City may lose funds due to legalities

A proposal by Celina city officials to buy land along the Coldwater Creek for a wetlands mitigation project is in legal limbo as a contractual deadline approaches.

City officials tentatively planned to buy a 5-acre parcel along the creek from developer Steve Klosterman as part of the proposed walkway project along the west bank of Grand Lake. The city must create 2.5 acres of new wetlands to make up for the portion of the lake that would be filled in to make room for the mile-long concrete path.

State officials already had given the city tentative approval to use the land for wetlands development. City officials plan to create the wetlands area and then divert the Coldwater Creek through it to reduce the sediment the creek carries into Grand Lake.

A resolution to purchase the land was stricken from this week's Celina City Council meeting agenda. The legislation was held back because city officials are pursuing a court proceeding to clear up any legal questions about plans to borrow money to build the path.

But a purchase option the city paid $10,000 for expires Monday, at which point Klosterman would be free to pursue his prior residential development plans for the Coldwater Creek property. Based on the option contract, the city would lose the $10,000, which would have gone toward the $12,500 per acre cost of the tract of land city officials want to buy.

City development consultant Kent Bryan said this week he is negotiating a possible 60-day extension of the purchase option with Klosterman.

The money for the option and the land is to come from the Grand Lake tax increment finance (TIF) district. That is the same fund city officials plan to borrow against to pay for the walkway project.

A TIF diverts property taxes on new improvements into a separate account to pay for infrastructure and other projects in and around the TIF area.

Bryan said he is uncertain if a 60-day extension of the option would be enough time to complete the legal process, called a bond validation process. City officials could finalize their plans to file that court action at their Sept. 25 meeting.

"It could be enough time, but will it? I don't know," Bryan said Thursday.

The bond validation hearing is the final opportunity by residents to formally oppose the project on legal grounds. City officials are hoping to justify their intentions and clear up any lingering legal questions about the project.

Also funding the project are a state budget line item grant of $250,000 and a $150,000 pledge from the Celina Rotary Club over the next 10 years, some of which was already spent for engineering of the project.

The purchase option is valid for all 55-plus acres of land Klosterman has available at the site. City administration officials were hoping other groups or individuals facing EPA wetlands mitigation requirements could buy into the site, but those purchasers never materialized.

If the wetlands project along Coldwater Creek falls through, city officials could build some wetlands on city-owned land along the Beaver Creek near the sewer plant. They originally opted for the Coldwater Creek site because it would help improve lake water quality. The Coldwater Creek flows into Grand Lake while the Beaver Creek flows out of the lake. Wetlands along the Beaver Creek would not do anything to benefit the lake.