FARGO - A Twin Cities developer is seeking a $5.25 million property tax break to help create a 44-acre industrial park on the far north side of Fargo.

Hyde Development plans to invest nearly $53.3 million in the project, which would be northeast of Interstate 29, between Cass County Highway 20 and the Amazon distribution center now under construction, according to City Commission documents made public Friday, Feb. 5.

The industrial park would include 643,000 square feet of warehouse space in three buildings to be built over three years.

The tax increment financing request will be reviewed by the commission at its meeting Monday, Feb. 8.

The commission will determine if staff should work with the developer on the plan, and forward an application to the city’s financial advisers for review.

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Jim Gilmour, the city’s strategic planning director, said Friday that he liked the project.

“I think it would be a great development. The question is going to be the appropriateness of the TIF financing,” which is up to the commission to determine, Gilmour said.

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While the area might develop without a tax incentive, Gilmour said it might do so less intensively. The size of the Hyde proposal is attractive for that area of town, he said, and would complement the Amazon distribution center just to the north.

“I think it’s a very appropriate land use,” Gilmour said of the proposed project. “You have good access to interstate highways. The airport is nearby. It’s a good location for this type of use.”

Three warehouses are planned for a 44-acre industrial park proposed by Twin Cities-based Hyde Development. The north Fargo park would be between the Amazon distribution center now under construction and Cass County Highway 20. (Courtesy of Hyde Development)
Three warehouses are planned for a 44-acre industrial park proposed by Twin Cities-based Hyde Development. The north Fargo park would be between the Amazon distribution center now under construction and Cass County Highway 20. (Courtesy of Hyde Development)

Tax increment financing uses all or part of a developer's property taxes to pay for infrastructure improvements, such as streets, sewers or parking lots in the areas near a new development. Fargo typically employs TIF to encourage development of affordable housing, construction in areas were it wouldn't be done without aid, remove blight, help with costs such as pollution remediation, or to spur development of underused commercial or industrial properties.

The requested TIF represents about 11 percent of the costs of developing the site, which is mostly vacant but for two farmsteads. It is zoned agricultural, though the city’s land use plan is for industrial and commercial development in that area.

Minneapolis-based Hyde Development was the developer of Fargo’s successful Butler Business Park on the southeast corner of the intersection of Main Avenue and Interstate 29.

The buildings to be built in the northside industrial park would be similar to the two buildings in the Butler Business Park, which were constructed using precast panels. The Butler Business Park project also received TIF assistance.

Hyde is asking for the TIF to help pay for extraordinary costs tied to the site development, including importing 5 feet of sand to place under the building slabs and footings to provide stability to counteract Fargo’s clay soil.

In a letter to the city dated Jan. 21, Paul Hyde, the CEO of Hyde Development, said a purchase agreement has been signed for what is being called the Holmquest site.

“These TIF funds are the deciding factor in whether or not this project is able to move forward,” Hyde wrote.

Getting the soils stabilized is a critical component of the project, Hyde wrote.

“Our buildings are known for their super-flat floors, which is only possible when built upon a property graded and compacted soil base. These floors attract industrial users who are then able to utilize high racking, laser-guided lifts and automated conveyor systems,” Hyde wrote.

“However, these same users are also very price sensitive. Without the support of TIF funding, we will be forced to incorporate these costs into our rental rates thus making our rents above-market and too expensive,” he wrote.

Gilmour said the Hyde industrial park proposal should help meet a need in Fargo.

“It seems like there is a demand in our market for more warehouse space. If you drive around town, you’ll see retail space and office space is probably fairly plentiful,” but warehouse space is still in demand, Gilmour said.

Meanwhile, the walls of Amazon’s massive 1.3 million-square-foot fulfillment center were already going up before the New Year.

Gilmour said the Amazon project is “well over $100 million, pushing $130 million” and will be the largest building in North Dakota.

Construction on the Amazon center will continue throughout the winter and “is going really fast,” Gilmour said.

“Their management team will be on the ground in April and probably be hiring people this summer,” Gilmour said.