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Helmut Schmidt, Published December 04 2012

Unsold land could leave Moorhead with bill

MOORHEAD – City Councilman Mark Hintermeyer is worried the city could take an $800,000-plus bath on a contract for deed for land near the Bluestem Center for the Arts.

The nonprofit that has been running the center, which will soon officially dissolve, has a contract to buy 50 acres of land abutting the 18-acre Bluestem Center along the Red River on the city’s south side.

Hintermeyer said that unless someone else picks up the contract or some other deal is struck – perhaps with the Fargo School District, which has assumed the debt of the struggling nonprofit – the city will lose out on the $489,200 purchase price and $318,055 in unpaid special assessments.

Hintermeyer said the City Council was promised that Moorhead wouldn’t have any liabilities tied to Bluestem, but that no longer seems to be the case.

“Now it’s problematic,” Hintermeyer said.

He said he believes the Bluestem group acted as an agent for the Fargo School District.

“I believe they’re responsible for the debt that is involved with that agreement,” said Hintermeyer, who said if Bluestem hadn’t been developed “we would not be having this discussion.”

The contract for deed is one of the final legal issues to be resolved by the Bluestem group, said Dave Olig, the president and chairman of the board of directors for the group. He said the group is aiming to close its books in January.

Bluestem used to run the Bluestem Center and raise funds for Trollwood Performing Arts School, the district’s summer theater program.

Fargo School District officials said they have no interest in buying the 50-acre parcel, though they might be interested in leasing 30 to 35 acres for programming and parking.

“Fargo Public Schools is in no way interested in owning land in Moorhead,” Superintendent Jeff Schatz said.

School Board President Jim Johnson said the 18 acres making up the Bluestem Center is owned by the city of Moorhead, and is leased by the school district. He said the district is up to date on its special assessments on that land.

In August, the district took over sole control of the operations of the facility after the Bluestem group failed to make its bond payments. The contractual agreement to take over the center gave Fargo School District the right to all of Bluestem’s assets. However, they didn’t have to take all of them, Johnson said.

Johnson said that the district may consider leasing some of the land and paying special assessments on the portion it leases.

Otherwise, he said, the problem is between the city of Moorhead and the Bluestem group.

City Manager Michael Redlinger said that if the contract for deed is terminated, the $318,055 in special assessments would be deferred, meaning they’d stay on the city’s books and be paid by whoever buys the property, or perhaps be part of a lease agreement.

The special assessments are to pay for installing utilities, a lift station and curb, gutter and paving for 50th Avenue South, city documents show.

The issue was discussed at the city council’s Nov. 26 meeting. Hintermeyer and Redlinger said it will be revisited at Monday’s council meeting.

The Bluestem group had only been required to pay the interest on the purchase price for the property. A balloon payment on the contract would have been due in 2015, Redlinger said.

Readers can reach Forum reporter Helmut Schmidt at (701) 241-5583

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