The city of Mankato has sold a $91,000 parcel and agreed to build a downtown parking ramp, the last two steps it had to take before developers agreed to a $2.5 million transformation of the underused Heco Building.
The land sale, approved Monday by the City Council, covered the space under the Heco, acquired by the city and leased to the building’s original developer, in 1981. The current annual lease payment is $5,442.
The purchase, by developers Tony Frentz and Rob Else, simplifies the project and will allow work to begin this August, Frentz said.
Their plan is largely unchanged from when it was first presented to the City Council late last year.
The first four floors — including the now-closed McGoff’s Irish Pub — will be commercial office space and the top two will be a mix of rental and condominiums.
City subsidies are standard for a downtown redevelopment. They include $25,000 in grants (which don’t have to be paid back), a $400,000 loan (which does) and $408,407 over 15 years in tax increment financing. That is a tax subsidy whereby the estimated increase in property taxes that will result from an improved property is dedicated toward paying some of the costs of the development.
The subsidies were predicated on job growth, Mankato City Manager Pat Hentges said.
There are 15 employees in the building now, and developers have said the renovation will bring 90 more jobs to the Heco. I & S Group intends to move from its Riverfront Drive headquarters to the Heco, and developers are in talks with a second employer.
The parcel sold Monday was appraised based on similar sales in the downtown area. The appraiser looked at four sales of land that ranged from $5.37 per foot to $11.87 per foot. The Heco parcel was set at $8.75 per foot, which was a judgment that compared this parcel’s quality to the others using factors like location, site improvements and size.
The ramp will double the 77 stalls currently on the site and will sit in the same spot as a previous version, which was torn down in about 2000, Hentges said. That ramp was in very poor shape, with crumbling concrete exposing the metal rods, and would have cost more than $1 million to renovate, he said. At that time, the owners of the Heco said they didn’t want to pay.
Hentges said underground footings of the old ramp can be used for the new one.
Key in the financing of the ramp is a state grant of $850,000.
The developers won’t be paying for most of the ramp’s cost, but will be responsible for the parts of the ramp that directly benefit their buildings as well as ongoing charges related to the use of the spots by employees and customers.
Frentz hopes people take notice of the Heco’s contributions to Mankato architecture, including floor-to-ceiling windows on the upper floors. The building was originally planned to mostly blue, but the city prefers earth-tones in its downtown so there was a bit of a palette swap.
Frentz said it would have been neat to include a restaurant in the building, but there was “no good fit” to replace McGoff’s.