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City to acquire Sharkee's through condemnation, eminent domain process

Lead Summary
Lori Sorenson

Luverne city officials are taking action to acquire the blighted Sharkee’s property through the process of eminent domain.
Documented code violations on the building include a leaky roof, structural damage, inoperable fire alarm and sprinkler systems, sanitary sewer backups, HVAC and electrical systems in disrepair, extensive mold and more.
Health code violations, primarily the basement sewage backup, led to the business shutdown in April 2014.
Then on May 26, 2014, the building suffered damage from a fire reportedly set by arsonists. The arson remains under investigation, but is essentially considered a cold case. It is unclear if an insurance settlement has been reached.
Meanwhile, the property has fallen into further disrepair, and property owner Dave Halverson has reportedly ignored notices of building code violations in April 2014 and April 2015.
As such, city charter and state law allows the city to acquire the property through condemnation proceedings.
At Tuesday night’s meeting, City Council members approved a resolution that gets this process started.
The resolution authorizes “preparations for and commencement of eminent domain proceedings or other methods to acquire title to certain property in the city in order to mitigate blight and remove a public nuisance.”
For city leaders and local volunteers working to improve Luverne’s South Highway 75 corridor, addressing the blighted Sharkee’s property is a final hurdle in those aesthetic improvements.
City Administrator John Call said it will be a relief to take action on that part of Highway 75.
“Especially with all the improvements on the highway and all the other positive things going on down there,” Call said.
He pointed out that Halverson could still exercise his right to sell the property, but so far attempts to negotiate haven’t resulted in action.
“It will either play out through that process (eminent domain) or it could still be a negotiated sale,” Call said. “We’re open to negotiating.”
At this point, however, doing nothing is no longer an option.
One of the first steps in the condemnation process is to appraise the property. By statute, three different appraisers must evaluate the property and assign a value.
This would be considered the fair market value that the city would end up paying for the property.
The assessed market value of the land is $86,900. The building is valued at $120,900.
The property has a $320,000 April 2007 mortgage, but the city would not assume financial liabilities.
It would, however, end up paying the costs of demolishing the 70-year-old building, which once served as the community’s thriving VFW dance hall.
With all the structural and code deficiencies, the building itself has little to no value, but it sits on nearly 2 acres of prime real estate along Highway 75.
According to the city building inspector, it would cost roughly $700,000 to bring the current building into “reasonable” compliance with city code, and that estimate doesn’t include structural improvements.
It would cost roughly $1.5 million to build a new structure of that size.
“It would be my opinion that this building could not be repaired or remodeled in such a way as to comply with the current building and related codes,” wrote City Building Official Dan Delgehausen in a May 7, 2013, inspection report.
That report noted the building was a fire hazard, with no visible extinguishers on the main floor and two in the basement that were last inspected in 2005. The fire sprinkler system hadn’t been inspected since 2010.
Delgehausen’s report included a letter from Electro Watchman Inc. dated April 29, 2014, informing the city of Luverne that Sharkee’s fire sprinkler system was disconnected April 29, 2014, due to failure to pay. The company sent the letter to the city because monitoring fire protection systems is required by law.
Delgehausen’s report was accompanied by dozens of photographs documenting moisture damage, mold, trash piled up in rooms, leaking roof, handicap accessibility violations and more.
It’s unclear how long it will take for the city to assume ownership of the Sharkee’s property, but the eminent domain process is the first step.
Sharkee’s opened in Luverne in 1998, and Halverson has owned it since 2010.
Prior to 1998, the building was owned and operated by the local VFW organization, which dates back to the late 1940s.
In September 2013, Halverson had announced plans to demolish the 21,000-square foot building that winter and put up in its place an L-shaped multi-business building anchored by Sharkee’s.
At the time, Sears had committed to 7,000 square feet on the south end, and a bakery and drive-up coffee shop was planned in 1,500 feet of the west wing, with Verizon (Sudenga Communication) filling 1,500 square feet of space just west of Sharkee’s.
Those plans never materialized and the business was closed the following spring.
Halverson has since purchased the Tailgator’s bar and restaurant business in Brandon.

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