for higher quality rental options, Gerri Langseth said she favored the Colony Apartment complex for various reasons. She urged the council to consider what Pelican should look like beyond year 2020. The proposed complex offered handicapped accessibility, as well as a pedestrian friendly setting, that would give retired and elderly residents an opportunity to “downsize” from larger homes into low-maintenance apartment units. 

The rent-subsidized high rise apartments complex in Pelican has been pointed to as a concern over adding more rentals. The Mill Pond Apartments, managed by a Twin Cities firm, have been the source of a high number of police calls and a frequent turnover in renters.  Renee Stromberg raised those concerns, noting that for most of her years in Pelican, “you could go to the Twin Cities for a weekend and not even lock your doors…I don’t think we need more apartment buildings,” she said. 

Several home owners in the area of the proposed development expressed concerns over traffic, maintenance and unsightliness, because of their proximity.

Former planning commission member John Ohman supported the project, despite some of the concerns voiced over city openness and transparency.  “Those issues can be fixed…But if we don’t go ahead with this, we’re right back to where we were three years ago,” said Ohman, noting that the 60 acre parcel of undeveloped city land, which is targeted for residential development, has been stalled–and the apartment complex could help accelerate the development of single family home construction. Addressing concerns about ongoing maintenance and management of the apartment complex, Ohman believed those concerns could be addressed by enforcement conditions attached to the abatement.

Pelican Rapids teacher and member of the city park board, Kate Martinez, said she favored the project. She pointed to at least two instances where potential residents, including children who would have helped boost Pelican school enrollment, relocated out of Pelican because of the lack of quality rental housing.  

Pelican planning commission member John Waller III said he favored the project because it would finance the extension of sewer-water to the undeveloped area of about 60 acres of city-owned land, and open up potential for single family home development.