Cottage Grove may put $1.9M in special funds toward Home Depot site redevelopmentFacing a tight deadline, the city is pushing a plan to pool $1.9 million in property tax revenue collected from three existing TIF redevelopment areas and put it toward construction of an LA Fitness and a couple of smaller retail businesses at the former Home Depot site.
By: Scott Wente, South Washington County Bulletin
The city of Cottage Grove plans to commit nearly $2 million in special property tax revenue to help redevelop the vacant Home Depot building.
Facing a tight deadline, the city is pushing a plan to pool $1.9 million in property tax revenue collected from three existing TIF redevelopment areas and put it toward construction of an LA Fitness and a couple of smaller retail businesses at the former Home Depot site, located at East Point Douglas Road and 80th Street.
Typically, property tax revenue from separate TIF districts cannot be pooled to support one redevelopment project, but the city wants to use a temporary state job stimulus program that allows combining funds from multiple TIF districts to help finance one project.
A TIF district is used to fund the redevelopment of a commercial area with the property tax revenue earned above what the site would generate if it were not redeveloped.
“It’s important to note that but for the jobs bill ... we really wouldn’t have this opportunity,” City Administrator Ryan Schroeder said.
The project is up against a deadline if it is to use the special financing. The state program is set to expire this year. In order to meet the program guidelines, project construction must begin by June 30.
The council voted 3-1 to support the financing plan May 2. Mayor Myron Bailey was absent.
Council member Derrick Lehrke voted against it. Lehrke said he generally is not a fan of the TIF program and wonders what other redevelopment projects in Cottage Grove could benefit if the funds didn’t go to the Home Depot redevelopment.
City officials stressed that general property tax revenue is not being used for the project and that without this one-time financing strategy, the redevelopment project will not go forward. The development group, Stonehenge, is not able to fund the entire $10.8 million project, according to the city’s financing consultant.
“They need assistance to meet the funding gap,” said Robin Roland, Cottage Grove finance director. “They need help.”
However, Roland cautioned that the city cannot guarantee the project will go forward. The tight timeline and other factors could complicate the redevelopment.
The redevelopment proposal is expected to go before the Cottage Grove Planning Commission and City Council in the coming weeks.
Redeveloping the highly visible Home Depot site has been a priority for the city. It is sat vacant since the home-improvement chain closed its doors in 2008.
“We’re doing everything we can to get this done,” Roland said.