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Losing business

By Staff | Aug 7, 2016

Two businesses in downtown Winnebago are now closed, and the city’s Economic Development Authority met Wednesday to weigh its options for the departure of another.

Relaying a discussion with Winnebago City Council member and local businessman Scott Robertson, Mayor Jeremiah Schutt said that the Winnebago Grill and Bittersweet Mercantile, both located on Main Street, are soon to be “up for market.”

Mercantile, a floral and fabrics shop, and the Grill, one of the city’s few downtown restaurants outside of Cuquita’s Tex Mex, are not the only local businesses shutting their doors, though Schutt said Robertson “has a price in mind”? one that might keep the stores under local ownership.

That would differ from the other issue faced by the EDA Wednesday, which was considering a proposed right-of-first-refusal letter to release Zierke Built Manufacturing, which intends to relocate from Winnebago to Fairmont by the end of the year or the start of the next.

To allow Zierke, an international provider of custom fabricated products, to receive state funds as part of its planned expansion out of town, Winnebago is required to sign off on Zierke’s request to move.

In a July meeting, the City Council tabled a decision on the request until Aug. 8, suggesting it would further research the potential acquisition of ZBM’s properties upon the business’s relocation. That is exactly what it did, and the results spilled over into the EDA’s agenda on Wednesday.

“I?spoke with (city attorney)?David Frundt,”?said city administrator Chris Ziegler, “and our two options would be getting an option to buy the Zierke building at fair market value or have a right of first refusal, which would give the city an opportunity to match an offer within 30 days.”

Winnebago, Ziegler said, would likely target Zierke’s main building as property for a new public works facility, even though EDA member Brad Wolf suggested such a building might need additional work to accommodate those plans.

Above all, however, Ziegler made it clear that what Winnebago really wants is for the ZBM properties to be acquired and then managed in a way that will at least partially offset the fact that a noted business is leaving town altogether.

“If the city can’t buy it,”?he said, “we want it in private hands as soon as possible.”

Ziegler said that discussions with ZBM led to an initial asking price by Zierke of $490,000 for the company’s main building at 120 6th Ave. SE.

But Faribault County Development Corporation’s Tim Clawson, visiting Wednesday’s meeting, proposed that Winnebago have the property appraised before letting the ink dry on any agreement, whether it be an option to buy the building or a right-of-first-refusal deal.

“And if you’re really interested in buying,”?he said, “I?think it’d be beneficial to negotiate the price up front.”

Left in the same predicament as the City Council, the EDA pondered how to proceed in a way that does not impede Zierke’s business plans but also keeps the city’s well-being in mind.

“I don’t think anyone wants to be the one who’s holding them up,” said board member Scott Lehman. “I’d see what it’s worth, get it appraised and cross the bridge when you get that far.”

Ziegler shared those thoughts but cautioned that Winnebago has to be mindful of the burden that could be placed on city residents if the relocation request is ultimately granted.

“Taxpayers have basically been subsidizing their business with those state funds,”?he said, “and now that they want to move, they’re going to need more.”

That is why, Clawson responded, an appraisal could at least set a value on what Zierke properties have. From there, the city could theoretically move forward, accepting Zierke’s proposed move while ensuring it has a fair opportunity to regulate the building acquisition.

And if Zierke does not take well to such a plan, the EDA said it is at least worth a try.

“I?don’t think there’s a problem with getting some strings attached,”?said board member Melissa Engelby. “If they can’t agree, they can’t agree, but at least we tried.”

Clawson, who also updated the EDA?on Faribault County Development Corporation’s loan programs, reminded the board that the region could still benefit from Zierke’s business, even if it is not located in Winnebago.

“You hate to see a business move,”?he said, “but what’s good for Winnebago is good for Blue Earth, what’s good for Blue Earth is good for Fairmont and for Albert Lea … it’d be a little different if they were going to Iowa.”

And that, Mayor Schutt added, is one of the reasons the relocation request will likely be granted, one way or another.

“I?don’t think anyone on the council wasn’t going to sign off,”?he said. “We just wanted to discuss and check the stipulations.”