School OK’s city request to extend TIF district

Cliff Buchan
News Editor

The Forest Lake School Board last Thursday night joined other area governmental agencies in supporting a city of Forest Lake request for a 10-year extension of a city tax-increment financing district that is set to decertify in 2015.

Mayor Chris Johnson went before the school board and received a 7-0 vote to support the move.

The TIF extension request is now at the state legislature where Sen. Ray Vandeveer, R-Forest Lake, and Rep. Bob Dettmer, F-Forest Lake, have introduced special legislation amendments to the omnibus tax bill to allow the extension. The city council, the Economic Development Authority and the Washington County Board of Commissioners are all on board supporting the request.

Increments from the TIF district would become available to support some of the costs tied to a city proposal to redevelop the Northland Mall complex to house new retail offerings and as a site for a new city hall, and police and fire department homes.

The mall project is part of overall improvements envisioned for the south Highway 61 corridor.

In addition to the mall project, a second proposal is for the redevelopment of the existing city hall site at 220 N. Lake St. with multi-family housing.

Johnson told the school board that the proposal is preliminary and the extension of the TIF district will only take place if deals can be reached for the two development projects. That has to be completed by the start of the next legislative session, Johnson said.

“If we don’t [get a deal done], it dies,” Johnson said of the TIF district extension.

Plan Details

Johnson said the plan is still in the preliminary stages, but ties strongly to input gleamed from community members to improve the Highway 61 corridor and an obvious need to do something with the mall site now owned by PACE Development. The PACE group is the former owner of MarketPlace Foods and its original plan to reopen the grocery store as part of a Northland Mall redevelopment remains stalled.

Johnson spoke briefly to that last week saying too many challenges exist for full development as a retail complex. Big box retailers are looking for freeway exposure, Johnson said. Market conditions and redevelopment costs on the site are other key negatives in the PACE attempts.

But with a second developer interested in a multi-family project on the current city hall site, the council and EDA are attempting to see the projects through. The TIF extension will provide some of the funds needed to do the public-private projects, he said.

“We think it’s an effort worth doing,” Johnson said.

Northland Mall is only 12 percent occupied at this time, he added. The main mall building spans 102,000 square feet and is on a 13.7-acre parcel. It was built in the late 1970s.

The city study revealed that a redevelopment of the mall site would increase property taxes paid on the property from $93,848 in 2011 to $140,720 with new retail development on site. The current city hall, which was built in 1939 and remodeled extensively on two prior dates, pays no property taxes now, but would generate $48,000 in real estate taxes with the new housing program.

Northland Mall property taxes are projected to dip to $35,000 in 2012.

As for the TIF district which is set to blink off in 2015, it generates $721,928 in tax increments. Some of the those dollars in future years would be available for eligible TIF projects such as demolition and site work.

If the legislature approves the city’s special legislation request, Johnson said the clock would then be in play with a little more than six months available to get the development projects approved.

The city for a number of years has studied potential new government facilities. Johnson said costs estimated to renovate and expand the existing city hall do not make financial sense, but a consolidated city, police and fire complex at Northland Mall would be doable.