The Northfield City Council on Tuesday approved subsidizing the planned 79-unit market rate apartment complex in downtown Northfield.

The vote passed on a 6-1 vote. Councilor David DeLong was the lone no vote.

The 25-year TIF includes the property the apartments are slated to occupy, at the corner of Fifth and Washington streets and city-owned parking lot on Washington Avenue. Plans call for the complex to be built on the opposite side of the block from Reunion, the restaurant that opened this summer after Rebound Enterprises made extensive renovations to the three historic buildings the eatery now occupies.

The $13.66 million apartment project is expected to include 33 studio apartments, 38 one-bedroom units and eight two-bedroom apartments. A public parking option had been discussed but has since been taken off the table.

The development is seen as likely not occurring with just private financing, qualifying it for TIF funding. The project has an estimated $1.8 million funding gap. Although the city committed to tax increment financing, the risk for the project is still seen as being on the developer to fund and construct the project and pay taxes. Project developers Rebound Enterprises and Stencil Group will still need to attain an adequate return on investment.

TIF financing is seen as capturing and utilizing most increased local property tax revenue from new development within a defined geography. It is used to encourage certain types of development or redevelopment that would not reasonably occur without assistance.

There are seven TIF districts in Northfield: Maple Brook Townhomes, Aurora Pharmaceutical, Spring Creek Townhomes, Jefferson Square Apartments, Hiley Neff Additions, Riverfront and Presidential Commons.

David DeLong mug

DeLong

DeLong asked what the difference was between this tax increment financing agreement and one that the council negotiated in 1999 for the 84-unit Presidential Commons development. That project did not produce enough revenue to cover bond payments and had to borrow from another tax increment financing district.

Parameters in the current project are seen as protecting the city. The developers this time need to find mortgage equity and financing. There is no outside revenue or bonds issued on behalf of the developers.

DeLong later took issue with including the nearby Washington Street parking lot in the tax increment financing district and unsuccessfully moved to exclude that spot from the district.

Councilors Brad Ness and Suzie Nakasian and Mayor Rhonda Pownell said they are in favor of establishing the district and appreciated the work developers did in the process.

Councilor Jessica Peterson White said she is mainly skeptical of public boards subsidizing private development but added this request was outside of the norm. She said the city needed to move ahead with the project because of the need for housing and increasing downtown density.

“I’m delighted to see this move forward as a resident of the immediate neighborhood,” she said.

“I appreciate the evolution of the TIF policies and the safeguards that were put into place with this TIF offer,” Councilor Erica Zweifel added.

Erica Zweifel mug

Zweifel

DeLong said although he agreed with nearly every positive statement about the project, he wanted the council, as a policymaking body, to discuss adding the parking lot into the district prior to Tuesday.

In extending the TIF boundary, including the parking lot, the city made the property eligible for possible funding sources not otherwise available if development takes place. The parking lot is not slated for construction in association with the project. DeLong said the apartment complex should stand on its own and not include any other work.

“We didn’t talk about this,” he said.

The main level of the apartment complex is expected to include lobby, office and fitness facilities, and floors two through four will contain 79 living units along with two elevated residential decks on floors one and four.

Approximately 90 percent of the units are planned to be market rate.

Reach Associate Editor Sam Wilmes at 507-645-1115.

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