"This has put this project in jeopardy for completion," Kietzer wrote. "We are asking for whatever financial incentives are available for this type of situation to allow us to complete this project."
The City Council, acting as the Mankato Economic Development Authority, had previously identified the property as one eligible for redevelopment assistance for blighted properties and approved $25,000 in EDA funds for site rehabilitation. Staff is recommending another $25,000 grant plus a $152,000 loan to Kietzer at a 3 percent interest rate. A portion of the grant money would have to be repaid if Kietzer sells the property in the next 10 years.
City Manager Pat Hentges said similar contamination problems have cropped up with downtown redevelopment projects. Although this is the first time the grant funds have been used outside the city center, Hentges said it's likely to be required again when development occurs on sites previously occupied by gas stations, dry cleaners and other businesses that might have leaked pollutants into the soils.
"It's a crap shoot in a city that's 170 years old," he said.
Kietzer maybe should have negotiated more protections for himself in the sales agreement with SA, but if the city denies the requested assistance the site would likely sit vacant until another developer agreed to purchase it, Hentges said. And that new developer probably would make the purchase contingent on cleanup assistance, he said.
"I think we would have been back to the same point," he said. "That gas station sat there empty for 10 years. ... If we really wanted to see that site developed, we would have had to assist with the cleanup."