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Alexandria council creates TIF for redevelopment plan

The proposed development at the corner of 3rd Avenue and Broadway in Alexandria is for a four-story building, with retail and commercial space on the main level, underground parking, and approximately 75 apartments on the upper three floors. (Contributed)1 / 2
A conceptual drawing of the mixed-use building proposal for the corner of Broadway and 3rd Avenue in Alexandria, as viewed from Broadway. (Contributed)2 / 2

Following a public hearing Monday night, the Alexandria City Council approved a 15-year tax increment financing plan for a multi-million dollar redevelopment that promises to remake an ultra-visible block in downtown Alexandria.

By a unanimous vote, the council passed a resolution to create a TIF district for GoodNeighbor Properties, which has proposed a multi-use four-story building that will take up much of one block at the intersection of 3rd Avenue and Broadway.

Under terms of the TIF agreement, GoodNeighbors aims to secure a building permit and start construction by June 30 of this year, and be substantially complete by the end of 2020. It estimates the total project cost at $19 million.

The completed project is estimated by city and county assessors to be valued at $11.2 million.

With tax increment financing, property taxes are frozen at the current rate for several years, and the future tax savings are used to help cover site development costs.

The proposal calls for the demolition and redevelopment of two unoccupied buildings – including the former site of Bello Cucina restaurant – and one building occupied by West Central Glass.

“It’s really a blight on the city to have a big corner on our main street sitting empty with falling-down, condemned buildings,” Alexandria Mayor Sara Carlson said following the meeting, in reference to the two unoccupied buildings. “To have a redevelopment project go in and some new development right on our main street is very exciting, and good for our community.”

The complex will sit on a footprint of 37,200-square-feet, and is to include about 75 apartments on the upper three floors. The main floor will be a mix of office and retail space and a restaurant, with 112 underground parking spots also part of the plan.

“The redevelopment of this block is really quite pivotal for Alexandria,” Nicole Fernholz, executive director of the Alexandria Area Economic Development Commission, said after the council meeting. “It will be pretty impressive.”

Debate over length of TIF

The project cleared the city’s planning commission in 2018, and the council approved the GoodNeighbor applications Dec. 17. The approval of a TIF was the last big hurdle, Fernholz said, before the developers close on purchase agreements they said they have with owners of four parcels and begin demolition. The other building on the block, the Edward Jones Investments building, is not a part of the project and will remain, she said.

GoodNeighbor’s initial request was for a TIF of $3.5 million over a 13-year period, which is the city’s standard duration. However, on Monday the developer requested tax increment financing of $3.9 million over a 26-year span, and the length sparked most of the discussion.

During the public hearing, Douglas County Board Chairman Charlie Meyer said he was very much in favor of granting a TIF, but the consensus of the county board was for it to be for nine years or less.

Former council member Bob Kuhlman also came out strongly in favor of the project and said it will be a huge benefit to the city, but he favored a reduction in the requested years.

Council member Bobbie Osterberg read a statement from John Kes, encouraging a further study and a lesser number of years.

Council member Todd Jensen stayed with that theme, also voicing a lack of support for the request to double the length of the TIF. In reference to a recent work session on this subject, he said, “I don't think there was a taste for the 26 years.”

Council member David Benson backed him up, saying that most people he has spoken with are not against the project, but are opposed to giving TIFs for numerous years.

“Our standard has been 13, and most people I've talked to said 13 years would be acceptable,” he said.

In the end, Jensen moved to reduce the proposed years from 26 to 15, and it received a unanimous vote. Osterberg noted the size and scope of the project in adding two years onto the standard 13, and for Jensen, another factor was the extra expenses it could take to clean up the site.

Contamination costs

While the city’s policy is to limit TIFs to 13 years for redevelopment projects, Fernholz pointed out its guidelines include an exception that reads “unless there are extensive environmental remediation costs.”

Rob Thompson and Ted Christianson of GoodNeighbor Properties attended the meeting and addressed that point specifically to the council, and in the TIF application.

It boils down to what it will cost for site development, demolition and to clean up any contamination that is discovered on the site, Thompson said, noting the location of gas stations in the past.

“So we're really dealing with the unknown,” he said.

It was Jensen’s understanding that when a TIF expired, the developer can request an extension. However, Thompson said his experience in those situations is that the request is turned down.

He detailed other costs which he deemed “extraordinary,” and while conceding they may not discover as much contamination as they expect, the potential exists for those costs to be high, considering contamination has previously been found.

Fernholz, who presented the TIF resolution to the council, pointed out that the project addresses several goals found in the city’s comprehensive plan, starting with the removal of blighted commercial sites and the construction of modern facilities in their place.

“Two buildings have been vacant for I believe 1 ½ years and 3 years,” she said. “The chances of getting somebody to purchase them and bring them up to code wasn’t very likely.”

“I don’t know who else would clean it up or when it would get cleaned up unless there was a big project like this going in,” Carlson said, stressing the difference between TIFs for housing and ones for redevelopment.

“This one I feel very good about,” the mayor said. “It will beautify a whole big section of our main street.”