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Grand Forks advances tax break for scaled-down hotel redevelopment

Grand Forks City Council members on Monday tentatively approved a “payment in lieu of taxes” plan for part of the project.

Olive Ann photo
A rendering of the newest iteration of the Olive Ann, a boutique hotel planned for downtown Grand Forks.
Submitted graphic.
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The coronavirus pandemic means a smaller and cheaper second attempt to build a fancy hotel and event center in downtown Grand Forks.

The Olive Ann was first proposed as a $29 million renovation and addition to the Edgewood Corporate Center at DeMers Avenue. But the pandemic prompted developer Phil Gisi, who owns the building, to recalculate that plan and, ultimately, aim for a $21.5 million project that, most notably, contains no new commercial office spaces but still offers high-end hotel rooms and a spot for wedding receptions and other get-togethers.

Grand Forks City Council members on Monday tentatively approved a “payment in lieu of taxes” plan for part of the project, forwarding it to a meeting of the council proper next week and, assuming they affirm their decision then, to a panel of other public officials called the “Local Government Advisory Committee,'' which will consider the plan and refer it to Grand Forks School Board and Grand Forks County Commission for further consideration.

The redevelopment project is split into two parts. The first: a renovation to the top floor of the existing five-story corporate center that will turn the offices there into the Cloud 9 event space. The second part would renovate the building to install a bar, lobby and retail and office space on the first floor, leave the second floor as Sky’s Fine Dining, renovate the third floor into hotel suites, and keep the fourth floor office spaces as is.

More noticeably, the second part of the project aims to build a new, five-story building adjacent to the existing one that would house more hotel rooms and a pair of four-season porches designed to accentuate the existing restaurant on the second floor and the nearly completed event space on the top.

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The two-part project has a two-part set of tax breaks. The first: a “Renaissance Zone” that means, in essence, that even as the property’s value increases, Gisi and his development partners would pay property taxes on the whole property as if it was unchanged for the five years after the renovations and construction had finished. City officials OK'd that tax break in early 2020 for the initial Olive Ann proposal, and city staff said that approval still applies to the newer, smaller-scale plan.

But Gisi also asked for a “PILOT” plan for each part of the project’s two parts and only received one. The renovations to the existing corporate center are set to only get the Renaissance Zone tax break, but the brand-new construction next door is set to receive a further 10 years worth of reduced property taxes. Under the plan council members preliminarily approved on Monday, the developers would pay no additional property taxes for the five years after the Renaissance Zone exemption expires, then 80% of the new taxes they would otherwise pay for a further five.

Fufeng infrastructure

In related news, council members were briefed on the city’s work to accommodate the Fufeng Group’s wet corn milling facility, which the Chinese company hopes to build in an empty field north of town.

The sewers the city might build and the roadways it might upgrade at the company’s request would cost between $90 million and $100 million, according to documents supplied at Monday’s meeting. The bulk of that total is part of the city’s existing plan to upgrade its wastewater treatment plant, and large but undetermined portions would be paid for by the company via utility fees and special assessments, according to City Administrator Todd Feland.

Documents supplied at Monday’s meeting indicate that the city is set to spend an estimated $66 million for the already planned work on the sewage plant, $17.1 million for further “raw” water infrastructure, $5.4 million for heavy-duty paving on 27th Avenue North to accommodate truck traffic to the plant, $1.5 million for more stormwater infrastructure, $1.3 million for lines for potable water, and undetermined amounts for further sanitary sewer work and a secondary access to the plant. Those figures produce a total of at least $91.3 million.

Joe Bowen is an award-winning reporter at the Duluth News Tribune. He covers schools and education across the Northland.

You can reach him at:
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