In a 6-1 vote, the Austin City Council approved a purchase agreement with First Heartland Surety and Casualty Insurance Services Company for the sale of the Plunkett Law office building, located at 107 West Oakland Avenue, during its regular meeting on Tuesday.

The site will be the future home of a new production studio for KSMQ Public Television, which currently rents space at Riverland Community College. According to 2014 numbers, KSMQ has a broadcasting audience of over 709,000 people in 22 counties in Southeast Minnesota and Northeast Iowa. KSMQ Public Service Media Inc. has programming on KSMQ TV, MHz Networks, Create, and MN Channel, which reaches a statewide audience.

According to KSMQ President and CEO Eric Olson, KSMQ has been interested in building a new production studio to better meet the region’s informational needs since 2016. KSMQ anticipates the project will cost $5.7 million. In October 2017, the Hormel Foundation pledged a $2.3 million grant for the project, provided the studio was built in Austin.

KSMQ requested $2.8 million in state bonds, roughly half of the cost, from the Minnesota Legislature, which had assisted other public television stations with their facility construction projects in the past. In November 2017, the council agreed to have the city serve as the fiscal host should the state bond proceeds be approved because state bonding funds can not be given directly to a non-profit, but must flow through a governmental agency, according to Olson. The council also agreed to have the city serve as the eventual landlord of the facility under a long-term lease with KSMQ after the facility is constructed.

The state awarded KSMQ $2.5 million in May 2018.

Olson said that KSMQ was courted by board members from other cities, including Rochester and Owatonna, about possibly building a new studio in those locations. KSMQ chose to stay in Austin because of the Hormel Foundation’s commitment and, after conferring with the city on possible locations, chose the Plunkett Law office location as its preferred site.

“The site meets our needs from an engineering and operational standpoint,” Olson told the council. “It fulfills two key components: exposure and access… There’s no guarantee that television stations get to keep their licenses. We have to be successful and grow and we really think being downtown will help us.”

Olson also said he hopes the building will be viewed as “a gateway to downtown.”

In negotiations with First Heartland Surety and Casualty Insurance Services Company, whose CEO is Peter Plunkett, a purchase price of $285,000 was agreed upon. During a closed session on Nov. 5, 2018, the council committed the city to the acquisition and demolition of the Plunkett Law office building, but capped that commitment at a maximum of $475,000, which they estimated would cover the cost of the purchase and demolition. KSMQ will be responsible for any expenses beyond that amount.

City Administrator Craig Clark called the agreement “a significant financial investment that will hopefully spur other redevelopment in the downtown in the Oakland corridor.”

“We’re really appreciative and value the opportunity to put an approximate $5 million structure on the south side of downtown, anchoring that side of the downtown,” he said. “It’s a significant investment built on other investments in the downtown, such as the Spam Museum and the new Community Rec Center and the façade improvements of the downtown.”

The project has received a large amount of support, but not everyone was pleased with the prospect of the sale. Councilman Jeff Austin (At-Large), who cast the sole dissenting vote, said that he did not oppose the project, but did not believe it was a good investment of city funds at this time.

“We’re looking at dedicating 45 percent of our building fund for this project when there are other projects that could come up that would need that money, possibly in the near future,” he said. “The grant money is to acquire land for and to design, construct, furnish and equip a regional public television station in the City of Austin. Nowhere in the bonding does it say they need support of the City of Austin to have this project go forward… At a time when we need to increase our tax base, to buy property and take it off the tax roles to me does not make sense, and to commit almost a half million dollars to this project does not make sense to me as a citizen of the City of Austin.”

Sara Shaw, who co-owns Hair Designers, which has been located in the Plunkett Law office building since the 80s, reached out to the Herald to express her concern over the deal, which she said she heard about through word of mouth, not from Plunkett or the city.

“They have no consideration for any of the businesses and they should have had some inclusion for us,” she said, referring to Hair Designers and K’Nyaw Grocery Store, which is also located in the same building. “We don’t even know when we’re supposed to be out.”

Shaw said she was approached by the Development Corporation of Austin (DCA) and offered relocation services; however, she said she did not have the money to put down on a new location.

“Salons are regulated by Minnesota,” she said. “There’s licensing, there are inspections; it’s a lot of cost.”

Shaw also said she is concerned for her employees.

“I have seven girls working for me and most of them are single moms with mouths to feed,” she said. “I’m not in a good spot and I feel like I’m responsible for these girls. We have a good clientele and we work hard. It’s a sad thing for everyone.”

“This is our tax dollars at work, and since when did the city get into real estate?” Shaw added. “(The council) just voted themselves raises and I’m losing my job.”

The council did discuss those businesses affected by the purchase.

“We’ve had the DCA and the SBA (Small Business Administration) reach out to the tenants there and try to find someplace that they might be able to relocate to,” Clark told the council. “They also provide business planning to try to help coordinate with them in the transition for them as best we can. The purchase agreement, as far as the tenants are concerned, is the responsibility of the landlord that we would get the building with the termination of those leases, but yes, we do want to help and hopefully have them land in a suitable location so they can continue their business.”

With the passage of the purchase and preliminary project agreements, Olson stated that KSMQ is looking to start a capital campaign in May to raise $3 million for any equipment whose cost is not covered by the bonding money. He hopes to have a groundbreaking in June and a ribbon cutting on the new facility by the fourth quarter of 2020. He also said he anticipates hiring more staff.

“There’s interest in public television and in a locally-based broadcaster that shows local content and PBS programming,” Olson said. “It is a value, so I’m thrilled there is interest in Austin.”

Clark told the Herald he hopes the projected new KSMQ studio will help in improving the Oakland corridor.

“We are also looking at doing a small area plan with the council,” he said. “This KSMQ property could be the fulcrum extension of that. Investment spurs other investment, and we’re very supportive and appreciate the recognition that KSMQ wants to be more visible in the community and be more connected to the community. That’s a good community partner.”