Red Wing Development News

City Council Reviews TIF Agreement for Fleischman Mall 3 Redevelopment

The council reviewed a proposed Tax Increment Financing (TIF) agreement for the Fleischman Mall 3 site redevelopment project at 110 Broad Street. The project, a mixed-use development including retail, apartments, furnished units, and condominiums, has been in development for approximately two years and received assistance from DEED for demolition. The TIF district (District 9-3) was previously approved, encompassing several downtown parcels. This new agreement focuses on the Mall 3 site, with an estimated project cost of $36.8 million. The city is proposing to provide approximately $6.1 million in TIF assistance, utilizing 95% of the TIF revenue for the project over the full 26-year term, with 5% retained for administrative costs. This differs from previous agreements which included a 15% pooling for downtown revitalization and a shorter 20-year term. Financial consultants Baker Tilly and legal counsel Jenny Bolton provided analysis, concluding that the project would not proceed without TIF assistance, citing market-leading aspects and redevelopment challenges. The developer, US Fair Perfect Hotel, presented details on the project's scope, unit mix, and financial projections, emphasizing the need for TIF to bridge the financial gap and make the project viable. Discussions also touched upon alternative financing methods like revenue bonds versus pay-as-you-go TIF notes and the associated risks for the city. The long-term nature of the TIF agreement (26 years) was noted in relation to future city revenue needs.