Why developers say they need tax incentives to redevelop sites along Edina’s France Avenue

Some Edina residents are questioning why city officials are backing tax incentives to redevelop what has been described as some of the best real estate in town.

Edina’s Housing and Redevelopment Authority (HRA) on Thursday supported a proposal for 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.

It’s the latest mixed-use redevelopment proposed along bustling France Avenue near the Southdale Center and Galleria shopping malls, where a high-rise apartment building and other projects are transforming the neighborhood.

Patrick Brama, senior developer with Enclave, said the four buildings of shops, restaurants, offices and apartments wouldn’t be possible without some tax incentives to help cover the cost of the public amenities Edina requires under multi-use zoning rules.

The project still has multiple hurdles to clear before it can be built, but some residents don’t think tax incentives should be part of the plan at all.

“It’s a gift to the developer,” said Ralph Zickert, an Edina resident, who reiterated what he told the City Council during an Aug. 7 forum. Zickert said he agrees with Mayor Jim Hovland’s assessment that “it’s one of the best pieces of property” in the city.

“It’s underutilized,” Zickert added. “It’s not blighted.”

TIF is a tax incentive that uses future property taxes to help pay for the development of distressed properties that otherwise wouldn’t see investment. It also can be used to help fund amenities like walking trails and public gathering spaces required by Edina for projects like the one proposed for the Macy’s site.

Bill Neuendorf, economic development manager for the city, said Edina works to protect taxpayers by ensuring developers meet all the conditions of their TIF agreements before they see any reimbursement. That includes public amenities, infrastructure improvements or affordable housing units.

Neuendorf and developers say increased construction costs and high interest rates can make multi-use projects expensive, especially when the public amenities and building design elements Edina requires are added in. They also factor in the cost of removing existing older buildings and challenging soil conditions in the area.

“For decades Edina has used tax increment financing to create places people seem to love,” Neuendorf said Thursday before city leaders approved the latest TIF district. “When we do surveys, people generally identify places built with TIF as some of their favorite places in Edina.”

But residents like Zickert question whether the amenities planned at the Macy’s site will truly benefit everyone, saying “99 percent of the benefit will be for the people who work there or live there.”

Residents are not the only ones questioning whether tax incentives are appropriate for redevelopment along France Avenue.

“I feel we have gotten into a situation where TIF becomes a financing tool to take a parcel that has existing issues that should be calculated and considered part of the market value,” said Council Member Julie Risser, the only HRA member to oppose the tax incentive for the Macy’s site.

Resident Judy Buckley says city leaders should be encouraging more transformational projects that Edina has long been known for backing. She referenced the city’s history of building the first indoor mall or converting a sand and gravel pit into Centennial Lakes.

“I don’t feel like we are working at that level of standard anymore,” Buckley said. “A lot of residents feel like developers are calling the shots.”

As further evidence of their concerns about the tax incentives, residents have pointed to a 5-acre parcel directly across France Avenue from the Macy’s site. City officials approved a TIF district there in 2023 for an office building, hotel and public spaces.

Work on the project has not moved forward, with Ted Carlson of Orion Investments blaming high interest rates and other business conditions.

“We are really close and pushing hard,” Carlson said. “We hope to have shovels in the ground this fall.”

The two sites are connected by more than just tax incentives. City leaders envision a tunnel or pedestrian bridge between the two projects, making it easier for residents to cross busy France Avenue.