Edina approves TIF funding for $85 million apartment complex to replace Perkins

A prime piece of real estate off Hwy. 100 in Edina occupied for decades by a Perkins restaurant will be replaced by an $85 million, seven-story apartment complex in 2024.

The Edina City Council last week gave final approval to the redevelopment project and a new tax-increment financing (TIF) district to fund the project.

The developer, St. Louis Park-based Reuter Walton, had requested $5.1 million in TIF to make the project viable.

TIF, which uses proceeds from property tax base growth to fund private developments, is rarely used in Edina, where most major developments are privately funded; only eight of 60 major projects in the city used TIF in the past decade. Bill Neuendorf, Edina's economic development manager, said TIF isn't used to just "bail out a developer, like some people think."

"Perkins would still keep flipping pancakes until they went bankrupt again," he said. "It only generates so much taxes. When you tear that down and replace it with a class A building ... that's how the taxing agencies like the schools actually benefit."

Residents at a public hearing last month objected to using TIF for the project. Bill Bailey said the city was "whoring" itself by giving money to developers when "it should be a privilege for a developer to come into our town and build a project."

Several residents said the school district was being "shortchanged" by the new TIF district, dubbed Eden/Willson, because it wouldn't expire until 2050 and schools won't fully benefit from the increase in property taxes until then. The property now is valued at $3 million, and officials estimate it will increase in value to $55 million during the 25-year life of the TIF district.

But Neuendorf said that school district officials expressed no concerns about the project. And Nick Walton, president and CEO of Reuter Walton, said the district will benefit as the development drives up the property's value.

"It brings an option for people that live in the neighborhood that want to downsize out of their Edina homes but stay in the neighborhood," Walton said.

Perkins will remain open for business in the next few months as Reuter Walton continues the process of purchasing the property, which is owned by Minneapolis developer Ned Abdul.

Rent for most of the 196 apartments will range from $1,650 for one bedroom to $5,450 for penthouses. The average apartment rent in Edina this year was $1,678, according to a second-quarter report from Marquette Advisors, amounting to a 1.7% increase over 2020.

As a condition for TIF funding, Reuter Walton agreed to make 20 apartments affordable for a family earning half the area median income — up to $52,450 for a family of four. Rent for the affordable units, depending on household size, would be in the $1,000 range.

Reuter Walton also agreed to other conditions for TIF, including public parking, $200,000 for public art and an easement for a future transit station. At the city's request, it agreed to include a 3,700-square-foot restaurant space on the ground floor and rezone the property to mixed-use.

To increase the public benefit, Reuter Walton and the city are allocating a portion of TIF — about $7 million — toward nearby roadway improvements. The area sees high peak-hour traffic volume from W. 50th Street and Eden Avenue to Hwy. 100, but sidewalks aren't complete and it lacks bicycle routes.

Neuendorf said that by making the area more pedestrian-friendly, it will feel more like a neighborhood rather than just a place to accommodate traffic. But even with the intended improvements, there has been pushback from residents.

Steve Makredes told the City Council that it's "disingenuous" to tout the project's affordable housing when the great majority of the apartments will be market rate. Residents Paul Porter and Janet Dietrich said road improvements don't address concerns about traffic and speeding on 50th Street, and Dietrich said she believes the plans will only make things worse.

Walton disagreed: "We're creating a building that is neutral to the existing condition, but we're creating millions of dollars that the city will then use to fix this traffic issue that's been going on for decades," he said. "So we view that as a real positive outcome."

"With new proposals, it's very rare to get everyone in the community to agree that it's the best project," Neuendorf said. "Some people hate it. Some people love it. Others are agnostic."

Groundbreaking for the project is planned for next spring, and city officials anticipate that the building will open by 2024. Neuendorf said a final design for road improvements will be ready by the end of 2022 so that work can begin in 2023. If road improvements are done simultaneously with the project, he said, "The whole area isn't a construction mess forever."

Neuendorf praised the "really high quality" of the architecture and overall design.

"Some proposals come in and they look more average and cheap looking," he said. "Developers recognized this high-profile corner and location. If they want to do something, they're going to have to aim for a home run."

Kim Hyatt • 612-673-4751