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Fergus Falls seeks campus tax breaks

ST. PAUL - Fergus Falls officials say tax cuts could be the answer to what to do with the sprawling and nearly empty Regional Treatment Center campus.

Mayor Russell Anderson and other city leaders appeared in front of the Minnesota Senate Taxes Committee Tuesday asking that people who live on the campus or open businesses there would not have to pay individual income taxes, corporate franchise taxes or property taxes for 15 years.

The city estimates that three new businesses and five to 10 families will move into the facility annually if the state approves tax breaks.

The Senate Taxes Committee made no decision about the proposal, but Chairman Tom Bakk, DFL-Cook, promised to consider it before the state begins demolishing the complex.

Sen. Mee Moua, DFL-St. Paul, said the campus - particularly the centerpiece Kirkbride Building. - is beautiful, but she wondered if the Fergus Falls request was premature.

However, Harold Stanislawski of the city's Economic Improvement Commission said the state needs to approve tax breaks before a developer would take on the project.

City leaders envision turning all or part of the 111-year-old, 740,000-square-foot Kirkbride facility into condominiums and businesses.

The treatment center was constructed for mentally ill patients, but care philosophy changed and most no longer are hospitalized. The state only uses part of the building, and some has been vacant for half a century.

State officials had decided to tear down the facility, at a cost estimated a few years ago at nearly $10 million.

City officials now are telling state leaders that they can save the $10 million demolition costs by giving new tenants tax breaks - and eventually bring in taxes to support state government.

Sen. Dan Skogen, DFL-Hewitt, called the proposal an "opportunity for tax development."

"It would take the burden from the state of Minnesota," Anderson added.

Stanislawski said no one knows how much of the building could be used. But he and other Fergus Falls officials asked the state to set aside some money to tear down the part of the building not eventually used.

Fergus Falls publisher Rick Anderson said his city's proposal is patterned after one successfully used in Michigan. He said he especially hopes that a tax-free facility would attract North Dakota businesses because many Fergus Falls residents travel to Fargo to buy goods.

Sen. Warren Limmer, R-Maple Grove, doubted how successful the campus could be given the fact that the town's mall is 60 percent empty.

Stanislawski responded that the campus, on the north end of town, would not be a retail center. Instead, he anticipates it would be used by bioscience and other non-retail businesses.

Sen. Keith Langseth, DFL-Glyndon, said the lakes area around Fergus Falls is rapidly growing and such a project makes sense.

"Businesses are locating where they want to live," he said.

Sen. Rod Skoe, DFL-Clearbrook, promised city officials that he will work with Bakk and others in coming days to try to fit a Fergus Falls plan into the Taxes Committee bill this year.

Don Davis
Don Davis has been the Forum Communications Minnesota Capitol Bureau chief since 2001, covering state government and politics for two dozen newspapers in the state. Don also blogs at Capital Chatter on Areavoices.