Counterpoint: When does Edina consider using TIF?

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I was quite surprised to read in the Minnesota Star Tribune (“Edina residents question tax incentives for redevelopment project,” Aug. 18) that the City Council of Edina, acting in its economic development capacity as Edina’s Housing and Redevelopment Authority, as stated by the reporter, “advanced nearly $23 million worth of tax-increment financing (TIF) to help fund a $300 million project planned for the 8-acre site that’s currently home to Macy’s Furniture Gallery.” This is a misunderstanding of the action taken by the Edina HRA on Aug. 15.

A bit of historical context on this transformational redevelopment proposal seems appropriate. This proposed project by Enclave Companies and Lifestyle Communities was submitted for rezoning and site plan consideration in March 2023. It thereafter went through a vigorous 15-month review process, including extensive opportunity for public input, at the neighborhood level and through formal processes at the Planning Commission and City Council levels. The Edina Planning Commission recommended approval of the proposal on May 22, and the City Council, on a 4-1 vote, recommended preliminary rezoning approval on June 18. A hearing on final rezoning will be held this fall to determine if all preliminary approval conditions have been met. Consideration of the use of TIF has been requested by the developer.

TIF has been used in Edina since the early 1970s to deliver permanent benefits to the public that are superior to the minimum requirements established in our City Code. Places that people love in Edina, like Centennial Lakes Park (with thousands of visitors every day), the original 50th & France and now the improved 50th & France, were all locations in our community where TIF was used to deliver short- and long-term improvements that are beneficial to the quality of life of the residents of not only our community but the region as well.

In Edina, TIF has not been used to subsidize developers or to attract developers to invest in the community. Instead, it has been used as a public finance tool to enable private developers to deliver desired public improvements while simultaneously enhancing the property tax base that supports the city, schools and county.

TIF can be a helpful funding tool to cover certain costs associated with exceptional public benefits that might not otherwise be achieved. In a situation where exceptional public benefits can be achieved, the potential use of TIF needs to be carefully considered in a distinct minority of situations.

So why is the HRA considering the potential use of TIF at the Macy’s Furniture site, which has been characterized by as “one of the best pieces of commercial property in Edina”? It is because the visions and aspirations adopted in the 2018 Greater Southdale Plan and related 2019 Design Experience Guidelines aspire to create new places that elevate the public experience for the future generations.

There are many reasons for considering the use of TIF at the Macy’s Furniture site, including the high industry costs to deliver a multiphase project that responds to market expectations and complies with Edina’s requirements associated with PUD (Planned Unit Development) zoning for the site. This PUD rezoning classification requires higher levels of exterior design and compliance with the Southdale Design Guidelines that subdivide this 8-acre “superblock” of private property into four smaller sites that are surrounded by new roadways, sidewalks and enhancement of an existing bicycle trail. These new routes will be privately owned and privately maintained so as to not burden future taxpayers and will be available for use by the public by means of permanent public easements. These new public easement areas cover nearly 50% of the private property and will also include landscaped buffers, public seating areas and public art.

Additionally, the developer will be required to provide dedicated public parking for 140 vehicles on a site where no dedicated public parking currently exists. As part of the rezoning process, the developer will also comply with two of Edina’s forward-looking policies — compliance with our Sustainable Buildings Policy and our Affordable Housing Policy.

Finally, this site proposal has intentionally been arranged to allow for a future pedestrian and bicyclist passageway across France Avenue to connect neighborhoods located on the east and west sides of this busy six-lane county road. If this proposal moves forward, TIF collected from this site could be the primary funding source of this new public improvement.

The fiscal impact of this proposal is dramatic. If TIF is determined to be used as part of this development process, the estimated market value of the site will skyrocket from $12 million to $300 million with a 10-times growth in property taxes collected annually.

I just stated “if TIF is used,” which takes me back to the action of the HRA on Aug. 15. That action, on a 4-1 vote of the HRA, was not to “advance” TIF funds to the developer but to instead direct staff and our public finance advisers to go to the next step of analysis to determine whether an agreement is possible with the developer on the potential use of TIF in the form of a redevelopment agreement. If an agreement is reached in principle, the City Council and Edina HRA would next need to determine whether or not to establish a new TIF district and whether or not to approve the use of TIF to support the developer’s proposal at the Macy’s Furniture site. This consideration includes another round of public discussion, including input from the school district, county and other taxing agencies.

Not every city is fortunate enough to have proposed $300 million developments in their town. We are grateful to have the opportunity to relocate the Macy’s Furniture Gallery into a modernized facility in Edina. And we are grateful that property owners and private investors are willing to modernize our community.

The pending proposal at the Macy’s Furniture site is just one example of current real estate development activity in Edina. We presently have two other projects nearby on France Avenue previously granted zoning approvals and TIF consideration that are currently paused. While those developers began the first steps by clearing those sites and constructing the first phase, further construction of those projects has unfortunately been slowed by the high cost of materials, labor and the expensive borrowing environment.

As to the proposal at the Macy’s Furniture site, we will see whether we can reach an agreement with the developer that gets, for Edina, the extraordinary public benefits that are possible. That determination, however, has yet to be made. I only wish the reporter had explained that properly to all who read the article.

James B. Hovland is Edina’s mayor.