Plans for North Side workforce center pick up steam

  • Article by: MAYA RAO , Star Tribune
  • Updated: August 12, 2014 - 4:15 PM

A project to transform a decrepit building on W. Broadway into a workforce training center and retail shops is closer to getting about $500,000 in tax breaks.

The building at 800 W. Broadway has sat empty since 2006, languishing in tax forfeiture after a separate $70 million proposal for a YWCA, shops and offices collapsed.

Developer George Sherman, who owns the Hawthorne Crossing shopping center next door, plans to lease the building to the Minnesota Department of Employment and Economic Development for a workforce center. Other health and educational organizations will also share the space.

A report prepared by Minneapolis project coordinator Erik Hansen said that redevelopment costs would exceed the finished value of the building, creating a financial gap necessitating the city tax breaks. He estimated that the $500,000 in tax breaks would be 7 percent of the project’s total cost.

The tax-increment financing tool, once widely used in city projects including the Target Center, allows local governments to divert new tax revenue created by the development to offset some of the costs of construction, like clearing land, building roads or providing water and sewer to the property. Critics say the tax breaks are often doled out to projects that would happen anyway and are skeptical that the development incentives offer real benefits for local residents.

Supporters say the addition of the large new development in the struggling area outweighs the loss of additional tax dollars.

“People want to see more activity on West Broadway,” Hansen told council members.

He noted that the project would bring training opportunities to an area where educational opportunities are lagging.

The development will also make use of the underused parking lot at Hawthorne Crossings and minimize concerns about adding a lot of extra surface parking.

City Council Member Lisa Goodman voiced some skepticism, noting that Minneapolis already is putting $14.3 million into W. Broadway.

“It falls under the ‘West Broadway, we have to throw money at it’ category,” she told Hansen. “I guess I buy your argument. If someone doesn’t do something right now, the building will sit vacant for a long time, and this is a part of West Broadway that perhaps we need to pay more attention to more than others, given that it’s a Gateway area.”

Sherman’s goal is to complete the purchase of the building — which is still owned by Hennepin County — and begin redevelopment by the end of the year.

The city’s economic development panel directed staff to continue studying whether such aid was appropriate.

Goodman said that projects nearly always receive tax-increment financing by the time they reach this stage of analysis.

The city has been targeting W. Broadway and other parts of north Minneapolis for economic development. The area was hit hard by the recession and foreclosure crisis. The community is still recovering from deadly tornadoes two years ago that damaged or destroyed a large swath of homes in the area. Some of those storm-ravaged homes are still sitting vacant.

City officials are eyeing similar tax subsidies along Broadway for a mixed-use development at Penn and Broadway and an expansion by the DC Group, an electrical-industry company, of its company headquarters at River Road.

 

Maya Rao • 612-673-4210

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