TIF and the East Brainerd Mall

When I was elected to the Brainerd City Council I promised the citizens that I would study and research all of the issues and keep the citizens informed of matters brought before the city council.

On Feb. 20 a developer appeared before the city council in regard to the East Brainerd Mall. The developer plans to demolish the current mall with the exception of the J.C. Penney store. The developer does not have a long- term lease with Penney's.

The project cost is $12 million dollars. The developer's proposed plan is:

1. Build a 64,670 sq. ft. free standing Cub Foods store.

2. Provide 26,000 sq. ft. for School District 181 and the school would pay over $200,000 per year for 15 years.

3. Provide 18,000 sq. ft. of retail space (No tenants committed.)

4. Provide 48,000 sq. ft. for the existing J.C. Penney store. The store would not be remodeled or renovated.

5. Propose to build two buildings (one 8,000 sq. ft. and one 12,000 sq. ft.) on the southern part of the parking lot. Both buildings to be free standing. Neither with tenants committed.

If the newspaper were to print the proposed layout of the development, it would make this proposal much easier to understand. If it is not published, the next best thing is for interested persons to request to see a copy at city hall.

This project is not being developed as a mall comparable to Westgate or Westport. The developer has stated that this project needs business entities other than just retail shops to be a viable project. Commitments and/or specific tenants have not been indicated in any agreement for occupancy.

6. The Brainerd City Council has given conceptual approval for tax increment financing to the tune of $6 million to help the developer finance this project. The council followed the recommendation of the Economic Development Authority/Committee.

7. The city will also pay the developer another $20,000 per year for 15 years a total of $300,000 to help finance this project. This amount is money taken directly from the general fund as an added burden to the taxpayer.

The developer has said that the project will not proceed without city financing as the rent for Cub Foods would be too expensive.

If this is true, then it is very important to ask a very direct question. "Should the citizens of Brainerd finance $6 million of a $12 million development project?" If the answer to this question is "yes," then another question must be asked: "Is it fair to ask the city to provide funding for one grocery store to compete with another store who are competitors?" This would be the case because Cub Foods would be the recipient of tax dollars and some of those tax dollars are now being paid by Super One (who is a competitor) which is located in the same general area.

Any new development is going to require city services such as police and fire protection as well as general road maintenance. If the city gives the increment of the real estate taxes to the developer then the rest of the citizens will be asked to pay for these services through an additional increase in taxes because you cannot pay for services from taxes not payable to the city.

How wise has the city council been with the use of tax-increment financing? They have used this avenue to help finance drug stores, restaurants, newspaper building, financial buildings and others. Somehow, somewhere we've lost sight of the initial and thoughtful use of tax increment financing. The statute was not meant for cities to finance the above mentioned businesses, but because of loopholes in the statutes, cities do finance these types of projects. But it is not following the spirit of the statute.

There have been a number of business developments in Northeast Brainerd without the use of TIF funds including: Chopper's, Triangle Oil, remodeled Pamida building, McDonald's Restaurant, Kentucky Fried Chicken and the Holiday Station. These businesses are to be congratulated for providing economic development without government subsidies (local tax dollars). They have added dollars to the overall tax base. They have not taken from the tax base.

It is interesting to note that in Baxter a number of businesses have been developed without tax-increment financing including Wal Mart, Target, Home Depot, Cub Foods and Mills Fleet Farm.

A question has risen as to the use of the East Brainerd Mall property as site to be developed by the Brainerd School District. Whether that is or is not a viable use of the property can only be answered by the school board as well as the voters of Independent School District 181.

I have been told by Brainerd school administration that this site (the East Brainerd Mall) could be included into their long range plans for classrooms and other needed space for school use. I have been told that the existing mall space could be remodeled for school needs for $44 per sq. ft. versus $140 a sq. ft. to build a new facility for school needs. This in itself represents a healthy savings for the taxpayer. Another sidebar thought is the fact that if and when the school builds to satisfy their growing space needs where will this be? Is land that could be "prime" development being considered? There are many questions that seemingly answers would be forthcoming if the three major government bodies, Brainerd City Council, Baxter City Council and Brainerd School District were to meet to discuss the "whole" picture and not just pieces to a puzzle much larger than one retail development.

If the East Brainerd Mall proceeds to develop, then in two to four weeks the city council will hold a public hearing on the final approval of providing $6 million to help finance a $12 million project.

It is at this time that concerned citizens, whether they are for or against the project, can express their thoughts, ideas and opinions.

(Olson, is an alderman-at-large in Brainerd and a former Brainerd mayor.)