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State nixes fleet store tax increment finance

The proposal for a new fleet store in Perham won't be receiving incentives through Tax Increment Financing. The request was officially rescinded at the Oct. 8 council meeting, because the size of the building exceeded state statute. It is uncerta...

The proposal for a new fleet store in Perham won't be receiving incentives through Tax Increment Financing.

The request was officially rescinded at the Oct. 8 council meeting, because the size of the building exceeded state statute.

It is uncertain what impact this will have on the proposal to build a 28,000 square foot fleet hardware and farm supply store. Developer and owner Mark Tomsche is exploring other ways to proceed with the project.

Only minutes before the Sept. 27 public hearing, the city finance consultant pointed out that, under state rules, no commercial retail building larger than 15,000 square feet can qualify for Tax Increment Financing in an economic development zone. This restriction was placed by the legislature, evidently to limit access to TIF by "mega-retailers."

In a "redevelopment zone," which was the case with Dean's Country Market, developers can obtain TIF. A "redevelopment" zone is one where there was existing structure and development to demolish or reconstruct, whereas a "development" zone is on strictly undeveloped land. In the case of the northerly portion of the Happel Addition, which includes the Dean's grocery store, there was a former turkey operation, and associated structures and outbuildings, that had to be torn down and removed.

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TIF and an economic development loan were requested from the city for the fleet project. The Perham Economic Development Authority approved a $150,000 low interest loan for the project.

The fleet project was estimated at $2.8 million total, with construction estimated at $1.36 million. If it had qualified for TIF, the fleet would have received at least $30,000 annually in tax reduction. Developer Tomsche anticipated employing 20 people, most of them full-time.

The fleet project has been a concern for Jim Bretz and Bette Pitzel, of the nearly 50-year-old Bretz Hardware store, which would face competition from the fleet store. At the Sept. 27 council meeting, they expressed concern about downtown Perham declining as business moves to the highway. They further questioned the city providing incentives to a new business which would compete with established businesses.

Perham Mayor Kevin Keil, at the Sept. 27 meeting, noted that the downtown business district actually did benefit from TIF and other public monies during the Main Street renovation and current 2nd Street Improvement projects.

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