Minot City Council approves TIF for Blu on Broadway

City council advances developer’s financing for street work

Submitted Photo A rendering shows the proposed Blu on Broadway, a mixed-use development, planned to begin construction this year.

A different method of financing a mixed-use project left Minot City Council members with different opinions and mixed feelings Monday.

On a 5-2 vote, the council approved the creation of a Tax Increment Financing (TIF) district that gives the developer of Blu on Broadway a five-year abatement on site improvements. The developer will put that money toward upgrading a one-block alley into a city street.

EPIC Companies, the developer, will pay the entire cost of the First Street Southwest project up front, at no cost to adjacent property owners.

Blu on Broadway is to be located at 1629 S. Broadway, the site of the former Northern Bottling plant. The council approved the project as a planned unit development in the fall of 2019. Expected to break ground this summer, Blu on Broadway will consist of a five-story building, with commercial units on the first floor and 42 low- to moderate-income housing units on the upper floors. Completion is anticipated in the fall of 2021.

Blu On Broadway is using over $5 million of private money, $4 million of National Disaster Resilience funds and an interest buydown from the Bank of North Dakota in addition to the TIF.

“This is a good vehicle to get some things that, but for the TIF district, wouldn’t happen,” Council President Mark Jantzer said. “In this case, it’s a road that’s going to be upgraded and constructed as part of this project, and at no immediate cost to the city. It’ll be taken care of over time by the tax increment financing, so I’m pleased to see this.”

Council member Josh Wolsky said he supports mixed use development and also has backed use of NDR dollars on the assumption the property and street improvements would provide return to taxpayers.

“I also have a little bit of a gripe with the principles associated with our economic development tools. I think the TIF is an extraordinarily powerful tool. But it is very difficult for me to to get a full sense of how these things work, especially when we start layering them together, and in this case we’re layering $4 million-plus of NDR dollars on top of a another significant investment by the public. I think that’s the only way that this can be described as this is, in fact, the public paid for this road,” Wolsky said.

“I just can’t support this project tonight, and I hope in the future we’re very careful about how we layer these economic development tools together because they really muddy the issue and make it confusing in terms of how these things work,” he said. “I can think of four or five projects right now that are going, where we have people paying the full amount of what it takes to redevelop a property and paying their public infrastructure costs on top of that, and so this is just one of those areas where, on principle, I have to say no.”

Wolsky was joined by council member Paul Pitner in voting no.

Pitner said Blu on Broadway isn’t good from a planning standpoint.

“It’s a square peg in a round hole, and I just can’t get on board with the idea of subsidizing the bottom line to this extent,” he said. His concern is having a housing project next to a major thoroughfare, with a low-income housing obligation for just 20 years, he said.

“I’m just not interested in subsidizing,” Pitner said. “This is essentially, in my opinion, paid for by the public with this TIF district.”

Finance Director David Lakefield said the tax break can’t exceed the cost of the street improvement under the developer’s agreement.

“They’re taking a little bit of a risk here because if property values don’t appreciate as much as they anticipate, they may not recover as much of that cost through the TIF mechanism as they anticipated. So they are the ones that are at risk on this. If property values skyrocketed for some reason, it’s unlikely that the increment in the tax, with the value, would ever exceed the public improvement costs,” he said.

The cost of rebuilding First Street Southwest, between 16th and 17th avenues to city standards is estimated at $700,000. Tax increment financing through a five-year tax abatement is estimated to cover $420,000 of that cost. The developer will be responsible for the full street construction cost.

Once the abatement on Blu on Broadway ends, the estimated additional taxes will be $82,000 annually.

“This abatement is absolutely critical for our affordable housing development to support the reconstruction of 1st Street,” Blake Nybakken, vice president of development for EPIC, wrote in public hearing comments to the council. “Without it, the economics don’t work and we will be looking for other possible solutions, which could impact the adjacent properties and delay the project, which we don’t want to happen.”

Todd Berning, company president, wrote in comments to the council that the project is a win-win for the community.

“We collectively came up with a solution that will put the burden on the project and not any other adjacent land owners or taxpayers, even though dozens of area land owners adjacent to it and otherwise will benefit from the new road. We are basically building a public road with city specifications at no cost to any other taxpayer other than Blu On Broadway,” he wrote.


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