Council OKs new TIF district for armory redevelopment

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BROOKINGS – Brookings city councilors voted 7-0 last week on a pair of resolutions creating boundaries for and adopting a project plan for Tax Increment Financing District No. 12 in the city.

The new TIF district surrounds the old armory and an adjacent city parking lot in downtown Brookings.

The parking lot space will be used for new construction of a two-story parking garage and a three-story, 74-room hotel above that, and the armory will be renovated and rehabilitated to include business space, such as a restaurant, ancillary hotel space, commercial office space and associated facilities to attract new business or facilitate the relocation and expansion of existing business, according to the tax incremental project plan, attached to the council agenda online.

After accepting Linchpin Corporation’s armory proposal in November 2019, the Brookings City Council approved Linchpin’s development agreement for the city properties in October 2020, and a due diligence period for the project was extended to June 2022.

“Tax Increment District #12 boundaries consist of the area encompassed by the current armory and municipal parking lot west of the armory. The proposed improvements include the renovation and rehabilitation of the armory and a 74-room hotel with two levels of parking, remediation of hazardous materials, and relocation of utilities,” according to a memo from Community Development Director Mike Struck. 

“The creation of Tax Increment District #12 is a public/private partnership as the city intends to transfer ownership of the armory and adjacent public property to a private developer to complete the proposed improvements. The developer will front the costs associated with the project improvements and only be reimbursed the increment generated from the improvements. The total project costs are estimated in excess of $4.5 million. The proposed improvements lie within the proposed boundaries of the district,” Struck wrote.

Tax increment financing (TIF) is used to fund public improvements within a specified area and has become popular in the state, Struck explained. 

“Many communities throughout the state have utilized tax increment financing to pay for extending roads, sewer, water, trails, and other infrastructure into areas to expedite development. As the name implies, only the tax increment (future growth in property tax revenues) is used to fund the improvements. The base, or property tax generated before the creation of the Tax Increment Finance District, continues to be paid to the taxing authorities. Tax Increment Districts are created to help attract private development. In turn, these developments expand employment opportunities, increase sales tax, and expand businesses into the community,” Struck’s memo says.

Struck said city officials knew this request for a TIF district was coming, as it was part of the original proposal for redevelopment of the city-owned property. 

“It’s just a matter of timing to make sure we time it as closely as possible to when construction can begin so that we can maximize the increment value that would be generated from the project,” Struck told the council. City staff recommended approval.

Struck said $4.5 million is the total dollar amount that could be captured from the property tax increment.

Struck said total properties in TIF districts citywide cannot exceed 10% of total taxable property in the city, and the City of Brookings currently has 1.5% in TIF districts now.

“And we do not really add anything with this because this is currently a city-owned parcel with zero property tax value. We’ve been pretty fortunate over the years with our tax-increment districts. We’ve had a couple that have been decertified because they paid off quicker, and there’ll be a couple more that will be decertified here in the near future, so that percentage point will actually probably decrease a little bit more,” Struck said.

Struck said the project is a public-private partnership, as the city committed to some costs associated with repairing the armory’s roof. That could also be eligible for reimbursement through the TIF district.

Clinton Powell of Linchpin Corp. said developers have started the environmental remediation process of the armory. 

“At this point we’re working on asbestos mitigation, mold mitigation and some of our lead mitigation efforts, and so the contractor’s currently on site working on those items. We’re hoping that we’ll see groundbreaking of the new portions of the facility sometime this fall with the projected completion of the total project in spring of 2024,” Powell said.

Councilor Wayne Avery asked when people might start seeing some structural changes to the property.

“It depends on if you’re thinking about big holes in the ground or vertical things. Big holes in the ground, we’re hoping for this fall,” answered Angie Boersma of Linchpin Corp.

Avery asked if the armory’s roof was stable after high winds caused damage April 23. 

Boersma said the city hired contractors to make sure the roof is at least weather-tight.

Contact Jill Fier at jfier@brookingsregister.com.