New Brighton considers funding cleanup, development of contaminated dump site

After years of land acquisitions and environmental cleanup, the city of New Brighton has seen the northwest corner of Interstates 694 and 35W develop with houses, apartments and corporate headquarters.

But one highly visible 17-acre property, which was partly used as a dump, has been left empty, a thorn in the side of city officials due to contamination issues and high construction costs.

Officials now say they have an opportunity to change that. The city is entering into a purchase agreement with United Properties to build on the site, a project that could include offices and light manufacturing. Officials could use tax-increment financing and city funds for environmental remediation and development costs.

“Since I’ve been here, this is the closest we’ve ever come to a development, meaning we have a development partner that does this sort of building, but also someone that wants to reside here,” Craig Schlichting, the city’s director of community assets and development, said at a recent economic development commission meeting.

The broader site, called the New Brighton Exchange, dates back to the city’s founding, when in the 1880s it became a development hub due to nearby railroad service. The Minneapolis Stockyards and Packing Co. operated on the site, as well as slaughterhouses and packing plants, which led to it being known as “Butcher’s Spur,” according to city documents.

Industrial development came and went over the decades, including uses that seriously contaminated the land and groundwater with leaking gasoline and heavy chemicals.

Necessary environmental cleanup made redevelopment a difficult sell, so the city started buying up the land in the 1990s. After decades of remediation and construction, the roughly 100-acre site is now mostly built out with companies including Data Sciences International and APi Group, apartments and houses.

The vacant 17 acres is the last parcel unspoken for in the area. Under the proposed deal, United Properties could buy the land from the city for $3.8 million, money that would go back to the developer to offset the extra costs of building on the contaminated site.

The city also is considering using tax-increment financing, since the site is already included in a TIF district, in which the increased taxable value of the new development would reimburse project costs. Schlichting said more than $6.6 million could be reimbursed through 2036, when the TIF district is set to expire.

He estimated there would be another $1.6 million in environmental remediation costs, including excavation and disposal of waste, which the city could pay. The site over several years was used as a dump for construction materials and other trash, Schlichting said, noting it continues to emit methane gas.

Schlichting said the city will seek grant funding for the environmental remediation work, but otherwise could use money from its $12 million redevelopment fund, which is set aside for such projects.

Due to the existing waste and soil condition, Schlichting said construction costs are higher, requiring a developer to build deep structural supports and possibly a vapor venting system. He said the Minnesota Pollution Control Agency has indicated it would not approve a residential or hotel use on the site due to the pollution.

“That is certainly a reason that a lot of people who want to be here say, ‘That’s expensive. That’s not going to meet my needs when I can go up to Blaine and build on an open greenfield site that doesn’t have the environmental concerns or the structural support issues,‘” Schlichting said.

City officials said more details on the purchase agreement, as well as environmental and development plans will be considered in the coming months.