It could cost Zierke Built Manufacturing (ZBM) thousands of dollars to get a letter from the Winnebago City Council saying they do not object to the company’s relocation to Fairmont.
In 2004, when ZBM announced a $200,000 expansion they were able to take advantage of tax-free benefits provided under the Department of Employment and Economic Development’s (DEED) JOBZ program.
For 12 years, the company did not pay any sales or corporate income taxes and most property taxes to the county, city and school district.
In addition, ZBM received numerous smaller tax breaks and wasn’t required to pay any taxes on its buildings.
Now, the City Council may ask ZBM to pay the city its share of the taxes on the buildings, which would be about 78 percent.
“We’ll have to figure that out. It is going to be significant,” says City Administrator Chris Ziegler. “We feel the citizens of the county and city provided them some benefits. Perhaps they should reciprocate.”
Tim Clawson, executive director of the Faribault County Development Corporation, told the City Council at their meeting Monday night that calculating the dollar amount in tax breaks received from JOBZ would be difficult.
“DEED can’t tell you what the tax benefit was. You can’t get that information, it’s classified,” says Clawson. “The only persons who know are the owners.”
However, Clawson says the city could try to collect the taxes not paid on the buildings.
“You could make a strong argument that the tax benefit should stay with the property and benefit the next person,” he says. “You can make an attempt to hold them accountable and use that in negotiations.”
Despite a recommendation from the city’s Economic Development Authority board, councilmembers decided not to seek an appraisal of a ZBM building at this time.
The city is interested in buying the company’s larger building located on Sixth Avenue Southeast that would be used by the Public Works Department.
City officials want to purchase the building at fair market value or have the right of first refusal, which gives the city 30 days to match an offer.
City Attorney David Frundt says the council could pick the company to do the appraisal and estimates it would cost the city between $2,500 and $5,000.
“I don’t feel comfortable going with this, unless we know they are going to play nice,” says Councilman Rick Johnson.
ZBM has asked the City Council to sign-off on the company’s relocation plans to Fairmont. That is required because they have received state funding in the past while in Winnebago.
Getting the city’s “no objection” letter will allow the company to seek state monies from various programs.
Councilmembers decided to have Ziegler continue discussions with the owners of ZBM.