The Blue Earth City Council in their chambers.

The proposal for an ambitious renovation of Blue Earth’s Three Sisters buildings continued to dominate discussion at the last Blue Earth City Council meeting.

The council spent their half hour work session and part of their regular meeting last Monday evening going over the proposal from a company called Connect the Grey.

While there seemed to be some consensus of merit of the overall project proposal by council members, the amount of city financial backing was debated at length.

Connect the Grey founder and CEO Janie Hanson was not at the work session, but was in attendance at the regular council meeting.

The company had been asking for $750,000 in city and community support for the $2.5 million project, with $750,000 also matched by the project sponsors. The remaining $1 million would also have to be raised from some other sources.

The city had originally offered $150,000 in grant money and $200,000 in a low interest loan.

At last Monday’s meeting, city administrator Tim Ibisch and Mayor Rick Scholtes said they had planned to reveal a proposal that would have the city form a Tax Increment Financing (TIF) District in order to raise whatever amount of funding the city would be putting into the project.

“However, we received a letter from Janie Hanson today which indicated her company would form a 501(c)(3) non-profit corporation to own the buildings,” Ibisch said. “That may not work with our plan to form a TIF District.”

The reason, Ibisch explained, was that the money raised by forming a TIF is paid back over a number of years by capturing the property taxes on the development, and a non-profit corporation would not be paying property taxes.

That fact was discussed at length, with some confusion as to whether there would, or would not, be property taxes paid on the buildings.

In the end the council agreed to have city staff continue to work with Hanson on the issue to come to some consensus about the property tax issue.

The council also spent some time discussing some of Connect the Grey’s current requests, which totaled $250,000 in expense to the city.

The funding requests included a $150,000 grant to begin with, $30,000 to do asbestos removal from the buildings, $40,000 to begin demolition work inside the buildings and forgiving the $30,000 in assessments on the properties for last year’s Main Street reconstruction project.

In the end the council voted unanimously to spend the $30,000 for the asbestos removal, but to postpone any decision on the others until the next meeting.

Some of the council members seemed to favor the proposal from Connect the Grey, while others expressed some concerns.

“I think this was a real clean deal with a TIF,” councilman Glenn Gaylord said. “We could have recouped our money and there would have been no problem. But if not, there is something that has been bugging me. Is it fair to the rest of the businesses in town if we give you the buildings for $1, then give you that much money to fix them up?”

A group of citizens at the meeting spoke in favor of the project, including Becki Steier and Shelly Greimann.

“This would make our downtown a destination for people to come here,” Steier said. “It’s silly not to think this is a great idea.”

Greimann agreed it would make a tremendous difference in the downtown area.

“We need this,” she said. “This is just what is needed in our rural communities.”

In other business at Monday’s meeting, the council:

Heard an update from Blue Earth Area Elementary and Middle School principal Melissa McGuire about joining the school and communities together in a new Buc Pride program that would promote a positive culture. The council agreed to join the program.

Completed their Board of Review and Equalization Hearing that had been postponed earlier.

Two requests to reduce property tax valuations were granted.

Accepted a low bid from Beemer Companies of Fairmont to demo the old municipal liquor store. The bid, one of four received, was for $15,998.

Reviewed the rules for golf carts driving in town and urged residents to go to City Hall to get their golf cart properly licensed.