The city of Mitchell acquired an old Main Street building Monday after the Mitchell City Council approved a settlement agreement with the property owners of The Crafty Fox building, intending to resolve the building’s ongoing nuisance conditions.
The council’s approval of the agreement was unanimous, which calls for the city to purchase the 223 N. Main St. building for $1 from owners Janice and Ronald Christensen, clearing them of all encumbrances. The decision was made Monday during a special meeting at City Hall, prior to budget planning discussions.
“We’ve had an order to correct issued on this property for a while now, and the property owners haven’t been able to afford the remediation costs,” City Attorney Justin Johnson said.
Johnson said tuck-pointing and replacing windows make up the majority of the 111-year-old building’s nuisance conditions that the city would need to address. According to Johnson, the window replacements would round out to a total cost of roughly $150,000. Upon the nuisance conditions being addressed, Johnson said the city could resell the property to cover its costs and help redevelop the four-story brick building.
“From that point, we would be able to deal with the property as we see fit. And the theory would be that we recover our costs through an eventual sale of it,” Johnson said.
Johnson said the property would be transferred to the city on Oct. 15. Under the agreement, the Christensens and their LLC would still remain responsible for utilities, taxes and other liabilities until then, and would owe the city $7,125.99 for the accruing property tax and Business Improvement District tax up until Oct. 15.
While the agreement calls for the property to be vacated at the time of transfer on Oct. 15, Johnson said the business has the option to continue leasing the space at 223 N. Main St., which would ultimately be decided by the City Council at a later date. In addition, the Christensens are also allowed to resell the building before the Oct. 15 transfer, in which the city would have to sign off on.
“It’s still up in the air as to what they’re going to do (Christensens), but if they wanted to continue leasing to stay there for a further period of time it would take further action by the council,” Johnson said. “And if an excellent redevelopment opportunity presents itself over the next few months, we can still explore that.”
The decision comes several months after the council struck down a similar agreement by a 4-3 with the property owner of a corroding Third Avenue and Main Street building in March, which called for the city to purchase the 301 N. Main St. property for $1. That building, owned by David Finnell, has a gaping hole in the side and has resulted in a nearby street closure for two years. Council President Kevin McCardle made up one of the four opposing votes at that March meeting, and said then he wanted to set a precedent to hold Main Street property owners accountable for maintaining their buildings.
However, a key difference between the two properties centers around the structural integrity and cosmetic repairs necessary in order to maintain the buildings. During Monday’s meeting, McCardle asked Johnson about the status of the building's structural integrity.
“Our city staff that has looked at it doesn’t have any immediate concerns about the structural integrity of the building, rather it’s more cosmetic concerns,” Johnson said, regarding The Crafty Fox building’s structure.
Because the building is classified as a historic building, Council member Jeff Smith asked whether the city has contacted the South Dakota State Historical Society. Smith also emphasized the differences in the two properties, noting it as a major reason for his decision to approve the 223 N. Main St. settlement agreement.
“I do know one thing, I’ve heard several people tell me 301 N. Main St. building is not worth salvaging. But this is a good looking building, and it just needs some more care,” Smith said. “I don’t know if any private individual is going to step forward and take the next step, and I feel this is an investment to be able to utilize the building and get someone in there so it’s usable.”
In response, Johnson said the city would need to begin the process of working in conjunction with the State Historical Society.
City refinances sales tax bonds
The council approved a resolution of the refinancing of sales tax bonds that were issued in 2012, which will give an expected savings to the city in the amount of the interest paid on those bonds, resulting in a savings of $445,000. The refunding bonds principal amount is not to exceed $9.8 million.
City Administrator Stephanie Ellwein said the refinancing was made possible through the city’s upgraded bond rating from Standard and Poor’s from A+ to AA- in 2019.
“We see an urgency to get this done soon so we can lock in that lower interest rate, and there is a public notice required,” Ellwein said, noting the resolution starts the public notice process.
In addition, the bonds issued from the city’s purchase of the Kelley wetlands in January helped upgrade the bond rating, which resulted in roughly $300,000 in savings, Ellwein said.
“It’s financially feasible to refinance those now, because of the changes in the city’s bond rating,” Ellwein said. “That gave us access to better interest rates as well.”