The Shakopee City Council has voted to establish a tax-increment financing (TIF) district around Canterbury Park, a crucial step toward breaking ground on the racetrack's $400 million redevelopment project this fall.

A TIF district will help fund public infrastructure improvements up to $33 million, with the exact amount yet to be determined. Future property tax revenue within the district will reimburse Canterbury for costs related to rehabbing public roads, walkways and utilities over the next 25 years — or until the note is repaid.

"It's a major step," Canterbury President Randy Sampson said after Tuesday night's 4-1 vote. "It really does solidify our ability to move forward."

The upscale-living complex on the track's west side, dubbed Canterbury Commons, will include 608 apartments, about 100 units of owner-occupied townhouses and senior condos, and a boutique hotel.

Doran Cos. signed on to build the luxury apartments, which would be the first domino in a much larger mixed-use development for specialty retail, eateries and office space. Advocates of the project say it will help alleviate a housing crunch and attract more young professionals to town.

"This could transform that part of Shakopee," resident Dan Russell said during a short public hearing. "It's a no-brainer."

Tom Denaway of Springsted Inc., a public-sector advisory firm, assured the five-member body that approving a TIF district to jump-start the development will not put the city at risk. Canterbury must foot the bill for public improvements up front with the assumption that it will be reimbursed. But should tax revenue fail to accumulate as predicted, the racetrack would be forced to swallow the remaining costs.

"It's all on the developer's shoulders," Denaway said. "They incur all the risk."

In addition, Sampson said Canterbury is likely to invest upward of $20 million itself to construct private roads, relocate horse barns and demolish old structures.

"We will have significant skin in the game," he said.

Council Member Mike Luce appeared surprised by the size of Canterbury's private investment, noting that it changed his outlook. He ultimately voted in favor of the TIF district, just days after penning a Shakopee Valley News editorial questioning whether he could support a public subsidy this large.

In December, Luce acted as the controversial swing vote when the council narrowly approved a land-use measure that allows for high-density housing at Canterbury.

Council Member Matt Lehman, who opposes most high-density housing, again cast the lone dissenting vote. Lehman said he struggled to justify approving tax-increment financing for the racetrack when other developments have emerged without public assistance.

But Mayor William Mars said officials have an obligation to help the local employer, which has struggled to commercialize its 380-acre plot for almost a decade — even as the surrounding area booms.

"We want Canterbury to be successful," he said. "A successful Canterbury is a successful community."