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County to take lead on major Newport redevelopment project

The former Knox Lumber property in Newport is among land that may be redeveloped in conjunction with the opening of a transit station near Interstate 494 and Highway 61. Bulletin photo by Jon Avise

Washington County will take the lead in redeveloping the area around a planned transit station near the junction of Interstate 494 and Highway 61, county housing officials and city leaders said.

The Newport City Council voted last week to authorize the Washington County Housing and Redevelopment Authority (HRA) to direct a proposed tax increment financing district intended to help finance millions of dollars in needed improvements in the area. The council also voted to designate the HRA to lead the work of purchasing surrounding properties from various landowners and then negotiate with real estate developers.

"This is something we've been working on," said City Council member Tom Ingemann. "Let's keep it moving. Let's go."

HRA Director Barbara Dacy said last week the authority is "prepared to work collaboratively" with the city as she presented the results of a preliminary financial feasibility study of the city's redevelopment vision that was commissioned last year.

That, City Administrator Brian Anderson said, is a huge boost to Newport's plans to transform a dreary industrial section of the city into a mixed commercial and residential district centered around the transit station to open to commuters along Maxwell Avenue next year.

"It's a huge step forward for accomplishing our goal [of redeveloping the Knox site and surrounding area] that the HRA has stepped forward," Anderson said. The city will release its detailed redevelopment plan this spring.

Washington County has already purchased the 11.6-acre former Knox Lumber property where it will build a 1,200 square-foot, climate-controlled building with 200 parking spaces for commuters using a St. Paul-bound bus route.

But assembling the remaining 29 acres won't be cheap -- an estimated $10.4 million, according to the report compiled by financial analysts Ehlers and Associates. That is too much for the city's small Economic Development Authority to handle, Anderson said.

"This is a rather large project; this is not a project we can tackle on our own," he said. "We don't have the financial resources for that."

TIF floated

One of the tools proposed by city and county officials to spur the area's redevelopment and complete around $3.4 million in needed public improvements is tax increment financing, or TIF, a public financing tool that uses projected future gains in property tax revenue to pay for present-day infrastructure improvements.

It's an instrument commonly used in public redevelopment projects -- Cottage Grove used a TIF district to help rehabilitate its Gateway North commercial district along 80th Street and East Point Douglas Road near Highway 61 in the early-2000s -- and Dacy said the HRA administered the use of TIF dollars in a recent Oakdale redevelopment project.

"It's a short-term instrument for a long-term gain," Dacy said.

The use of TIF in the Newport redevelopment efforts would require the approval of the Washington County Board. Newport's representative on the board, Commissioner Autumn Lehrke, toured the Knox site last week with fellow Commissioner Dennis Hegberg, of Forest Lake, and said she's supportive of efforts to remake the site around the future transit center.

"Newport is in desperate need of some redevelopment," she said in an interview.

The city has long struggled with a small and stagnant tax base and has relied heavily on state aid. A successful redevelopment of the transit center area, the report indicated, could provide significant relief.

The current value of the roughly 40 acres that include and surround the future transit center siteis $4.7 million. A fully redeveloped Red Rock Gateway area, the report projected, could increase the value of that area by $53 million and generate $1.14 million more in property taxes annually, roughly half of which would end up in the city of Newport's coffers -- an enormous economic boost to a city with an annual budget of $2.5 million.

Dacy stressed patience, however, saying officials should expect a 20- to 30-year wait for large-scale development to take root.

"This is the beginning of the process," she said. "There's a lot more work to be done."