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Questioning land purchase: Citizens raise concerns about sale to B&B Enterprise to BEDA

BEMIDJI – The nearest landowner to the property now slated for high-end townhomes said he isn’t opposed to development there, but questioned whether the city was getting enough cash for the land.

“Are we getting our money’s worth?” asked Don Heinonen, who owns three acres east of city-owned land now slated to be sold to B&B Enterprises.

Heinonen was one of two residents who addressed the Bemidji Economic Development Authority Monday evening during a public hearing on the proposal to sell 6.5 acres of city-owned land to B&B Enterprises, a limited liability corporation operated by local developers Brian Freeberg and Bob Whelan.

B&B Enterprises has accepted a counter-offer from the city to purchase the land east of the Sanford Center for $300,000 to develop 30 upscale townhomes. B&B Enterprises also has the right of first refusal for an adjoining 5 acres of land to the south, to be sold at no less than $100,000.

Heinonen questioned why the city would opt to leave any money on the table, referencing a city decision to pursue an agreement with B&B Enterprises over Blue Star, a Grand Forks, N.D., based development group that offered more money for the same property.

“We believe that we got a good value for that property,” said Mayor Rita Albrecht.

City councilors, acting as the BEDA, unanimously voted to approve the findings and move forward on the land sale to B&B Enterprises.

According to city officials, Blue Star’s offer was $507,198 for the 6.5-acre northern lot and $90,621 for a selection of the southern lot – it did not ask for the entire parcel – for a total of $597,819. Blue Star also was subtracting $140,000 to require the city to put in needed road and utilities.

Albrecht said Blue Star’s proposal was not as strong as the proposal from B&B Enterprises.

Also, whereas B&B Enterprises is planning 18-20 additional townhomes for the adjoining southern parcel, Blue Star proposed storage units, Albrecht noted.

“We think that the ultimate build-out of this development will increase the tax base in the long run more than the other proposal would have,” she said of B&B Enterprises’ plans.

John Chattin, city manager, said the city is achieving its goal of getting $10,000 per housing unit, but the number of units is lower than what the city first envisioned.

The city originally pictured four- to five-story condominiums, but that vision has been adjusted, much like the city’s early plans for mixed-use development west of the Sanford Center, Chattin said.

“The market for the last three years has dictated that we are looking at lots of different options that were not originally conceived when we looked at the south shore,” he said.

Still, he continued, the city is getting the $10,000 per unit it originally sought.

“The difference is we are building twin homes and four-plexes … instead of having several large multi-story-type buildings,” he said. “Therefore, the price is less than we anticipated.”

Councilor Jim Thompson said he believes the cost for the land is secondary to simply getting it sold and getting it on the city’s tax rolls.

“The price doesn’t mean a heck of a lot in the long run,” he said.

A second city resident, Tom Cooper, said he was concerned about the quality of the developer the city has chosen.

“I’m hoping that you will raise the bar on the architectural design of this … and raise the standards,” Cooper said.

City councilors noted this project, like all south shore developments, will need to go through the south shore design review committee for review and approval.

Thompson also encouraged Cooper to examine Freeberg’s Irving Oaks subdivision.

“This group has already been before the design review committee and there have been several comments made to them about their design and some changes required for the exterior design,” Albrecht said.

She said there is a prescript list of building materials and landscaping requirements developers will have to meet.

Chattin said the developers have indicated they may seek three variances for the project, including a 25-foot setback from the road instead of 30, having a sidewalk on one side of the street instead of two, and the use of a new, thicker type of vinyl siding.

“All those things will be discussed as the process moves forward,” said Councilor Nancy Erickson.