Larson Motor Service property may become housing development

The Larson Motor Service property along First Street Northeast in Little Falls may be turned into a housing development.

Sand Cos. Inc. of Waite Park is buying the 5-acre property from Larson Motor Service, which is relocating south of town.

Jamie Thelen, president of Sand Cos., said in a telephone interview Wednesday that the development company plans to build eight townhomes and a 49-unit housing development for senior citizens 55 and older. He said the senior development would be part of a cooperative, where residents would buy shares into the cooperative.

"We want to offer a senior community for residents in Little Falls," said Thelen. "We did a market study for the area and we talked to people in Little Falls and saw a need for this type of housing."

Thelen said the senior living units may include common areas, such as an exercise room, workshop, library and heated underground parking area. The units may sell for $110,000 to $140,000 with buyers paying one-third down and making 40-year mortgage payments. The monthly payment, which would include fees for taxes, debt service, replacement reserves, insurance, common area utilities and area upkeep, would be more than $800.

Thelen said his company has done other senior cooperatives in the state, including one in Elk River, and they are popular with senior citizens.

Sand Cos. is waiting for the Little Falls City Council to vote on its request to redevelop the site with tax-increment financing.

Tax-increment financing is a method of financing public or private improvements that are needed to serve new development. While the existing tax on the property continues to be paid, the increase in tax value of the property is returned to the developer for a set period of time to help pay off the cost of the development.

The Little Falls Housing and Redevelopment Authority Monday agreed to recommend that the city council approve the request for a tax-increment financing district. The city council will vote on the matter Feb. 28.

Thelen said his company requested the financing option to help clean up the Larson Motor Service property. He said there are demolition costs involved, environmental cleanup and substantial site work to do before the actual development can occur.

Little Falls City Administrator Richard Carlson said long ago wooden boats were made at the site, contaminating the property.

"This site needs to be cleaned up before anything is built on it," said Carlson.

Carlson said the tax-increment financing would be no longer than 25 years. He said the city has had 24 TIF districts since 1985 and a few have expired.

David Drown, city financial consultant, said at a planning meeting Monday that the 25-year period is longer than any deal he has seen from the council. Drown said the redevelopment cost to buy the land and demolish the buildings to reach bare ground suitable for building is about $2.3 million and the TIF could cover about $1.5 million of the cost.

The Larson Motor Service property is zoned industrial. Carlson said the housing proposal from Sand Cos. is allowed on the property, so the property would not have to be rezoned. However, Carlson said the company could rezone it to residential. If the developer requests to rezone the site a public hearing would have to be held.

Part of the property includes Riverside Park. Sand said there are two proposals for the park -- keep it where it is or move it to the center of the townhomes.

Sand and Carlson both said either way the park would remain a public park.

If the housing proposal is approved the townhomes would open in May 2006 and the senior cooperative would then begin to be constructed.

(Senior reporter Renee Richardson contributed to this story.)

JENNIFER STOCKINGER can be reached at jennifer.stockinger@brainerddispatch.com or 855-5851.