Victoria MN Newspaper

It was explained TIF is only available on a blighted unimproved property -- like the Victoria Drive site. The city would remove the blight, improve the property, and therefore increase the property taxes paid by the new owner of that property. The increment between current property taxes paid (on a $200,000 home) and that of a new retail office building (maybe worth $2 million) would be captured by the City of Victoria for up to 26 years, said Mr. Uram.

"We will incur costs on the Victoria Drive site," he said, "but the increment will reimburse those costs to the city. Those costs are close to $400,000. We can extend the TIF district up to 26 years. We start at the assessed value, which is pretty low." He said the annual increment to the City of Victoria could amount to $60,000/year.

As Mayor O'Connor said, "The TIF allows the city to reimburse itself."

Said Councilmember Pavelko, "We've done a good job of determining costs but we don't have the actual value of the properties. Value is what's actually there. It seems to me we're trading 8,395 square feet on Victoria Drive for 9,154 square feet of Lakeside, excluding 2,500 square feet of the Plaza, which is almost a one-to-ratio."

Said Councilmember Jim Crowley, "The two sites are only roughly equal. Lakeside is ready to build. There are a bunch of improvements needed to make the Victoria Drive site ready to build."

Said Councilmember Pavelko, "I think the Victoria Drive site is more valuable. It has two accesses and parking."

Agreed Mayor O'Connor, "What you've said is true. This is more valuable property and therefore better for private downtown development."

Agreed Councilmember Tom Strigel, "I think it would be offensive for City Hall to take up the prime property. And the TIF means $350,000 extra to us." Prime property pays prime taxes.

Said Councilmember Pavelko, "If City Hall and a library are such huge draws, the Victoria Drive site seems to make more sense. I'd pick this one for City Hall."

Mayor O'Connor said that in order for a developer to get a building permit, they need to provide parking. The 14,000 square foot building proposed for Victoria Drive can use the Rose Street Parking Lot, a parking lot that benefits all of the city. "Parking spaces have to be committed come hell or high water," said the mayor.

Added Councilmember Crowley, "Parking spaces are part of the pool. There will be over 20 parking spaces on Rose Street. Another building cannot come along and 'take' those spaces."

The Hartman building planned for Lakeside is smaller (4,620 square feet) and requires only eight committed shared parking spaces.

The land exchange agreement states that the Rose Street Parking Lot will remain at-grade for at least 20 years. In the past, there was talk about putting a parking ramp or parking garage on the site.

Said Councilmember Pavelko, "When you encumber property like that, you're taking away value."

Councilmember Lani Basa pointed out that the 20-year agreement can be altered with agreement of both parties.

Said Councilmember Jim Crowley, "We have no plans at this time to build a parking garage. We will agree to work with the developer and they have a say in it."

Councilmember Pavelko said there is no guarantee the developer will build and the city can't force a developer to build, then the land sits vacant in downtown Victoria.

Said Mayor O'Connor, "It's a promise, and a good risk, in my opinion."

Said Developer Terry Hartman, "It looks like the earliest we could develop this one would be 2014 and into 2015. That's a good comfortable time for us. There are a lot of rooftops coming into Victoria. The economy from four to five years ago has changed dramatically. We sure intend and hope to build."

Referring to the fact that current City Hall still stands and the Johnson home still stands, Mayor O'Connor said, "Until we leave, you really don't have a place to go."

Said Terry, "That give us a year to two years to have it ready."

Said Councilmember Pavelko, "The Lakeside property is empty. Seems that's blighted too."

It was pointed out by City Attorney Mike Norton that the Lakeside property, which is, in fact, improved property and ready to build, does not qualify for Tax Increment Financing. "And we can't use TIF to build a Public Works facility or a City Hall," he said.

TIF can be used to spur economic development. It increases property value and therefore property taxes. Future increases in property taxes from a designated area can be used to pay for improvements only within that area. The City of Victoria doesn't pay taxes to begin with, no matter the increase in value of its property.

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