Dave Halverson and his attorney, Nick Maxwell, asked Luverne City Council members at their Sept. 13 meeting to delay action on the condemned Sharkee’s property.
The city is in the process of acquiring the lot on South Highway 75 through eminent domain, and Tuesday’s agenda included another step toward that end.
Halverson wasn’t on the agenda, but the council granted his attorney five minutes to speak.
“The dispute with his insurance carrier is still open, and that has prevented Mr. Halverson from doing anything with his building,” said Maxwell, Mankato.
“He can’t do anything because he would be spoiling evidence in his civil case. … He is in a very difficult situation.”
Maxwell asked the council to table action on eminent domain until May of 2017.
He compared Halverson’s situation to that of a businessman in the military who is deployed and unable to address business concerns in his absence.
“The situation for Dave is no different,” Maxwell said. “He can’t make remediations to this property because his hands are tied.”
Mayor Pat Baustian and the council didn’t see the situations as the same.
“We’ve been waiting for two years for something to happen with this building,” Baustian said. “There’s no guarantee it would be resolved by May 17.”
Councilwoman Esther Frakes shared the mayor’s reservations. “I’ve enjoyed your restaurant through the years, and I was a regular customer,” she said.
“But I’ve witnessed firsthand the deterioration of the building. The roof leaked, the bathrooms were in disrepair, the basement was in disrepair and the kitchen left something to be desired.”
The council unanimously voted to approve a resolution to file eminent domain action to proceed with acquiring the former Sharkee’s lot.
Background
Luverne city officials had started the process of eminent domain last fall to demolish the blighted structure and to address public nuisance issues that had developed in the former restaurant and sports bar.
They conducted a public hearing on July 26 as part of the process in order to allow testimony.
“Eminent domain is a fancy term for taking,” Maxwell said at that hearing. “It’s an extreme act of government to take private property. … This is a taking.”
By statute, the city wouldn’t simply take the property; it would pay the value of the property as determined by a panel of three impartial appraisers.
Maxwell said Halverson isn’t interested in liquidating the property and he intends to take responsibility for it.
He pointed out that in 2013 Halverson had worked with the city on plans to improve the lot through Tax Increment Financing.
According to those plans, Sharkee’s would have been demolished and reopened in its current location in 2014 as an L-shaped “mini mall” that would have also housed Sears, Verizon and a drive-up coffee shop.
But in April of 2014 Sharkee’s closed due to health code violations, mainly basement sewage backup, and on May 26, 2014, the building suffered damage from a fire reportedly set by arsonists.
The arson remains under investigation but is essentially a cold case.
Halverson’s insurance carrier, Auto Owners, denied payment on the fire claim, alleging that “someone close to” Halverson — a former employee — had been implicated in the arson.
That individual had been questioned and no criminal charges were filed, so Halverson sued his insurance company.
“If someone other than you sets fire to your property, your insurance carrier ought to pay for it,” Maxwell explained after the hearing.
If a judge were to order an insurance payment, it could influence Halverson’s plans for the lot.
Meanwhile, the property has fallen into further disrepair, and building code violations remain.
As such, city charter and state law allows the city to acquire the property through condemnation proceedings, which were set in motion September 2015.
Meanwhile city looks to also improve adjacent Mert’s lot
The city purchased Mert’s Repair lot (for $160,000) to the east of Sharkee’s, and has sold Marlin Kracht a new lot in the Industrial Park (for $10,000) for his planned expansion.
Once the city owns both the Sharkee’s and Mert’s Repair properties (roughly four acres total), the plan is to demolish the buildings on the lots and use Tax Increment Financing as a tool to work with a private developer to redevelop the properties.
Closed session Sept. 13
At the end of the Sept. 13 meeting, council members entered into a closed meeting to “consider and develop offers for the purchase of real property located at 705 Kniss Ave. S.”
State law allows closed meetings to discuss negotiations of this type. The information of any official action will be made public at a later meeting.
Council members noted that negotiations with Halverson will continue prior to any final action on the property.