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Grand Forks City Council approves tax break for Lyons redevelopment

Grand Forks City Council members approved a "payment in lieu of taxes" plan for a redevelopment plan that aims to turn an entire city block into a mixed-use development. The "PILOT" plan means that, once construction is complete, the redevelopers will pay, for 20 years, property taxes on the site as if they hadn't touched it.

Lyons Auto Supply, in downtown Grand Forks, is one of the city's oldest businesses. Photo by Eric Hylden/Grand Forks Herald
Lyons Auto Supply in 2018. Eric Hylden / Grand Forks Herald
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Grand Forks officials approved a 20-year tax break for a redevelopment project across the street from City Hall.

City Council members voted unanimously in favor of an agreement between the city and Northridge Accommodations, LLC, which encompasses the developers who want to turn the Lyons Auto Supply garage and the entire block on which it sits into a six-story stack of businesses and apartments on North Fourth Street. The centerpiece of that agreement is a 20-year “payment in lieu of taxes” agreement that, in effect, means the developers will pay property taxes as if they hadn’t touched the site even as its value ratchets up considerably after the building on top of it has been rebuilt. It’s the largest tax break the city can legally offer the developer.

“It’s rare that this City Council has approved the max,” City Administrator Todd Feland told council members. A city consulting firm analyzed the deal and concluded that the “PILOT” plan is financially necessary to the redevelopment plan.

The tax break doesn’t kick in, so to speak, until the redevelopment is complete, which means the developers would still be on the hook for taxes on the more-valuable property until they’ve finished work. Once that happens, though, Northridge is set to pay $10,636.44 in total property taxes for the next 20 years to the city and state governments, plus Grand Forks County, Grand Forks Public Schools and the Grand Forks Park District, according to documents supplied to council members.

When the agreement expires in the early or mid 2040s, Northridge would pay property taxes on the building’s contemporary value, which city documents estimate will be about $32.94 million in 2045. The property’s assessed value for 2022 is $704,000. In all, the plan could save the developers an estimated $8.76 million.

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Holiday hours, Herald building renovations

In related news, council members:

  • Approved four “holiday hours” for city employees as an administrative thank-you for their work throughout the year. City employees have until July 1 to use the additional time off. Eighty-eight percent of city staff had used the similar hours council members agreed to give them in 2020.

  • Agreed to cancel the council’s scheduled meeting on Dec. 27. Mayor Brandon Bochenski asked wryly if anyone on the council dais wanted to be there two days after Christmas.

And, acting as the city’s Jobs Development Authority, council members and the mayor:

  • Authorized city staff to solicit bids to renovate the Grand Forks Herald building into a “tech accelerator.” The federal Economic Development Administrator awarded the city a $1.08 million grant for the work, which is estimated to cost about $3 million.

  • Approved a $107,000 loan to Northern Air Family Fun Center, which is meant to help the business pay down the interest on a $2.72 million loan it took out to add an area for go-karts and mini golf.

  • Approved a $30,000 loan to Cole’s Detailing to renovate a spot in a Grand Forks industrial park into which the business’ owner plans to expand it.

  • Agreed to defer until January 2022 repayments on a $17,000 loan the development authority approved in February 2020 for Snack Shack, LLC, which operates a mobile food stand in the region. Business owner Jeff Holt missed repayments in August, September and October, and claimed to city staff that the business’ trailer was damaged and unusable. An Oct. 10 post on the business’ Facebook page announced the damages. Holt hopes to have the trailer repaired or replaced and ultimately get the business up and running again by “mid-2022,” according to city staff.

Related Topics: GOVERNMENT AND POLITICS
Joe Bowen is an award-winning reporter at the Duluth News Tribune. He covers schools and education across the Northland.

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