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City reapproves Armory TIF district; Phase 1 opening planned for June

The architect's rendering shows a patio view. The project will be completed in four separate phases. (Echopoint Design & Development)

The Park Rapids City Council, in a three-minute public hearing at which no one spoke, approved modifications to the Tax Increment Financing District for the Armory Square project Tuesday noon.

In conjunction with that approval, the council, after months of negotiation and discussion, entered a redevelopment agreement with Echopoint Design & Development LLC, the company Alan Zemek has formed to oversee the project.

If all goes as planned, a charming sidewalk seating area for dining should grace the building's premier corner by June as part of the first phase of construction.

Park Rapids retained the services of financial and legal consultants to assist in the developer's agreement. That contains Zemek's new approach in the project, revised cost estimates and the tax increments.

The changes include Zemek refurbishing 24,000 square feet of commercial property downtown, not the original 30,000 square feet proposed, phasing the project into four stages and an increase in the estimated cost of the redevelopment that will be reimbursed to Zemek.

Park Rapids committed a maximum of $450,000 for reimbursement of "eligible reimbursable costs" over the life of the project. The city will receive a $50,000 administrative fee. Zemek was unable to attend the meeting.

"What the estimates are showing now is that Alan would have at least $450,000 in eligible reimbursable costs and so if he incurs those costs and they're eligible and he starts paying increased taxes on the building, whatever that tax increment is, out of that tax increment we can reimburse up to $450,000," said city administrator Bill Smith.

Changes in the TIF district necessitated the brief public hearing.

"Before we started the tax assessor, to keep the math simple, we collect $100 in property taxes on this building as it is now," explained Smith after the meeting.

"The developer makes the proposal and they run their projections and do the redevelopment, then they

of $100 the property tax is going to be $150. That $50 difference is the tax increment.

"Out of that increment the city, for the next 25 years, can use that tax increment to reimburse the developer for certain eligible costs, infrastructure kinds of improvements. So if the developer doesn't incur eligible costs of pay the taxes, the developer doesn't get any reimbursement."

But Smith said while all such projects have a risk factor, the Armor Square project is fairly low-risk.

The public and city have overwhelmingly supported the project as a centerpiece of downtown revival.

"The city believes that the proposed redevelopment would not be reasonably expected to occur solely through private investment within the foreseeable future," the TIF documents state.

With the 25-year TIF district, the developer will plan for:

n 6,200 square feet of retail and commercial space in Phase 1;

n 3,800 square feet of retail, educational or office space in Phase 2;

n 8,000 square feet of exhibition and performance space in Phase 3;

n 6,000 square feet of mixed use office and retail space in the final phase.

"Sure, both the city and developer have risks but the city's is pretty minimal," Smith said. "We're not out anything unless the developer just completely falls on his face and then we've got this big empty building in the city. We had a big empty building there to start with."

Zemek has ambitious visions of a restaurant, retail space and other uses for the building in addition to a community center that would attract a variety of events to the city.

"The public hearing and city council vote yesterday definitely helps our confidence for redevelopment of the armory, but it is still a huge challenge," Zemek e-mailed Wednesday.

"We have divided the building into four components for different uses that will allow us to redevelop the building in phases, as we are able to attract users to the building.

"This will help reduce the risk of trying to take it on all at once, which is quite an intimidating task," he wrote. 

"It will also increase the likelihood of success, as each phase of the building project can be targeted to a different use. We hope that a variety of uses, such as retail, food service, community space, studios, arts and theater will add to the vitality of down town Park Rapids as a shopping, dining, and entertainment destination."

"We are finalizing construction plans for the first phase now, which will be street level commercial space on the corner of Second Street West and Park Avenue South," he wrote.

Sarah Smith

Sarah Smith is the outdoors editor. She covers courts, business and breaking news in addition to outdoors events.

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