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Brainerd City Council: Royal Tire looking to rebuild

Royal Tire is asking the city of Brainerd for help in financing a new retail store at its current location on Sixth and Washington streets. Sheila Haverkamp, executive director of the Brainerd Lakes Area Economic Development Corporation (BLAEDC),...

Council member Mary Koep (left) expresses her excitement at Royal Tire's proposal to reconstruct at its existing site in Brainerd. Spenser Bickett/Brainerd Dispatch
Council member Mary Koep (left) expresses her excitement at Royal Tire's proposal to reconstruct at its existing site in Brainerd. Spenser Bickett/Brainerd Dispatch

Royal Tire is asking the city of Brainerd for help in financing a new retail store at its current location on Sixth and Washington streets.

Sheila Haverkamp, executive director of the Brainerd Lakes Area Economic Development Corporation (BLAEDC), presented the company's application for tax increment financing (TIF) to Brainerd City Council Monday night. The company plans to tear down its current building and build a new retail tire and automotive service store.

The city council gave conceptual approval to Royal Tire's proposal and set a public hearing on the TIF assistance for the June 15 council meeting.

"We are enthusiastic about the fact that this redevelopment in our own city and on Washington Street is going to occur," said Mary Koep, council member. "This is really banner news for our city."

The company expects to retain the 10 existing jobs at the store and add two more by the end of the second year following completion of the project, with an average projected wage of $16.23 per hour.

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The TIF assistance is an economic development tool used to help businesses offset the costs of redeveloping a site. Instead of paying higher taxes immediately upon completion of a new building, a business instead will use those tax savings to cover the costs of demolition and new construction.

A "very preliminary" estimate of the value of a new Royal Tire store is $1,000,000, compared to the property's current value of $427,700. Based on these estimates, the company would save about $10,000 per year in taxes for the next 20 years and apply that $200,000 toward demolition and construction.

"This redevelopment project will be a further catalyst for economic development and redevelopment," reads BLAEDC's memo to the city council. "It will eliminate a blighted building, create jobs and increase the tax base in Brainerd."

In requesting TIF assistance, BLAEDC seeks to make the case the city of Brainerd will benefit from the redevelopment of the site versus abandonment or the possibility of losing the new retail store to another area. The cost of building on an empty lot is typically less than the demolition and cleanup required to redevelop an existing site, so TIF assistance acts as an incentive to stay put.

Paul and Pat Dunnick, owners of Minnesota-based Royal Tire, told the personnel and finance committee the building is substandard and has required several remodels over its 35 years of operation. The building itself is even older, having operated as another tire business previously.

"We're looking at making this into a place where people want to buy tires," Paul Dunnick said.

Paul Dunnick said they had originally considered a larger building, but scaled back their plans to remain in the same location in Brainerd.

"We feel this would be our best choice rather than trying to move it," Paul Dunnick said.

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The company plans to keep employees working at its commercial store in the Brainerd Industrial Park during the four months of construction. Although the company intends to divert its customers to the commercial location as well, the Dunnicks expect some customers to seek tires elsewhere during that time - another reason for seeking the TIF assistance.

Council member Dave Pritschet said there's often a focus on bringing new businesses to Brainerd, although "just as valuable, and sometimes more so, is keeping businesses here."

CHELSEY PERKINS may be reached at 855-5874 or chelsey.perkins@brainerddispatch.com . Follow on Twitter at www.twitter.com/DispatchChelsey .

Related Topics: BRAINERD
Chelsey Perkins is the community editor of the Brainerd Dispatch. A lakes area native, Perkins joined the Dispatch staff in 2014. She is the Crow Wing County government beat reporter and the producer and primary host of the "Brainerd Dispatch Minute" podcast.
Reach her at chelsey.perkins@brainerddispatch.com or at 218-855-5874 and find @DispatchChelsey on Facebook, Twitter and Instagram.
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