Questions Put To City Commission About 3rd Street Project

Local Attorney Joe Knopp told the Manhattan City Commission Tuesday night that he represented two property owners in
the proposed 3rd Street Development Area. Knopp asked the Commissioners to consider several questions. In his questions
and statements Knopp refers to two commercial developments by Wal-Mart. One on the west side of Manhattan was turned
down by this Commission and is now in court. The second is the land being cleared north of the Wal-Mart store on the east
side of Manhattan. He does not say "Wal-Mart" but that is the company and the areas he is referring to. Here are his remarks
to the Commission:

ISSUE #1

WHO SHOULD GET THIS VALUABLE POWER AND
WHY NO COMPETITIVE BIDS?

1. The Developer gets 250,000 square feet of Vacated Streets and Alleys.

a. If valued at $4 square foot. ($1 million dollars)

b. If valued at $10 square foot ($2.5 million dollars)

2. The Developer gets the right to acquire property through eminent domain proceedings.

Eminent domain seems "fair".

i. Taking property from an unwilling property owner is inherently unfair.

ii. How do the acquisition prices that have already been paid by the developer compare to current fair market appraisals?
Will the properties acquired by eminent domain receive the same premium?

3. Right to select the retailers to be included in the shopping district.

4. Right to pay for the cost of acquiring property from money otherwise that would go to taxes.... tax increment financing.

a. How much will be needed? Have you been given an educated guess based upon the company’s years of experience in
doing these projects in other parts of the
country?

b. Where are the plans?

5. Find relocation moneys from Economic Development funds.
 

ISSUE #2 -

WHAT IS THE EXPECTED LOSS OF TAX REVENUE?

1. Property has increased 28% since 1993. What is projected growth in tax revenue if no city TIF?

a. Ordinarily TIF in areas that have limited development potential... here is one of last areas for development in city.

b. The city will experience increased revenue even if no development. TIF freezes the city’s income and gives the increase to
the developer.

c. Why freeze one portion of the city’s income and thereby for the rest of us to pay more? Will the city freeze expenditures
during this time frame?

2. Shouldn’t there be some indication of cost before entering this contract?

a. Cost will be cost of acquisition.. . $10-15 million

b. Cost of relocation of businesses $??? million

c. Cost of parking facilities $??? million

d. Utility relocation $??? million

e. Traffic studies and cost of traffic control $??? million

It can be argued that all of these monetary issues are not "final" and subject to negotiation
at a later date. Yet the contract provides that , "Whenever consent of approval of any party is
required under this agreement, it shall not be unreasonably withheld or denied".

If we know today that the projected cost is unreasonable, then why go forward?

3. This will be the biggest direct city expenditure of city funds for a single project in our history.

a. Exceeds the Mall because much of that money came from the federal government

b. Exceeds the $8 million raised for Economic Development Funds.

c. Exceeds any capital expenditure by city... water plant, city hall, dog pound

EMBARKING ON THIS COURSE WITHOUT SOME DATA... OR AT LEAST NO
DATA BEING PROVIDED TO PUBLIC.... IS DANGEROUS.

ISSUE #3

WHY GIVE THIS DEVELOPER A BLANK CHECK?

City may argue that the contract imposes no obligations on the City since the contract can be voided at any time. Yet I
believe that you are mistaken if you are expecting the developer to expend thousands of dollars, then quietly go away if you
conclude that it should stop for any reason. There will be considerable incentive to ask a court to determine if the City
Commission was "reasonable" in its decision to refuse to proceed under the terms of the contract.

1. Other developers anticipate retail development without Public tax dollars.

Consider that less that 100 yards from this site there is another developer who has:

a. acquired land with no assistance from the taxpayers.

b. will relocate utilities on the site with no assistance from the taxpayers

c. will build parking facilities with no assistance from the taxpayers

d. has paid for the cost of relocation with no assistance from the taxpayers

e. upon development will immediately pay more taxes on the improved site than are currently being paid... vs freezing taxes
for 10-15 years.

2. Other developments have been denied the right for retail development who have expended monies based upon the city’s
promises and have not needed
Public tax dollars.

The City has denied a retail development which has:

a. already paid acquisition costs for land,

b. already paid utility relocation costs,

c. already paid street improvement and reallocation costs

d. already paid traffic control costs AND

e. is ready to pay significant tax increases.

To give this developer these advantages appear to be unnecessary and on their face, it does not seem prudent use of tax
dollars.

ISSUE #4 -

NO NOTICE OR PUBLIC HEARING GIVEN TO
ADJOINING NEIGHBORHOOD.

1. This agreement is tantamount to rezoning the proposed area for a commercial retail area.

2. This proposal violates the current Land Use Plan.

a. Current Land Use Plan specifies "General Commercial" use along 3rd street.

b. The Current Land Use Plan specifies Residential on both sides of 4th street.

c. By signing the agreement and agreeing to not unreasonably deny all decisions that require approval in the future, the city
has committed itself to a specific development without giving owners with 200 feet of 4th Street the notice they
deserve.

Issue #5 -

COMMUNITY CIVILITY

By committing the community to this controversy without more information, the commission is inviting criticism.. Leading
without educating our citizenry as to why the battle is necessary invites criticism of the process as well as the product.

This project rivals the Mall in the area that will be taken and exceeds the Mall in the local
tax investment required.

The mall and the acquisition of property in the 1980’s represented an equivalent of a civil
war in this community. It was the war to end all wars. We were told that if we just did this one
thing, the town would be saved and other investment would pour into the community to rehabilitate downtown. This
commission seems bent on a mad rush to Fort Sumter once again.

In a time when we have struggled through a referendum with emotion of the crusades and
now the economic debate on setting wages in this community that rivals the European class
warfare struggles, it would seem that the community deserves some time to absorb the emotional
stresses that this commission seems to want to initiate.

We have just completed a multi-million dollar expansion of city hall, an extraordinary expansion of the dog pound; denied
request to increase the tax base on the west side; anticipate plans for massive transportation subsidies; child care subsidies;
park expansions; and who knows what else in on the next mayor’s agenda.... now you propose that we give the equivalent of
a $10-15 million tax break on one of the areas where values are increasing the most.

Today, less than 20 days after the first word of this project was leaked to the public and
with no more information than the public had 14 days ago, you are suggesting that we know
enough to committed to this 4 year project that will stop any development in this area, depress
the values of all of the property in the area, and create uncertainty... for what?

There may be many good things hidden in this proposal, but let us know more. Show us
the figures and projections that make sense. Why do this for one developer and not all
developers?
 

GROWTH OF PROPERTY VALUES

Year Official Tax Appraisal Amount

1993 - $5,210,392

1995 - $6,601,157

1997 - $6,658,771

1999 - $6,699,380

Total Growth: $1,488,988 OR 28.6 % INCREASE