UPDATED: Argenta Hills Deal Squeaks By on 3-2 Vote; Target Likely Coming to Inver Grove Heights

The lingering silence that followed the Inver Grove Heights City Council’s decision to go forward with a $1.25 million development deal stood in stark contrast to the rest of the emotionally charged public hearing on Monday night.

The raucous two-hour-long hearing—called so area residents could comment on the proposed deal between the city and IGH Investments, LLC., the developer behind the Argenta Hills project—was punctuated by catcalls from the audience, yelling and groans of frustration.

“We act like a two-bit you-know-what that can’t get a date,” Inver Grove Heights resident Dian Piekarski, an opponent of the deal, said during a particularly tense portion of the hearing. “Inver Grove is better than that, we should sit here and we should get the developments that we want.”

Despite stringent opposition from several residents in the audience, the council voted 3-2 to OK a modification to a Tax Increment Financing district spending plan that will facilitate the $1.25 million deal. Councilors Vance Grannis and Rosemary Piekarski Krech cast the dissenting votes.

Under the terms of the deal, the developer would complete roughly 150,000 square feet of commercial development and finish site improvements, including paving, landscaping and on-site lighting. In return, the city would pay out $1.25 million in forgivable loans to the developer. Money for the deal will be drawn from the city's Southeast Quadrant Tax Increment Financing district fund.

Roughly $550,000 of the total will go to the developer to pay for site improvement costs, while another $700,000 will be passed along as an incentive to Target, which plans to open a store to anchor the development. Under the terms of the agreement, Target must remain in operation for at least five years after it opens. If the 135,000 square foot store closes before then, the developer is required to repay the city a prorated amount of the original loan.

The council’s split decision marks the end of a months-long debate over the commercial and residential development.

Construction on the project all but ceased as the recession hit in 2008, leaving the city with acres of parking lots, lighting and other improvements, but no stores or tenants. Negotiations between city officials and IGH Investments, LLC. to complete the proposed development reignited this spring, fueled in part by the extension of a state law that allows cities to funnel TIF money into construction projects outside the boundary of the TIF district.

Supporters of the deal, including Mayor George Tourville, say the completed development will bring businesses, jobs and as much as $77,000 in annual tax revenue to the community. City officials also believe that the connection fees businesses will pay to hook up to city water and sewer will help Inver Grove Heights recoup some of the roughly $12 million it spent several years ago to bring utilities to the Northwest Area.

 “It’s easy to say that jobs are number one, but what are we going to do to get jobs?” Tourville said during the meeting.

Without the money, Tourville and others added, the development isn’t likely to happen in the foreseeable future.

But critics, like Councilor Vance Grannis, said the deal lines the pockets of large companies and developers at the expense of taxpayers.

“We should let them pay for it, instead of doing a government buyout,” Grannis said.

WHAT IS A TAX INCREMENT FINANCING DISTRICT?

TIF districts use the extra property taxes generated as a result of development within the district boundaries to pay for certain development costs, according to information provided by the Minnesota House of Representatives. When a new building is constructed within the district, the market value of the property and its property taxes typically rise. That money is funneled in a TIF fund.

Usually, money generated by a TIF district must be used within the district, but a 2010 state law allows that money to be used outside the district if it creates jobs or jumpstart construction. In this case, a portion of the money stored in the Southeast Quadrant TIF district would be used as a forgivable loan to IGH Investments, LLC.

WHAT’S IN THE DEAL?

The terms of the deal between the city and IGH Investments, LLC. contain a number of provisions to protect the city:

The contract calls for the developer to compete a 135,000 square foot Target store and an additional 15,000 square feet of retail space, all of which will be open for business by Dec. 1, 2012. Construction on public improvements around the development must begin by Sept. 1, 2011, while work on the Target store must begin by Feb. 15, 2012.

If the developer fails to meet any of its deadlines, or if Target closes within five years of its opening, the developer must repay a prorated amount of the forgivable loan. The project must also generate at least 14 new, full-time construction jobs at the Argenta Hills site.

Correction: The article above has been changed to reflect inaccuracies. The developer is required to repay the city a prorated amount of the $1.25 million forgivable loan if Target does not remain open for five years. The project, fully developed, will generate $77,000 in annual taxes for the city.