FARGO – A Minneapolis development firm that specializes in cleaning up dilapidated sites wants to turn an old industrial site here into an $18 million business complex.
But the proposal hinges on Hyde Development getting a tax break for the 15-acre former site of Butler Machinery, at the southeast corner of Interstate 29 and Main Avenue.
The development group is asking for nearly $2 million in tax reimbursement over 15 years, in the form of tax-increment financing.
“We’re excited to try and clean up the front door of Fargo and also bring probably 300 new jobs to the site and at least $10 million in new property tax base, if not $15 million,” said Paul Hyde, founder and partner of the firm.
At a meeting this week, Fargo city commissioners asked finance staff to further study the tax break.
Planning Director Jim Gilmour said the reimbursement amount and time limit of the TIF district could still be altered. A third-party financial adviser will review the proposal and report to the city’s finance committee, Gilmour said.
The city would also have to hold a public hearing on the tax break. The proposal could be back in front of City Commissioners in late July, at the earliest, he said.
Hyde said he hopes to start demolishing the old buildings in July. The first new building could be up by late August, with businesses moving in by January, he said.
The so-called Butler Business Park proposal includes four, multi-tenant industrial buildings totaling 180,000 square feet.
“What we’re trying to do is present sort of a state-of-the-art, sustainable, LEED buildings business park on a very visible site,” Hyde said, referring to the Leadership in Energy and Environmental Design green building standards.
That corner of the I-29 and Main Avenue intersection has languished and is in need of refurbishing, Gilmour said.
The buildings there were built in the 1950s and bring in less than $10,000 in property taxes annually. The $18 million Hyde proposal would bring in about $250,000 in property taxes annually, Gilmour said.
Hyde still needs to provide the city with its financial plan for the project, Gilmour said. But he said early indications are good.
“I think it’s real positive to see this type of industrial infill development,” he said.
In the business of cleaning up polluted sites, Hyde said tax-increment financing districts and other tax credit programs, like the Renaissance Zone, are critical to getting developers involved.
“You need that funding to make sure you have a level economic playing field with a clean site,” Hyde said. “I can’t charge more rent to somebody to be on a polluted site, and that’s what those tools are there to solve, and it’s a vital tool to make redevelopment happen.”
Tax-increment financing is a tax break used to spur development in areas that are blighted or underused. A developer gets repaid for a certain amount of property taxes assessed on the new value a project creates.
The Renaissance Zone is a North Dakota program that offers broad property and income tax exemptions for developing in designated areas – downtown, in Fargo’s case.
Hyde Development is the same firm that attempted about two years ago to build a new apartment complex geared toward students on First Avenue North in Moorhead along the railroad tracks. That project was scuttled after it didn’t get enough state money to help with pollution cleanup, Hyde said.
But looking in Moorhead also brought the Minneapolis firm to Fargo. They’ve been searching for an ideal site here for about a year and a half before landing on the Butler site, their first proposed project in Fargo.
“I hope the first of many,” Hyde said.
The firm has done other projects in Minneapolis, Milwaukee, and Fridley, Minn., Hyde said.