The Free Press
For both Mankato and North Mankato, downtown revitalization has been a high priority, bolstered by Envision 2020. Called Downtown Renaissance, the goal developed by the greater Mankato community leaders was to encourage public, private and nonprofit investment and/or reinvestment into the city center and establish economic incentives for projects.
The long-vacant site of the former Marigold Dairy at the foot of the bridge linking North Mankato and Mankato was a painful reminder of the unfilled potential of Lower North and was a top target for renovation.
The city, through its economic development arm, the Port Authority, spent heavily purchasing property and homes, relocating houses to prepare the site. The city took out a loan in 1990 to pay for demolition and has been making loan payments yearly. Various proposals for a hotel and commercial development never materialized until finally developer Van Moody built the present two-story Marigold I project.
He now is hoping to win approval for a $17 million project for a six-story, 108-unit complex with mostly one- and two-bedroom units aiming for higher-end renters with rents estimated at $1,100 to $1,800 per month, with two penthouse suites renting for $3,500 a month.
The Port Authority has authorized tax increment financing (TIF) of $2.5 million for the project -- $1.2 million in tax payments will be used to pay off the earlier city loan payments of which are expected to increase from more than $35,000 this year to nearly $90,000 in 2016. The deal also includes a $225,000 loan from the Port Authority to the project. It's slated to be paid back as a lump sum in 2029. At 5 percent interest, a rate that hasn't been firmly set, the Port Authority would get nearly $200,000 in interest when the loan is re-paid.
As pointed out in an earlier article, the TIF is structured in such a way that the developer pays his taxes to the county. Several months later, the developer gets a check for the taxes, minus the payments for the loan and the city's administrative fee of $3,778 per year. The developer has to show the money was spent on approved parts of the project, such as parking and the construction of utilities.
On Monday night, the North Mankato City Council will consider the project, which has its detractors. Critics point to the sheer size of the project claiming it will detract from the overall ambiance of the area, and there is concern that taxpayers will be left to foot the bill should the project fail.
The city's planning commission sent the proposal to the City Council with no decision on the conditional use permit needed to build a six-story building. It felt the project needed more vetting and consideration. That's not an unreasonable position given the impact such a project will have, albeit a very positive one if successful. Not all are guaranteed success and Mankato's fitful downtown history shows what can happen when development doesn't happen as expected and tax dollars had to be used to help its resurrection.
With the Marigold project, city leaders should be privy to all the financial requirements for Moody so they can judge the risk involved. After all, a request for partnership -- in this case a loan and TIF -- means everyone should have the information necessary. It is especially critical given the lack of a city administrator who could provide the council with advice.
As to the risk of constructing more apartments, a study by the City of Mankato in the spring found there is a need for about 475 apartments but without detailing who those potential renters could be. Mankato State University has said it needs more apartments for its students and enrollment is growing. And presently homes that couldn't be sold are being rented because there were no high-end rentals available in the market.
As the economy eases, these homes could come back on the market as contractors build apartments to satisfy these renters. Unlike other cities in the state, the greater Mankato area is growing in population and with new concerns from consumers about shouldering mortgage debt, housing shifts are inevitable.
And given the impact of such a large footprint to the Belgrade district, the council should weigh its decision on how it will impact future development of the downtown. It started that process in 2011 when the Port Authority hired I&S to provide recommendations on how to invigorate the downtown. Those recommendations were updated this year and it appears the six-story Marigold II (labeled '2.5') project is presented as part of that plan.
It would be helpful if the council discussed codifying these recommendations -- and publicizing them -- to ensure downtown follows an orderly design and assure further its citizens as well as developers and investors on what to expect.