OWATONNA — “This is an exciting night for Owatonna,” said city council member Kevin Raney.
It was an exciting night indeed on Tuesday — albeit a somewhat quiet one — as the council unanimously approved the establish of three Tax Increment Districts and the use of tax increment financing for three upcoming projects in Owatonna that are guaranteed to make an impact on the city’s infrastructure.
Tax increment financing, or TIF, is a public financing method that is used as a subsidy for redevelopment, infrastructure, and other community-improvement projects. The TIF dedicates tax increments within a certain defined district to finance the debt that is issued to pay for the project. TIF creates the funding for these projects by borrowing against the future increase in these property-tax revenues.
The approvals of the resolutions, as well as the public hearings, were held at the beginning of the meeting with no comments being made from the public. The projects include the Costco distribution center, the expansion of Daikin, and construction of a 28-unit apartment building.
The Costco distribution center project will construct a 354,415-square-foot facility in the northeast corner of 39th Avenue NW and 18th Street SW. The project will result in the addition of 200 new jobs and will provide an estimated $2 million in public improvements to be completed by Costco as part of the project. Those improvements include constructing 10th Street NW, improvements to 39th Avenue NW, reconstructing 18th Street SW for the length of the property, and putting in an emergency warning siren.
The maximum amount of TIF for this project is $13 million and would be a “pay as you go” TIF for up to nine years, meaning the increment received is only as much as is paid from property taxes.
The Daikin expansion project will include the construction of a 150,000-square-foot warehouse just east of their manufacturing space. This will allow warehousing space in the main plant be converted into manufacturing space which will result in the addition of 50 new jobs. The total amount of TIF for this project is $1,471,017 and would be a “pay as you go” TIF for up to nine years.
The apartment complex project will consist of demolishing the existing building on the southeast corner of the intersection of 18th Street SW and 2nd Avenue SW, which is a vacant block building, and constructing the 28-unit apartment building. The building will have garages on the first floor and two stories of apartments above. The total amount of TIF for this project is $290,744 and is estimated to last 12 years.