By Katrina Vander Kooi, summer intern
On Tuesday night, in a joint meeting of the School Board, Luverne City Council, and Rock County Board, members decided on a course of action to create a community day-care center in City Centre Apartments.
The three boards had drawn up a contract with Don Dunham Jr., a Sioux Falls developer, who renovated the old elementary school.
The contract stated that Dunham would provide a rent-free area for a day care in the apartment complex, and in return for that, Dunham would receive a tax abatement. The abatement would forgive 100 percent of the school, county and city taxes for 10 years - or about $35,000 a year.
The day care was supposed to be completed by the end of this year, but Dunham has refused to furnish the day-care space that is estimated to cost $178,000.
Dunham has said that by providing the vacant space, he is fulfilling his part of the agreement and shouldn't have to furnish it.
At the meeting, Don Klosterbuer, school, city and county attorney, gave the boards two courses of action.
One option was to wait until the Dec. 31, 2001, contract deadline when Dunham must have the day care completed. Klosterbuer did not recommend this option because the boards would have to decide if they should pay Dunham's abatement for the 2000-2001 year after the year was over.
In the second option, that won't be an issue.
The second option was to send Dunham a letter informing him that he had breached the contract. The contract was set up so that it could be terminated at any time if one side had breached it. If the letter is sent out, Dunham would have 45 days to respond.
The boards discussed the options at the meeting. Keith Erickson, City Council member, brought up the solution of having Dunham donate the space and have the three boards furnish it. However, all three groups agreed that they did not have enough money in their budgets to furnish the day care.
Erickson also brought up the point that Dunham is being paid through the abatements to furnish the day care. "There is no incentive for him to do anything and no incentive for him not to do anything," Erickson said. "Either way he comes out zero-zero."
Jane Wildung, Rock County Board member, reminded the boards that Dunham would come out with a profit, because he would have a finished space in his building.
After much discussion, the boards decided on the second option, to send Dunham a letter informing him of his breach of contract by not providing the contracted furnished day-care facility in the building. Dunham will be given 45 days to respond to the letter, and depending on that response, the boards can determine the next course of action.
The boards also decided to send Kyle Oldre, Matt Hylen, Vince Schaefer and Don Klosterbuer to meet with Dunham after the letter is sent in order to negotiate with him.
Background
One year ago, LCEDC was formed to meet with Dunham to finalize plans for the community day-care center in the center of the City Centre Apartments. The committee applied for an estimate to furnish the space, and the bid came back at $178,000. About that time, the LCEDC could not get a commitment from Dunham that he would do it.
Dunham's attorney sent Klosterbuer a letter last November stating that Dunham did not have the duty to construct a day care. He only had to offer the space.
During early November, Klosterbuer sent a letter to Dunham's attorney stating that his clients believed Dunham was required to furnish the space.
Klosterbuer did not hear back until March, when Dunham's lawyer informed him that Dunham would be meeting with Mayor Glenn Gust and other officials.
The Luverne Community Economic Development Corporation reported on the meeting stating that Dunham and the committee disagreed on the terms of the abatement. Dunham would not furnish the space. Because of this, the boards did not pay the abatement amount to Dunham this year.
After not receiving the abatement, Dunham did not pay the first half of the real estate taxes. When asked about this, Dunham responded that when he received the abatement amount, he would pay.