by April Scheinoha
The Thief River Falls City Council has approved selling the Municipal Service Center property to Digi-Key to aid in its expansion plans. The council unanimously approved selling the property for $1,368,000 to Digi-Key. The sale was approved at a special council meeting Tuesday, May 30.
As part of the agreement, the city will pay the actual cost of asbestos removal in an amount not to exceed $100,000. The sale is expected to close on or before June 20.
Prior to accepting an offer from Digi-Key, the city had obtained an appraisal at its own cost. The appraisal came back at the above amount. The sale was approved after the council met in closed session for about 15 minutes before reconvening in public.
Digi-Key is planning to build a one-million square foot fulfillment, valued-added manufacturing and warehouse center on the site of its current western parking lot. A skywalk would connect the new building to the current facility. Located southwest of Digi-Key, the city property would become the company’s new western parking lot.
Digi-Key would like the Electric Department to move by July 31 in order to facilitate the start of construction in spring 2018. Mayor Brian Holmer noted that construction is expected to take three years.
Digi-Key’s project is estimated to add an additional 1,000-plus jobs over 10 years at Digi-Key. The building, technology and equipment are expected to be an investment of $300 million in Thief River Falls, according to information provided by the city.
The sale comes on the heels of the Minnesota Legislature approving several incentives for Digi-Key to expand here. Those incentives for Digi-Key included $4 million in tax incentives per year for 10 years, and $4 million through the state’s Investment Fund. Holmer noted that the city will receive $1.6 million for city infrastructure as well as an increase in Local Government Aid.
Holmer said the governor signed all of the bills related to the expansion plan with the exception of the tax bill. However, the tax bill is becoming law without Gov. Mark Dayton’s signature. (Later that evening, it was announced that Dayton had signed the tax bill after being advised by legal representatives to do so.) Holmer’s announcement was met with applause in council chambers.
Dave Doherty, Digi-Key president and chief operating officer, and Rick Trontvet, Digi-Key’s vice president of administration and human resources, attended the special council meeting.
“We’re just ecstatic to hear the preliminary news,” said Trontvet, who noted Digi-Key needed to confirm some items before making a formal public statement.
Trontvet thanked all of those involved. He said the level of support provided by the city, Pennington County and the state of Minnesota were nothing short of wonderful. He further acknowledged that Digi-Key appreciates the city’s efforts in helping the company secure the parcel on its available timeline.
The city has already approved a Tax Increment Financing district for the project. Digi-Key and its consultant are currently reviewing the development agreement for the TIF district. The annual tax increment is estimated to be up to $1,112,926 for the Digi-Key project. Tax increment can be used for land acquisition, site improvements/preparation, utilities, and other qualifying improvements. The nine-year TIF plan has an estimated budget of $9,793,859, which includes administrative costs and interest.
It is estimated that the property will have a market value of $36,689,615 after the improvements are made. It currently has a market value of $6,521,915.
It has been four months since city officials learned of Digi-Key’s expansion plans. Saying it felt longer than four months, Holmer thanked city staff, the council subcommittee and the council for their assistance in this partnership with Digi-Key.
Electric Department equipment, offices
The sale of the property means that the city’s Electric Department will be without a home. After approving the sale of the Municipal Service Center property, council members approved leasing a 17,000-square-foot building owned by Darin Robson. The city plans to store some of its Electric Department equipment there until it constructs a permanent home for the Electric Department.
As part of the lease, the city will rent the building for $5.00 per square foot for two years. The lease also contains an option for a third year at $5.50 per square foot. Robson’s building is located west of Thief River Falls and south of the Hefty Seed Company. The Robson property is adjacent to the city limits, so the city Electric Department will be paying Red Lake Electric for electricity.
“We have pretty much looked everywhere within a one-mile radius of the city of Thief River,” said Electric Superintendent Dale Narlock, who noted the Robson property was deemed the only viable option.
Holmer said the Electric Department offices will be located at the former HDR Engineering building. That city-owned building is located next to the Thief River Falls Fire Hall. Earlier, the city had contacted Pennington County about possibly renting City Auditorium for that purpose.
At an earlier meeting, the council also approved leasing property owned by Clayton Thompson and Verna Thompson for $750 per month from now until March 31, 2018. Equipment will be stored at that property, which is located along 140th Avenue Northeast.
It is expected that additional Electric Department equipment will be stored at the former ITS Auto building, which the city already owns.