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Businessman claims East Grand Forks officials put a roadblock in the way of a land deal

Retired business owner Mel Johnson said that he received a down payment and purchase agreement with moving and storage company U-Haul, to buy a 4.3-acre parcel of undeveloped land adjacent to the former Shopko building, as well as the building itself.

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The former Shopko building on U.S. Highway 2 in East Grand Forks, photographed Aug. 16, 2021. Photo by Eric Hylden/Grand Forks Herald

A former East Grand Forks businessman is claiming city officials there foiled his plan to sell a vacant parcel of land to a business. City leaders counter by saying the business pulled out of the deal.

Retired business owner Mel Johnson said that, in early March, he received a down payment and purchase agreement with moving and storage company U-Haul to buy a 4.3-acre parcel of undeveloped land adjacent to the former Shopko building , as well as the building itself. He said that after U-Haul representatives approached East Grand Forks City Planner Nancy Ellis to discuss zoning, they were informed that portions of their plan to turn the locations into storage facilities were disallowed under current zoning requirements.

The company then backed out of the deal, and received its down payment back, less $100 for Johnson.

Johnson said Ellis should have told City Council members of the potential sale, presumably so they could advocate for it, after U-Haul backed out of the deal.

“She didn't tell anybody on the City Council or anything about this happening,” said Johnson, who is retired and lives in Arizona.

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For her part, Ellis told the Herald she had been in contact with U-Haul officials twice, the first time to discuss the Shopko site. Ellis told the company that indoor storage units, along with some retail activity and servicing of trailers and equipment, were allowed under the current zoning rules.

Ellis said she was doing her job when she informed the company that storage units were not allowed on Johnson’s parcel when they called a second time. She informed the company officials they could either move to have it rezoned or try to have the relevant city ordinance amended.

“They said ‘OK,’ and that was the last I heard from U-Haul,” Ellis said.

In an email Johnson sent to the Herald, he wondered if Ellis was turning away developers to the city, “unbeknownst” to council members. But aside from the fact that a company was interested in buying two plots of land, Ellis said she did not have anything to take before the council, such as a request to rezone, as U-Haul had stopped communicating with her.

East Grand Forks City Council President Mark Olsatd defended Ellis, saying she’s the point person for any business wanting to discuss zoning in the city.

“The process is she's the local person who deals with planning and zoning. They would go to her and she told them the process,” said Olstad. “That's what any city does, so it's not anything Nancy did wrong, by no means.”

After U-Haul received back its deposit on the land, Johnson flew to Fargo in late March to discuss with the realtor and the company the possibility of salvaging the deal. He said company officials were still interested if the land were to be rezoned. Johnson then said he called members of the council, who he said had not heard of the deal.

Shortly thereafter, Johnson came to East Grand Forks to meet with Olstad, Ellis and David Murphy, city administrator, to try to resurrect the deal.

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“We left the meeting with the understanding that (East Grand Forks) would reach out to U-Haul, but I do not think that was ever done,” wrote Johnson in an email to the Herald.

Olstad did communicate with the real estate company working with U-Haul, and learned they were still interested, provided the land was rezoned. The talk was apparently moot as shortly after U-Haul initially pulled out of the purchase, furniture business St. Michel Rental LLC signed a contract to buy the building. The company eventually received a $149,999 development loan from the city to help rehab the building.

Olstad said he would inform U-Haul if there was a change in St. Michel’s situation, and that he could not guarantee an attempt to rezone the land would be successful, as the matter would ultimately come before a council vote.

In his conversation with the realtor, Olstad said he learned U-Haul initially pulled out because the company prefers not to go through the rezoning process in its land deals. Rather, officials prefer to buy land already zoned to their needs.

“They deal with a lot of real estate all over the United States, and their experience when they find a property they want and it's not zoned correctly, they usually just walk away anyway,” Olstad said. “They don't want to go through the hassle.”

Johnson said he was approached by a Fargo-based real estate company in December to list his property together with the Shopko location, in case they had a client interested in buying both. Johnson does not own the Shopko site, just the 4.3 acres adjacent to it.

According to Johnson, U-Haul intended to buy both sites and turn the Shopko building into an indoor storage facility, which the company has done in other locations. The adjoining plot would have become standard storage units. The deal, he said, would have come in at nearly $5 million, and he claims it would have raised between $85,000-$95,000 in estimated property tax.

“We visited (the) Polk County tax assessor's office about a ‘what if’ scenario,” said Johnson.

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Johnson believes the furniture store isn’t as good a deal for East Grand Forks, as it required an economic development loan from the city, and that it doesn’t raise as much property tax. Johnson said that tax estimate comes in at $15,000-$20,000.

A representative of U-Haul in Fargo said staff looked at two locations in the region: an abandoned hotel in Grand Forks and the Shopko location across the river. The individual said he did not know why the company backed out of the deal. An email to Amerco, U-Haul’s parent company, went unreturned, as did a follow-up call and message to an executive-level individual with U-Haul.

Related Topics: EAST GRAND FORKS
Adam Kurtz is the community editor for the Grand Forks Herald. He covers higher education and other topics in Grand Forks County and the city.

Kurtz joined the Herald in July 2019. He covered business and county government topics before covering higher education and some military topics.

Tips and story ideas are welcome. Get in touch with him at akurtz@gfherald.com, or DM at @ByAdamKurtz.

Desk: 701-780-1110
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