Hearing labor concerns, Roseville OKs tax subsidies for Fairview development


The former trucking terminal in the 2700 block of Fairview Avenue in Roseville is well on its way to becoming apartments and a medical office building with the help of city subsidies in the form of tax increment financing. Residents and others spoke against city financial support of the development Sept. 16 at a Roseville Economic Development Authority meeting because of labor concerns associated with the lead developer. (Mike Munzenrider)

The industrial site is slated to become 117 market-rate apartments and a 40,000-square-foot medical office building. A local dermatology practice is set to move into half of the planned medical office space. (courtesy of City of Roseville)

What could have been a typical Roseville Economic Development Authority meeting on Sept. 16 turned into a discussion of labor rights as folks turned out to raise concerns about a development deal on the agenda that night.

The authority, which is the Roseville City Council acting under a different name, was set to give final approval to development contracts and tax increment financing agreements with Walton Holdings, LLC, and 2720 Fairview MKT, LLC, according to city documents.

The two limited liability corporations plan to redevelop 2720 and 2740 Fairview Ave. into 117 market-rate apartments and a 40,000-square-foot medical office building. Local business Tareen Dermatology is set to occupy half the medical space. The site, blocks north of County Road C, is currently a defunct trucking terminal and part of the Twin Lakes Redevelopment Area.

What altered the course of the evening were concerns raised by the North Central States Regional Council of Carpenters union and community members about wage theft accusations associated with Reuter Walton Commercial, which is set to be the general contractor for the redevelopment.

Per reporting by the Star Tribune, the owner of a company contracted by a subcontractor used by Reuter Walton was charged in 2017 with labor trafficking and theft by swindle; the case is still pending in court. Reuter Walton denied knowing its subcontractor had hired the company in question.

The authority ended up unanimously approving the redevelopment agreement and up to $2.9 million of tax increment financing over 15 years for the housing development to cover soil cleanup, construction costs and development fees. It also pledged up to $650,000 for the office building, over the same time span and for similar purposes.

Tax increment financing works by taking new property tax revenue created after a development is complete and routing it back to the developer to cover specific costs.

Within the agreement for tax increment financing, per city documents, is language allowing the city to withhold financing following completion of the project should Reuter Walton be found guilty of wage theft.

City staffers heard from the carpenters union and then worked with the authority’s lawyer to create the clause, which will be carried forward in all future authority agreements.

Authority members said they were concerned by accusations of exploitation but felt the agreement clause would be sufficient. Mayor Dan Roe noted it was difficult to address past allegations with a development agreement for the future, and said the council should look at what role the city could play in holding contractors accountable through its licensing process.

 

Community concerns

While the authority ultimately approved the development and financing agreements, before doing so it heard impassioned remarks from both the developer and victims of wage theft.

Nick Walton, owner of Reuter Walton, forcefully told the council that the allegations against his company were baseless and that the carpenters union was “trying to enter this conversation at the 11th hour and in their words, ‘kill the deal.’”

Walton said there was a smear campaign against his company and said the union was only there to gin up union contracts for the development.

Kim Nelson from the carpenters union requested that the council not approve the agreements, and brought with her immigrant workers who, with the help of a translator, told the council frightening stories of being threatened with death by a subcontractor who refused to pay them.

“I just want the community to realize the conditions that we live in and the threats we get on a daily basis,” said a Spanish-speaking carpenter named Eric.

Both of the workers who spoke said they’d been working on what was at top level a Reuter Walton project. Another Reuter Walton official said the details in the stories told by the men didn’t line up with actual work done by the company.

Other community members asked the council to do its due diligence when it came to labor practices at the development and others in the city.

Authority members said they took the labor concerns to heart, noting that Roseville links itself to developers through its agreements.

“When we enter into these partnerships with the development community I think we are obligated to make sure we are dealing with organizations that are of the highest integrity,” said council member Bob Willmus. “We do attach our name in partnership with these developers.”

With his sights on general contractors, Willmus added, “You have an obligation to know and understand what your [subcontractors] are doing and how your subs are treating people.

Walton said work on the project could break ground next month.

 

– Mike Munzenrider can be reached at mmunzenrider@lillienews.com or 651-748-7813

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