The unoccupied building at Sportland Corners in Nisswa could become the site of an American National Bank, possibly with Stonehouse Coffee as a tenant, if the Nisswa City Council agrees to establish a tax-increment financing redevelopment district there.
The council on Wednesday, May 16, agreed to the first step of holding a public hearing July 18 to talk about the TIF redevelopment district, so it could hear firm monetary numbers that would be involved. The council then would decide whether to establish the TIF district.
Tax increment financing is a method of financing public or private improvements that are needed to serve new development. While the existing tax on the property continues to be paid, the increase in tax value of the property is returned to the developer for a set period of time to help pay off the cost of the development.
PJ Smith, president of American National Bank in Pequot Lakes, told the council American National Bank will come to Nisswa.
"The question becomes where do we do it and how do we do it? That will be driven by location," Smith said.
The Sportland Corners location on Smiley Road, just off Highway 371 and County Road 13, is preferred, but only with a TIF redevelopment district. Otherwise, another location for a standalone bank building would be sought.
Smith said the property owner is selling the Sportland Corner site for $775,000, and he estimated the property to be worth between $300,000-$400,000. He estimated a TIF note in the area of $500,000 likely would be needed.
"That sounds like a lot of money, but again look at where it's being created from - from the increment of additional value of the property," Smith said. "Do you want to redevelop that property?"
The building is rapidly deteriorating and would be knocked down, Smith said, noting terms to buy the site are completely contingent upon approval of the TIF redevelopment financing district. He said he is close to an agreement to have Stonehouse Coffee as a tenant.
"It's a complete work in progress," he said.
Preliminary plans call for 5,000 square feet on the main level to house the bank (4,000 square feet) and Stonehouse Coffee (1,500 square feet), and 4,000 square feet of space on the second level for future bank expansion, or more likely for other businesses looking to expand or move to Nisswa, Smith said.
The bank could close on the property Sept. 3 and break ground shortly thereafter. But if the council wasn't on board with a TIF redevelopment district, Smith said he wouldn't waste time and money to design a building.
City Administrator Jenny Max said the city's consultant would provide more information in the next couple of months, before the July public hearing, including how much money would be involved and how many years the TIF redevelopment district would be in effect.
Mayor Fred Heidmann said he wanted to see the Sportland Corners area developed, but asked if the city offered TIF to one business that didn't want to pay the asking price for a chunk of land, what would the city do if another business asked for the same elsewhere?
Smith said the council has to ask the "but-for question" - But for the TIF, would development happen? He said it's clear the answer in this case is no.
"TIF isn't a subsidy," he said. "It comes off the increment of the additional taxes."
Council member Gary Johnson said he sees this as an opportunity to take care of an eyesore. The property will continue to deteriorate and be an eyesore," he said, noting it seems TIF financing would be a wise use for this project.
Council member Ross Krautkremer said numbers are crucial, but he also believes the project would be an appropriate use of TIF money. Each project would stand on its own, so the city wouldn't be obligated to offer TIF financing in every case, he said.
"TIF is hard to understand, so without seeing numbers it's impossible to make a decision, but I'm in favor of going down the road and hopeful we can come to terms on something reasonable," Krautkremer said.
Council member Don Jacobson was absent May 16.