by CHRIS ROGERS
Last week, the city of Winona’s Port Authority tentatively agreed to sell a piece of city-owned land on the downtown riverfront to a Fastenal subsidiary for a fraction of its assessed value.
Fastenal announced last month that it plans to construct a 400-600-employee office building on the downtown riverfront in order to accommodate its rapidly growing staff in Winona. City leaders heralded the announcement as one of the most significant investments in downtown Winona in modern history. “To me, it’s just so great that a Winona company is willing to continue investing in the community,” Winona businessman Jerry Papenfuss said, noting Fastenal could expand elsewhere. “Anytime you can put 400-600 people in the downtown area with good jobs, I think what’s going to follow that is more retail, more jobs, and more restaurants,” Mayor Mark Peterson stated.
The site of the proposed office building is just east of the Winona bridge and just west of the Rivers Edge condominiums. So far, a Fastenal subsidiary called Rock, LLC, has spent $3.3 million buying eight properties at the site. The proposed site also includes a city alley and a small strip of city-owned land, which Fastenal still needs to acquire.
Last week, the city’s Port Authority Commission tentatively approved a deal to sell a small strip of city-owned land behind 224 West Second Street to Rock, LLC, for $2,000. The strip is a remnant piece of property left over from the city’s development of the area — then called Riverfront Industrial Park — in the 1990s. The piece is known as Outlot H, and it measures just 2,970 square feet. Rock, LLC, offered the city $2,000 for it, or roughly 67 cents per square foot.
That price is higher than what the city received from Mn/DOT for small pieces of city-owned land underneath and near the bridge, which Mn/DOT needed for the Winona bridge project. Mn/DOT paid the city 55 cents and 59 cents per square foot, respectively, for two similar parcels in 2013, according Winona Economic Director Lucy McMartin. However, the Winona County Assessor’s Office estimates the Outlot H’s value at $14,200 — seven times more than the price the Port Authority Commission tentatively approved. The assessor’s office is charged with estimating property values for tax purposes. Local governments and nonprofits usually do not pay taxes, but the assessor still gauges their property values.
Rock, LLC, paid above-market prices for neighboring properties. The largest piece — the former Tri-Mac lumber property — sold for around $16 per square foot, according to Winona County Assessor Steve Hacken. Hacken’s office estimated another pair of parcels as having a combined value of $119,600; Rock, LLC, paid $400,000 for it. The assessor valued still another parcel at $298,300. A private appraiser figured it was worth $363,500. Rock, LLC, paid $1 million for it.
“I think whenever the Port Authority is involved in a project, we take a look at the valuation, but we also take a look at the public benefit and the economic impact a project can have on the community,” McMartin said. After all, the Port Authority’s job is to promote economic development. “A lot of people don’t really know what we do, but you see our work,” Port Authority Commission President Mike Cichanowski explained. “We help development when development happens, we clean up polluted sites, we bring public and private resources together, we support projects that create good-paying jobs, and find ways for businesses to expand and invest in Winona.” Cichanowski spoke during a press conference announcing Fastenal’s expansion, adding, “Today is a great day for Winona.”
Fastenal’s new office building is going to benefit Winona’s economy and the city’s tax base, McMartin stated. Some cities donate land to projects like that, she pointed out. “We typically like to receive what the land is worth for a project, but we are open to discussions about that if there’s a great economic impact from a project. This isn’t that case,” she said. Fastenal is not getting a discount, although its project likely will have great economic benefits, McMartin explained. She said the proposed sale price is on par with or even greater than what the land is worth. Outlot H is currently unused by the city and too small to be developed, McMartin noted. “It’s a relatively small parcel in the middle of a number of other parcels. It’s in a very awkward location without access,” she said.
Look at all the land in Riverbend Industrial Park and J.T. Schain Industrial Park that the Port Authority sold for development over the years, McMartin continued. “Some might say, ‘Well maybe you could ask more,’ but we take a look at the public benefit and weigh that out as well.”
“In terms of the overall project, if this is a cornerstone of the overall project and makes it easier to get it done, then I think we should definitely consider that,” Al Thurley said of the proposed sale price. Thurley is one of two elected City Council members who serves on the Port Authority Commission.
The Port Authority Commission voted 6-0 to approve the tentative deal last week. Port Authority Commission member and Fastenal executive Dana Johnson abstained. City staff are expected to bring a purchase agreement back to the Port Authority Commission for final approval later this summer. The appointed Port Authority Commission can sell certain city-owned property without City Council approval.
On Monday, the City Council will hold public hearings on vacating a city alley for the proposed Fastenal office building and vacating another alley for a development proposed by Fastenal founder Bob Kierlin’s Main Square Development at the Hardee’s block. It is typical for the city to vacate alleys to allow development. That hearing is at 6:30 p.m. in the council chambers on the third floor of city hall.