A planned development to transform an empty parking lot into two three-story buildings is getting some assistance from the city.
In addition to selling Municipal Parking Lot No. 5, located at the intersection of Minnesota Avenue and Grace Street, for $1, the City Council Oct. 25 agreed to establish a Tax Increment Financing district to help pay for development. Shannon Sweeney, of David Drown Associates, told the council that the TIF would allow the city to capture the increase in property taxes that the development creates and pay some of that back to the developers to help negate the cost.
The incentive is capped at 14 years or $1.5 million. After that, the city, Nicollet County and St. Peter School District will receive the full annual property tax payments.
As part of the incentive agreement, the developers must keep at least 20% of the residential units occupied by or available to persons whose incomes do not exceed 50% of the county median income. This will ensure the new complex provides some affordable housing in town. With 34 expected units in the second and third floors of the two buildings, seven will need to meet those requirements.
The council voted in favor of the TIF agreement, and it also voted in favor of the final development agreement for the project. The $1 land sale from the city to the developers was determined, according to Community Development Director Russ Wille, based on the city’s 20 years of efforts to get the property developed.
“The price is consistent with offers made to previous developers, as they have considered potential developments at that location, and the price reflects the challenges of development on that site,” he said.
The council voted 5-1 in favor of the development agreement, with Mayor Chuck Zieman voting against and Councilor Stephen Grams absent. Zieman had indicated his concern with a couple aspects of the project, including the buildings materials and especially parking. The development will leave 35 parking spaces on the property to pair with the 34 living units.
Wille said that, by his non-scientific counts, there were a peak of 61 vehicles occupying spots available on the development block out of 101 total at the noon hour of a Tuesday.
The developers plan to get to work Nov. 5, wanting a hole in the ground before winter, with construction taking place immediately after up to potential completion in June 2022. The people associated with the development group, called STP Group, have completed several projects in town, including the Dunkin’ strip mall and Capitol Room.
Leaders on this project include president, broker and owner of Coldwell Banker Commercial Fisher Group, David Schooff, and 19-year St. Peter resident Matt Borowy, owner of Bright Pixel Design. Borowy, a designer and architect who is a partner in a development project for the first time, came up with a design plan. The buildings, which would mostly be filled by 34 apartments (one bedroom and two bedroom) but would also include commercial spaces on the main level, are expected to blend in with the existing downtown.
The developers are not yet revealing what plans they have for tenants in the commercial spaces, but they are negotiating with some possible clients now. The team is anxious to get started.
“I’m feeling excited and relieved that we’re over (the development agreement and incentive) hurdles,” Borowy said. “When you’re working with public entities, you never really know if things are going to move forward until the votes come in.”
As a member of the community, Borowy feels confident the project will bring an improvement to the downtown.
“I think people are going to be really excited and love these buildings once they’re open and running,” he said. “It’s a night and day difference between this empty parking lot and what we’re going to produce in that spot.”
He added, “We’re going to have 34 new families downtown, living, buying food and groceries. It’s going to turn that block around.”