A proposal that calls for the City of Chadron to bear the majority of costs for a water line loop to encourage development of property on the west edge of town met with resistance Monday from council members.
A subdivision improvement agreement with Fuller Construction was tabled after a lengthy discussion about whether or not 70 percent of the water line loop costs, which amounts to $222,250, is too much for the city to pay. Council members George Klein and Cheryl Welch both spoke out against the plan, while Vice Mayor Keith Crofutt suggested waiting two weeks to take action in order to allow everyone to learn more about the project and consider the information.
“I wonder if we aren’t setting a terrible precedent (picking up 70 percent),” Klein said early in the discussion.
“I agree,” Welch commented. “That’s a lot more money to ask the citizens to pay.”
In a metropolitan area, it’s true that developers would traditionally pay for 100 percent of the costs of improvements, City Manager Greg Yanker said. However, because of Chadron’s locations public-private partnerships are necessary.
“We don’t have those same opportunities,” he said. “We don’t have developers knocking on our door.”
Fuller Construction is purchasing all of the property known as the “industrial park” from Northwest Nebraska Development Corporation, with plans to construct its company headquarters on one of the lots and eventually develop the rest by bringing additional businesses to the location. Fuller Construction plans to build its office on Lot 4 of the park, which already has water access, said Eric Fuller. The agreement to finish a water main loop and provide water to the remaining lots isn’t necessary to move forward with his own construction, but it will help market the rest of the property for development.
Legally, the city must pay for at least 28 percent of the water line loop construction because it owns adjoining land. Yanker recommended the city pay an additional 42 percent of the costs to encourage development on the property, which NNDC has owned for decades and been unable to market.
NNDC Director Deb Cottier said she believes NNDC has owned the property for more than 30 years and been unable to attract investors, in large part due to its lack of utilities. She urged the council to move forward with the project, noting that the overall scale of the improvements at the location is much larger than the water line loop, and the city is being asked to pay a percentage of one small piece of that larger plan.
To date, Fuller Construction has already spent roughly $270,000 making improvements in the area, and the company and the Nebraska Department of Transportation have agreed to pay for extending Stockade Road, said attorney Randy Cullers, who represented NNDC and Fuller Construction before the council. The city will own the water line loop and the street at the end of the project.
“It’s a good partnership,” Cullers said.
The land is currently being leased for farming, is valued as agricultural land and generates roughly $50 in property taxes. This the best chance to see it developed for other purposes, Cottier said, and as soon as any development happens, its valuation will increase. This is the “nuts and bolts” of economic development, she added, noting that along with increased valuation, additional businesses will translate into more salaries, sales tax, economic impact from construction and more.
“This is a precedent I would be pleased to set,” Cottier said.
If the city delays the project by a decade, the cost of completing the water line loop would increase by an estimated $48,000 or more, Yanker said. And bonding it would add an additional $112,000 in interest. He recommended the city pay for it outright using infrastructure improvement and capital project reserve funds.
City employee Lori Storbeck spoke out against the plan, saying that while it’s a good project to pursue, now is not the time to do so because budget cuts this fiscal year meant city employees did not receive raises.
Mayor Miles Bannan and Councilman Mark Werner both expressed support for the project.
“It’s a bet on Chadron’s future with a hometown team,” Werner said.