ARC of Minnesota, a popular chain of thrift stores whose proceeds benefit people who are mentally disabled, will not open a new store in Burnsville as soon as it planned -- if at all.
Prompted by ARC's desire to come to Burnsville, the City Council last week voted 3-to-2 to enact a moratorium on thrift stores until the council can establish standards for how the stores are to look, operate and pay fees.
ARC attorney Steven Mayeron, of Leonard Street and Deinard in Minneapolis, said the moratorium would make it impossible for ARC to complete financing for the purchase of the building as required by the end of the year. That could scuttle its plans to open a location in Burnsville.
The moratorium could last no more than a year, and Community Development Director Jenni Faulkner was directed to present standards for council consideration as soon as possible.
ARC wanted to buy the vacant spot formerly occupied by an Ultimate Electronics store in a cluster of businesses behind the Dakota County Burnhaven Library on County Road 42.
The nonprofit was going to be assisted in the purchase by the St. Paul Port Authority, which had offered to sell $2 million in tax-exempt bonds to give ARC a lower interest rate.
That bond sale option will run out by the end of the year, Mayeron said. He urged the city to give approval for the bond issuance and then allow ARC to work with the city on follow-up conditions for the store.
The council approved the bond sale but was not dissuaded from enacting the moratorium.
Mayeron said the moratorium came as a surprise, because his dealings with Faulkner led him to believe ARC had answered and satisfied all city concerns about how the store would operate and receive donations.
Mayor Elizabeth Kautz and Council Members Mary Sherry and Bill Coughlin voted in favor of the moratorium. Council Members Dan Gustafson and Dan Kealey voted against it.
Sherry said the moratorium is necessary because "we don't have any standards," and simply applying conditions to the property ARC wanted to buy would be a "seat-of-our-pants" approach.
One of three thrift shops now open in Burnsville is not well kept, Sherry said. By setting standards, "I would like to get it all nailed down so we all understand what the expectations are of thrift stores."
Kautz said of ARC's proposal, "This is a property across the street from the Burnsville Mall." The city wants to welcome ARC to the community, "but we want to do it in a very thoughtful way."
As an aging community, Burnsville must maintain its standards, Kautz said. "It's the standard and quality of that whole retail area we are looking at."
Coughlin was concerned about the fact that ARC's purchase of the building would take it off the tax rolls, leaving the city to find a way to collect fees in lieu of taxes.
The city's existing thrift stores pay taxes through their rent. In this case, ARC intended to buy the building, and that would require the city to set up an alternative payment.
ARC agreed to that and pledged to be trustworthy in its payment. But the nonprofit does not have a similar arrangement with another city that it could offer as an example.
Such an arrangement "may not be legally enforceable," Coughlin said. "I am really bothered by that. At some level we are at the mercy of what your organization decides to pay or not pay."
Mayeron said his opinion is that such an arrangement would be legally enforceable.
Kealey and Gustafson wanted to exempt ARC from the moratorium and thought ARC -- whose flagship store in Richfield has a good reputation in the community -- would be responsive to city concerns.
ARC had planned to invest $500,000 in improvements in the building.
"I think we are heavy-handedly putting a clampdown on a business better than the ones we have," Kealey said. "We have to take a leap of faith with the quality of people who are in front of us."
Gustafson said the building ARC wanted to buy is appropriately zoned for retail use. "They would never have anticipated what happened here tonight."
Burnsville Chamber of Commerce President Bill Corby objected to the moratorium as an action that could send an "anti-business" message.
"The moratorium seems like a serious action," Corby said. ARC could bring more business to the city, he said. "The free-market system should determine the success of a business, not the government."
Kautz said Burnsville is a business-friendly city. "We are taking some time to make good decisions long term."
Laurie Blake 952-746-3287