FARGO - Xcel Energy is seeking tax incentives from the city to redevelop a downtown site that used to be home to the company's manufactured gas plant nearly six decades ago.
City commissioners voted 3-2 to study the company's proposal for a tax-increment financing district Monday, March 26, with Tony Gehrig and John Strand dissenting.
The 2-acre property in question is at 11 12th St. N., now home to the 88-unit Heartland apartment complex, which was built in 1969, nine years after the gas plant closed. The property, located across NP Avenue North from the Union Storage building, is now owned by Heartland Properties and Xcel is negotiating to buy it.
Jim Gilmour, the city's top planning official, said the property is worth $2.9 million now but could be worth $20 million when redeveloped.
Mark Nesbit, the utcompany's principal manager for North Dakota, told city leaders the company has plans to conduct remediation at its own expense because underground components of the gas plant remain. He said the company wants to go further and remove the components as well as demolish the apartment complex, which is in blighted condition.
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That would allow the land to be redeveloped, though the company doesn't have any specific plans for construction.
Gilmour said Xcel might just sell to the land to a developer instead of doing the redevelopment itself.
According to the company, the gas plant converted coal and oil to gas for lighting, heating and cooking between 1885 and 1960 when it closed because natural gas had become widely available in town. Two separate tests have shown the property is safe for the public but not necessarily for construction workers if they had underground work in the area, which is why Xcel is conducting remediation at an estimated cost of $20 million.
The cost of clearing the land for redevelopment is estimated at $2 million, according to Nesbit. If the city agrees, this cost could be paid with tax-increment financing, or TIF, in which all property taxes collected in a given area would be dedicated to paying Xcel back this amount.
Gehrig said he wouldn't support another TIF district because the land is prime real estate and developers will build on it regardless.
Gilmour said he's concerned what kind of redevelopment would occur, suggesting the city wouldn't want a convenience store or fast food restaurant there.
Gehrig shot back that it's not city government's role to decide that.
Actually, the city's use of tax incentives and its general planning policy does play such a role. Incentives are generally aimed at properties that are worth more and therefore pay more property taxes later on. It also offers incentives to some industries and not others.
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Strand said he would like the city to require any redevelopment provide affordable housing but later decided Xcel would pursue a project no matter what and incentives weren't needed.
The TIF district would still require approval by commissioners after the city conducts the study.
