The Free Press, Mankato, MN

July 9, 2013

Council approves office tower ramp

Mayor opposed, worried about future expansion of TIF

By Mark Fischenich mfischenich@mankatofreepress.com
The Mankato Free Press

---- — Mankato Mayor Eric Anderson, after largely staying silent on the city’s largest downtown development project in nearly two decades, came out strongly opposed to a tax-increment financing plan to support the $15 million Front Street office complex Monday night.

Anderson, who had abstained on previous votes because he owns property near the planned project, was alone in his opposition at the council meeting. A public hearing on the financing plan for a city-constructed parking ramp drew no comments, and the council voted 5-1 to approve the subsidy.

The vote leaves only the approval of the final development agreement with developer Tailwind Group, expected within 30 days, before the project goes to bid and construction can get under way on the parking ramp, a seven-story office tower and a four-story mixed-use building.

Anderson’s primary concern was that the tax-increment financing district would generate more revenue than is needed to build the ramp and that a future council might be tempted to use the extra revenue for downtown improvements that might even involve condemnation of property.

“This TIF district looks very different than what I envisioned last December,” Anderson said, referring to the original presentation of the ambitious redevelopment of the block bordered by Riverfront Drive and Cherry, Warren and Front streets.

Tax increment financing is a development tool whereby the extra property taxes generated by an improvement are set aside for several years to help cover the costs of the improvement. In this instance, a minimum of $180,000 in added taxes will be produced annually when the project is complete.

The money, set aside for up to 25 years, will be used to finance a portion of the $4.9 million parking ramp adjacent to the office tower and the construction of a surface parking lot on the south side of Front Street.

City Manager Pat Hentges said he expects the $1.4 million in TIF bonds that will be sold will be retired in as little as 12-15 years and that the TIF district will disappear long before the 25 years for which it was authorized. But the district was created to give the council the option of using extra money for other downtown improvements along Front Street, the alleys behind Front Street businesses and the pedestrian plaza across Cherry Street leading to the Mankato Place mall.

Downtown property owners, working through the City Center Partnership, are developing a “connectivity plan” to make the area more pedestrian friendly from the Mankato Public Safety Center to the City Center Hotel (formerly the Holiday Inn). Hentges said a specific plan is expected within 90 days, and the TIF district will give the council a tool for financing a portion of the improvements or for future maintenance costs.

He said there’s no intention of using the TIF revenue for a dramatic redevelopment of other Front Street buildings.

“I’m not aware of any grandiose development plan,” Hentges said.

Anderson worried that ideas from the “City Center Renaissance” plan, part of the Envision 2020 long-range planning process started in 2006, would transform into specific development proposals that the TIF funding would make possible.

“That language is being put in there without any of this being discussed with anyone,” he said.

Councilman Jack Considine said the council has long eschewed condemnation, that any future project would require council approval, that affected property owners are always consulted and that concepts from the Envision 2020 process shouldn’t be taken too seriously.

“A lot of it was just people coming up with ideas they thought would be cool,” Considine said.

Councilman Jason Mattick suggested he would join Anderson in blocking the sorts of future development projects the mayor was concerned about, but Mattick wasn’t interested in strictly limiting the TIF proceeds to the planned parking ramp.

“I have some of the same reservations as you,” Mattick said. “But I think it’s really important to leave our options open.”

Along with the TIF proceeds, the $4.9 million in parking improvements will be financed with a $2.2 million state economic development grant, excess proceeds from previous TIF districts in the city and $600,000 from Tailwind.