John I have to make a clarification on the Sowles building issues and Urban Village. Initially the figures were no where near that much. Unfortunately because of the leaden feet of the MCDA over the last four years the project has gone up in cost. If the agency had executed on this deal in the early phases the cost would have been substantially lower. I believe the project was and still will be an excellent project. Obviously many other folks felt the same way. The Met Council has funded this project on two occasions as has the County. It has total neighborhood support. I haven't seen the latest projections in tax capacity but given the rise in housing I think this project will deliver the goods over it's lifetime.
Lisa McDonald
East Harriet
----- Original Message -----From: John RockerSent: Wednesday, January 22, 2003 11:58 AMTo: mpls issuesSubject: RE: [Mpls] Stimson BuildingThe city has to quit buying high and selling low, no matter how noble the
motives might be.
Or maybe more precisely, the city should only subsidize a project if it can
clearly demonstrate that the return on its investment is greater than it
would be if it did nothing.
If the city subsidizes one project to kick start redevelopment and new
privately-financed development sprouts up all around the subsidized one, the
overall increase in tax revenues may justify the initial subsidy. I'm just
not sure anyone is doing the analysis.
The city spent $6M to rehab the Stimson Building that it now plans to sell
for $2.5M because it can't afford the carrying costs. The Stimson Building's
rehab was done in conjunction with the Pantages, but what was the city's
exit strategy? What did it hope to gain by taking a loss on the building?
Would the city coffers had been better off just leaving the building alone
until the market made the numbers work?
One of the next projects on the agenda will be the Urban Village, where the
city, Met Council and Hennepin County will spend $7.8M to buy the Sowles
Crane site, pay to relocate the company to Eagan, prepare the site for
development -- and then turn around and sell it for $1.8M. How much new
development -- and in what time frame -- does this project have to spur to
justify a $6M subsidy? In how many years would this property have
redeveloped without public intervention and under which scenario would the
city be better off?
These are the types of questions the city council members need to be asking
before any more projects are bought high and sold low.
John Rocker
Calhoun
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