Luverne City Council members approved a series of resolutions at their March 23 meeting related to the Town Square development on South Highway 75 and Hatting Street.
•They named Midwest Sustainable Consulting LLC as the developer of record for the Towne Square project, which will initially consist of two three-story, 27-unit apartment buildings.
The Texas developer will coordinate plans and specifications of the apartments, arrange financing and meet requirements of the $680,000 workforce housing grant and the $550,000 deferred loan from the city.
•The council approved an ordinance on March 23 to convey the real estate from the city to the developer for $1. Closing will be by April 15, and the land transfer would be after that.
•At the March 23 meeting, the council also took action to modify the TIF plan to reflect additional city commitments spelled out in the development agreement.
The city will grade the site to elevations necessary for the construction of the two apartments and provide hard surface parking for the entire site, as well as all ingress and egress access lanes for the entire site.
The estimated cost for these site improvements, including an inflation factor is $1.537 million, and that’s in addition to the city’s initial investments in preparing the site for development.
The tax increment financing plan will need to be adjusted by that amount, and a public hearing is required to amend it. The council set May 4, 2021, as the hearing date.
City invests up front for future returns
For background, the city purchased the condemned Sharkee’s property and the Mert’s Repair lot and approved the parcel as Tax Increment Financing District 23.
The city paid $220,000 for the condemned Sharkee’s property and $160,000 for the piece that housed Mert’s Repair (that moved to a new shop built on a city lot in the industrial park).
The city later purchased 2.13 acres from Gary Golla for $155,000 to square the corner of Hatting and Freeman for the 6.5-acre lot.
The city razed the buildings and improved the property with water, sewer and electric hookups to prepare the site for future development.
The costs for acquisition, demolition, and site improvements of the lots (more than $600,000) will be recouped with future tax increments.
The project utilized a $680,000 grant through the Department of Employment and Economic Development to meet workforce housing needs in Luverne.
The grant required a matching investment from the city, which fulfilled that obligation with its investment in the site improvements.
The way tax increment financing works, the new owners of the bare lot will pay full taxes on the improved property, but the difference between the current tax amount and the new tax amount will pay down the TIF debt.
After the TIF expires in 25 years, local governments will benefit from taxes paid on the full value of the developed lots.
The multi-phased project could produce up to $10 million in market value once the whole area is developed.
The overall plan is to redevelop the entire 6.5-acre area over the next five years into a commercial and housing neighborhood known as the Towne Square Addition.
Property will be sold off as it is developed into housing and commercial property in the mixed-use development.
At the March 23 meeting, Mayor Pat Baustian remarked that it’s good to be at this point of movement on the development.
“There’s 9.5 million (dollar) reasons why this needs to get going. We’ve been working on this a long time,” Baustian said, referring to the city’s investments in Towne Square so far.
“Our council has been proactive in cleaning things up and looking for housing options. It’s a big project, but it’s really a great opportunity for our city council and EDA to show what working together long term can accomplish.”