Port Authority talks finances and the futureIn upcoming weeks you will undoubtedly hear a lot about Red Wing Port Authority finances and how the organization might deal with a cash deficit of just over $1 million.
By: Myron White, Red Wing, The Republican Eagle
In upcoming weeks you will undoubtedly hear a lot about Red Wing Port Authority finances and how the organization might deal with a cash deficit of just over $1 million. First, let me assure you it is an issue that the Port staff and Board take very seriously.
I would like to provide an overview of the costs of development, how we will adjust to the present economy and what are the communitywide benefits of our investments.
Like most homeowners and businesses, the Port’s primary asset is the property it owns. Also, like homeowners and businesses, the Port primary asset is not worth what was five years ago even though the cost of owning that asset increases.
When the Port partnered with Fairview Red Wing to develop the park, we made a significant financial investment. We purchased the River Bluffs property for $1.5 million and assumed over $2.5 million as our share of the assessments for street, sewer and water improvements. To date we have paid $705,000 of the $1.5 million land obligation and just under $2.6 million on those assessments (including $930,000 in interest). Our outstanding assessments are just over $878,000.
The cost of owning the 35 acres of developable property in River Bluffs is just under $300,000 annually of which $68,000 is real estate taxes paid to the city, school district and county.
Our difficulty came about when the economy took a downturn and getting a sale at a price that will let us recover our investment. Up until the economic downturn, our property sales were at or slightly ahead of what we anticipated.
Adjusting to the present
Please keep in mind that the Red Wing Port Authority still holds very valuable assets, 35 developable acres in River Bluffs, 20 plus developable acres at Central Research. That acreage will translate into jobs and tax base for Red Wing. Another valuable Port asset is Ole Miss Marina, which, as of August of 2009 held just under $500,000 in cash reserves.
The Port’s primary mission is the creation of jobs and tax base. The Port can claim success.
Today in River Bluffs privately held property has a taxable market value of almost $42 million and generates over $1 million in property taxes annually. The development is also home to 859 jobs (1009 if you count Fairview’s “casual” employees). Because of those improvements to Tyler Road, businesses like Wal-Mart, Target, Culvers, etc. have chosen to build along that roadway generating another $32 million in valuation and $1.16 million in property tax revenue.
Those two developments generate over $2 million annually in property tax revenue.
Finally, we should never forget that because of the River Bluffs development, Red Wing is home to Fairview Red Wing Health Services, a fantastic state of the art medical facility in our back yard.
How do we work
our way out?
In conclusion, like many landowners, the Port is going though a difficult time. To put it simply, we are “land rich and cash poor.”
Like many families and businesses going through difficult times we are making significant cuts to our budget and rethinking the way we do business.
If you have any questions or suggestions that might help, please do not hesitate to contact me, Myron White, at (651) 385-3697 or Missy Voth at (651) 385-3638. I would be more than happy to sit down with you.