A committee made up of two Wadena City Council members, interim city administrator and economic development director will once again discuss proposed tax abatement for the new Tri-County Health Care clinic after the council failed to pass a recommendation coming from the committee Tuesday, Oct. 12.
The discussion at times became heated between the council and Tri-County Health Care President and CEO Joel Beiswenger as both parties noted that the other has been difficult to work with during the process of this new development.
Tri-County Health Care presented their request for tax abatement on Aug. 31, 2021, which was 15 years at 100% tax abatement from the time the property began to be taxed, likely 2024. That’s an estimated savings of about $1.5 million for them.
This request was shared publicly during a public hearing, at the Maslowski Wellness and Research Center. Hearing this plan, the majority of those speaking up and giving responses agreed that if the tax impact would be no different than it is now, they would not oppose that abatement. The consensus seemed that the public did not want to see their taxes increased by this abatement, instead they wanted to negotiate a lesser abatement.
Beiswenger was agreeable to such an idea and TCHC staff prepared a tax abatement plan which reflected TCHC paying the same amount of taxes as they do now, plus offers paying the expected loss of $2,500 in LGA funds over the length of the abatement, plus pays an addition 2.5% each year for inflation.
What the abatement committee came up with was an abatement lasting two years, with 100% abatement for one year (2024) and 50% for the second year (2025). It was an abatement of about $150,000. This recommendation came from a committee made up of city councilmen Bruce Uselman and Jessie Gibbs, interim city administrator David Evans and Economic Development director Dean Uselman. Neither Bruce Uselman or Gibbs attended the public hearing.
This recommendation was not taken well by Tri-County Health Care representatives including Beiswenger, board member Jolene Johannes and Dr. Steve Davis, who addressed the council during their meeting Tuesday.
“What is the basis for the committee's decision,” Beiswenger asked repeatedly.
Councilman B. Uselman said that the committee met for two hours and “went round and round” on the topic. He felt that even the two-year abatement was generous of the city.
"As a committee we said what’s the simplest dollar amount, and this is what we came up with. It was painful to reach that level."
- Bruce Uselman, Wadena City Council
Gibbs also spoke of the meeting and said in his research, he could find no medical facility in Minnesota that has been given a tax abatement.
Beiswenger’s response was that just because it had never been done, doesn’t mean it shouldn’t be considered.
For councilman Uselman the idea of giving a tax break to the hospital was not one he wanted to entertain as he said he knew widows and seniors struggling to keep their homes in the community. He felt that any extra tax on these community members was more than they could bear.
“I struggled to reach this point,” Uselman said, indicating that even the reduced abatement was concerning.
Beiswenger expressed concern about not being able to be a part of the committee discussions in order to be able to answer questions or address assumptions. Council members and Evans repeatedly noted that their decision making process does not involve negotiations with the applicant, to which Beiswenger kept asking, “Why not? Can we find a win-win?”
Beiswenger was surprised at the level of opposition to the abatement that council members said they were hearing considering there were just a handful of people opposed at the public hearing. Mayor George Deiss noted he received three dozen calls, a dozen emails and others addressed him in person about the topic. Beiswenger felt that had people brought the concerns at the public hearing he could have at least addressed them and answered questions.
“It’s very unfortunate and I would say very unfair for those folks who are expressing their opinion privately to you, even though it’s their right to do so …,” Beiswenger said. “Whatever issues were brought up I did not have an opportunity to address an alternate view of that.”
Jolene Johannes attended the meeting and suggested that the council is probably only going to hear from the negative folks not the positive ones.
B. Uselman asked if the hospital representatives were disappointed in the abatement recommendation. All were.
“Very disappointing,” Dr. Steve Davis said. “We’re not asking for no taxes, we’re asking to pay the same amount of taxes for the next 15 years.”
Davis called TCHC’s proposal a win-win situation. The hospital does not get taxed to the full extent for 15 years while they try to grow their staffing and offerings and the taxpayers do not get taxed extra, either, he said.
When Mayor Deiss spoke up he pointed out that taxes will still increase because of the hospital moving into Otter Tail County.
“Wadena County is raising their taxes. So if you live in the city of Wadena and you live in Wadena County, your taxes are going to go up to make up the difference of what Wadena County is losing,” Deiss said.
To that Beiswenger again said that Wadena County had the opportunity to have the hospital within its territory but the offer for the Wadena County Fairgrounds property was a cost far beyond what they were willing to pay.
Beiswenger again asked the council to entertain his modified abatement request that showed the hospital paying the same amount of taxes, plus covering the cost of LGA funds, plus a 2.5% increase for inflation. Showing frustration, he added that while the council supported TCHC’s TIF (tax increment financing) application, it appeared that they did not support an abatement. He said the two were similar saving opportunities for the clinic.
Councilman Gibbs was offended that Beiswenger felt the city was not supportive. He felt the city has been very supportive of the project. He added that the council could not easily prove job growth at the hospital, which is a major part of the reason behind an abatement as it’s considered an economic development driver.
Beiswenger responded that they can show that growth and are willing to do so as he was confident it would happen. So confident, he was willing to come to an agreement, which would put some risk on TCHC if they did not see the growth, even paying back the abated taxes.
“If there is a solution that ties to us proving our position or FTE growth, that’s reasonable,” Beiswenger said. “We’re willing to share in that risk if there is shared gain.”
Councilman Uselman spoke to the same topic and said that it would be too difficult to track job growth.
“As a committee we said 'what’s the simplest dollar amount,' and this is what we came up with,” Uselman said. “It was painful to reach that level.”
Beiswenger addressed that concern saying that they could simply offer up their current full-time equivalent numbers and report their growth or lack of growth moving forward. If they failed to grow, the risk was on TCHC.
Councilman Wade Miller looked to Economic Development director Dean Uselman to see if there were grants available that may help create some dollars for the project that may offset these tax dollars. Uselman was looking but did not have answers at that time. Beiswenger agreed that would be helpful.
Throughout the discussion Beiswenger pushed that the council be willing to work on this further and include TCHC in the conversation.
Councilman Uselman made a motion to accept the committee’s recommended abatement. His motion died for a lack of a second.
Yes 9% Only partial abatement 5% No abatement 87%
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Only partial abatement
Councilmen Gibbs and Mark Lunde expressed a desire to have this go back to the committee to see if there is a proposal more amicable to both parties. Councilman Uselman stated he did not care to take the discussion back to the committee and he even asked if any other council member would want to serve on the committee. No one volunteered.
“We’ve done our due diligence,” Uselman said.
Gibbs suggested he would be willing to look at it again but said he would make no promises and was not a proponent for abatement. Deiss said if they do look at it further there is no promise that they would change their mind, they may even recommend no abatement.
Beiswenger said he would provide whatever information he could to the committee if they could tell him what they needed.
Deiss said that a lot has changed for the city since these talks began.
“Our reserves are down, our audit showed it,” Deiss said. He said the city needs to find ways to reduce their budget. Or they too will have to increase taxes, putting further burden on city residents.
One area the council did clear up was that abatement could only be 10 years compared to 15 years, according to city code. That, under the proposed abatement would be a decrease from $1.5 million to $750,000.
While it was unclear if B. Uselman would end up serving on the committee or when the committee would meet again, they are tasked to meet again and look over new information to again bring a recommendation forward. Deiss suggested it could be months before it’s brought to the council again.