Excess in federal government? McIntosh feels the sting

McINTOSH, Minn. -- The city of McIntosh is waiting for the federal government to send a bigger rent check that's not likely to arrive.

Instead, the feds plan to move the Farm Service Agency and Natural Resources Conservation Service from a city-owned building to a new structure that's not built yet -- for almost 2.5 times the rent they're now paying.

Local and congressional efforts to stop the move have fallen short.

With their backs to the wall, McIntosh officials recently granted a building permit to the Rochester, Minn., real estate investment firm for the new building.

"We're not too pleased with the whole situation, but I guess you can't fight the federal government," Mayor Bruce Haaven said. "I just listened to President Obama's speech about excess in government. Here's a good example of that."

The FSA and NRCS have offices in the Bella Building, which once served as City Hall in downtown McIntosh, an eastern Polk County community of 635. The city offices have been located in the McIntosh Community Center since the early 1990s, according to Teresa Syverson, city clerk-treasurer.

Haaven said the building has served area farmers. In addition to FSA, it also houses the East Polk County Soil and Conservation District, Natural Resource Conservation Service and University of Minnesota Agricultural Extension Service.

FSA employs nine people in McIntosh.

The city has been charging the federal government rent of $9 per square foot for about 2,600 square feet of space.

Earlier this year, the city bid $10 per square foot to renew the lease in December. However, a Rochester developer bid $22.14 per sq. ft. for the yet-to-be constructed building. The General Services Administration, which negotiates leases for the FSA and other federal agencies, accepted the higher bid for the new building.

Rep. Collin Peterson's office tried unsuccessfully to intervene last month.

"It was too far along by the time we got to it," said Wally Sparby, public interest director for the 7th District congressman. "The congressman wasn't very happy about it."

Ironically, Sparby served as state director of the Minnesota Farm Service Agency in the 1990s.

The city, after approving the building permit, sent a letter to the federal government, saying it was going to raise the rent to $22.14, from now until the lease expires Dec. 1.

A federal official quickly responded, saying it wouldn't pay that much, according to Haaven.

"I told him they already agreed to pay that much for a building that's not even built yet," the mayor said. "They offered $11. But we haven't seen anything yet."

Haaven said the loss of the two federal agencies will hurt downtown McIntosh.

"It's busy all the time. And many of those people also shop, eat or have coffee while they're downtown," he said. "Our businesses will lose a lot of that support if the FSA is on the far end of town. Farmers are upset about this. It's just been a nice fit for years."

The mayor said the city and federal government had been trying to negotiate a new lease since 2007, adding that GSA has forced delays by adding amendments to a proposed lease agreement.

He said GSA has demanded that the city renovate the building.

In the past three years, the city has replaced the building's roof and siding.

It has remodeled restrooms to comply with the federal Americans with Disabilities Act and agreed to add another restroom on the main floor, where FSA is located.

It also has buried all utility lines, paved the parking lot and installed fiber-optic cables.

"Whatever they've asked for, we've done," Haaven said.

Syverson said the potential loss of $30,000 in annual income is difficult to overcome, especially since the city also is losing $17,000 in Local Government Aid from the state this year.

Two years ago, the city disbanded its local police department to save money after losing LGA funding.

The city's general fund budget is $378,000.

Sparby said Peterson has spoken with officials in Washington about the situation, which has occurred in other 7th District counties, too.

"The congressman wants to see some changes," he said. "We'll try to get the negotiation process changed in the future, so this doesn't happen again."

As for now, the city is trying to attract a new business, perhaps a call center or a regional office, to the building, to make up for the lost revenue.

"We still have to pay to heat the whole building," Haaven said. "We are actively looking for new tenants. If we're able to get some, they could leave. We were told they couldn't kick them out until Dec. 1. Hopefully, we'll get some tenants by then."