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City seeks to support downtown Willmar development

WILLMAR -- Major development could be on the way to downtown Willmar and the Willmar Planning and Development Department is hoping to assist. Marketing Concepts of Spicer is interested in redeveloping the old Nelsen's Laundry and Cleaners propert...

Downtown TIF
A possible tax increment financing redevelopment district could assist Marketing Concepts of Spicer's plans for the old Nelsen's Laundry and Cleaners location on Benson Avenue Southwest in Willmar. (Shelby Lindrud / Tribune)

WILLMAR - Major development could be on the way to downtown Willmar and the Willmar Planning and Development Department is hoping to assist.

Marketing Concepts of Spicer is interested in redeveloping the old Nelsen's Laundry and Cleaners property on Benson Avenue Southwest, with the goal to move the marketing business, and its nearly 60 employees, to Willmar. Adding another 16 employees are possible over the next three years.

"The project looks to be a favorable addition to downtown," Willmar Planning and Development director Bruce Peterson said at Monday night's City Council meeting.

An avenue of assistance is creating a redevelopment tax increment finance district for at least three lots at the site. The district would freeze the property value for 12 years, which would keep the property taxes at their current level. Tax revenue from the post-development value would be available to the property developer for reimbursement.

Marketing Concepts has applied for the tax increment finance district designation. The business wants to start work on its project immediately after the district is formed. To move the process along, the council set a May 1 public hearing, which is required before the a TIF district can be approved.

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Councilor Audrey Nelsen, whose family owns the land in question, abstained from the vote, which passed unanimously.

Tax increment financing does not provide any reduction in taxes. The increase in taxes is redirected to pay for development expenses.

It's estimated the new downtown project could create about $10,500 in annual tax increment, which could be used to help the developer pay for the land acquisition along with demolition and rehabilitation of the building.

The project itself, which Marketing Concepts estimated will exceed $1 million, could create an estimated $500,000 increase in property value for the lots, according to the Kandiyohi County Assessor's Office.

While state law allows redevelopment TIF districts to go for as long as 25 years, Peterson is recommending only 12, and for the district to be small in scope.

"It has been my philosophy over the years that you should restrict your TIF sizes as much as possible so they have to create their own increment and stand on their own. So they don't have ancillary tax increases contributing to their own project. It's part of the city's pay-as-you-go philosophy," Peterson said.

A public hearing was also set May 1 for an economic development TIF district for two lots in the Industrial Park. GM Development is planning on building a 14,000-square-foot trucking terminal and office building with 24 loading docks, along with hiring 10 new employees in three years.

Magnum Trucking will operate the terminal providing less-than-truckload shipping, which is the transportation of relatively small freight. The new construction could bring about $650,000 in additional value, according to the Kandiyohi County Assessor's Office.

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A potential second-phase project includes the construction of a 42,500-square-foot distribution and warehouse space, with an estimated market value of $1 million by the assessor.

The TIF district, which would last no more than 10 years, would assist the city in recouping $135,355 from the land-write down and help GM Development with the second phase of the project.

The land purchase approved last month by the city qualified for the city's Industrial Park write-down policy, which reduces the price based on the number of new employees and increased property values due to development.

All TIF districts must pass the "but for" test, which evaluates whether the project would happen without the tax increment financing district in place. Peterson said he believes both the downtown and Industrial Park projects will pass the test, especially in regard to the work needed at the Nelsen building.

"It will require extensive work," Peterson said.

In an interview last week, Peterson said Willmar has used TIF districts for a wide range of projects.

"There was a time we had 15 to 16 active TIF districts in the city," Peterson said. Now there is only one, from the Jennie-O Turkey Store expansion in 2014.

"It's a great tool to use," Peterson said.

Shelby Lindrud is a reporter with the West Central Tribune of Willmar. Her focus areas are arts and entertainment, agriculture, features writing and the Kandiyohi County Board.

She can be reached via email slindrud@wctrib.com or direct 320-214-4373.


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