FARGO - About $1.5 million in property tax breaks are being sought by Drekker Brewing Co. and development partner PS Holdings to help build a major expansion to Drekker's Brewhalla complex.

The request for a 10-year tax increment financing package for the $20 million Brewhalla Market will be heard by the city’s Tax Exempt Review Committee 1 p.m. Tuesday, April 27, in the City Commission chambers.

A “but for” report submitted April 20 by city staff supports the tax break, saying that it’s needed to make the endeavor financially viable.

The project at 1702 1st Ave. N., just west of the current Drekker Brewhalla, consists of a 100,000-square-foot, four-story building that will include event halls, a 24-room hotel, 18 one- and two-bedroom apartments, a 22,000-square-foot market for vendors and eateries, and underground and surface parking.

The project was announced in December 2020. Plans call for construction to start in May and finish in September 2022.

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Mark Bjornstad, president and co-owner of Drekker, said the TIF is needed to help with extraordinary costs tied to land acquisition, site excavation, soil conditions, demolition, site work and public works improvements.

The area where Drekker wants to build was developed in the early 1880s and other buildings were located there until the 1920s or so.

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According to city documents, surprises are expected once the digging starts.

  • Nearly every excavation for The Railyard’s utility piping ran into old foundations, either stone, masonry or concrete.

  • Bad soils were found where old foundations were improperly backfilled.

  • At one excavation for the addition of a private residence, there was a 20-foot square by 6-feet-deep excavation backfilled with layers of plate glass covered by soil, all of which had to be removed.

  • A former railroad roundhouse was located in the area, and it’s believed that old foundations will be found. Soil borings have found construction rubble in three spots.

  • There is anecdotal information that part of the old Fargo Central High School construction debris was landfilled in the area of the new construction. That could include asbestos containing materials and lead paint.

  • Soil borings indicate 12 to 15 inches of soil would have to be removed and the ground built up for a new foundation.

  • It is considered a “brownfield site.” There is no known petroleum or chemical contamination, but there is known underground debris and contamination.

Drekker Brewing Co.'s Brewhalla at 1666 1st Ave. N., Fargo. Drekker's owners and a development partner are seeking a $1.5 million property tax break to help with construction of a $20 million addition just west of the craft brewery's building. (Photo courtesy of Drekker Brewing Co.)
Drekker Brewing Co.'s Brewhalla at 1666 1st Ave. N., Fargo. Drekker's owners and a development partner are seeking a $1.5 million property tax break to help with construction of a $20 million addition just west of the craft brewery's building. (Photo courtesy of Drekker Brewing Co.)

The breakdown for the costs to be reimbursed by the TIF include:

  • $971,639 for property acquisition.

  • $241,650 for demolition and site clearing and grading.

  • $101,600 for dealing with poor soils.

  • $118,682 for public works improvements.

  • $71,682 for legal and TIF fees.

The site currently generates about $10,000 a year in property taxes, but in Year 10 or sooner of the TIF period, it is expected to generate $150,000 to $175,000 a year in taxes for the city, Cass County, and the Fargo School District.

The partners in the development are investing $3,840,000 and seeking a loan of $15,360,000 to build the project. Estimates call for the project to create about 200 jobs and generate about $1 million in sales tax revenue.