The city of New Brighton is proceeding with the development of its Northwest Quadrant district, but that progress is as much on paper as it is in dirt and concrete.

The city's first $670,000 debt service payment is due in February on a parcel that has few occupants, and no concrete development plan. Still, city officials are content to sit tight -- for now -- thanks to some creative financing made possible by the Legislature last year.

Meanwhile, the city is awaiting a market study, due next month, from the Colliers Turley Martin Tucker consulting firm, which will assess the site's strengths and make recommendations on the smartest balance of residential, retail and industrial development for the postrecession economy. Environmental remediation continues on the site, in preparation for the development proposals that city manager Dean Lotter hopes will come in the near future.

"We're getting in position here," he said. "The only thing that will be restraining development is the market."

The Northwest Quadrant, literally, is the northwest corner at the junction of Interstates 35W and 694, east of Long Lake. For more than 10 years, the New Brighton has been acquiring land in the 100-acre site with hopes for a mixed-use development to include housing, retail, business/industrial and a luxury hotel complex.

The residential developer pulled out about this time last year, and the city found itself in a position of beginning a protracted legal process, or pursuing new ideas to make it through the recession, Lotter said.

With the first payments on the property due in early 2010, the city had to get creative to maintain its AA3 credit rating and to avoid passing the debt to taxpayers.

"This time last year, we were preparing ourselves for the reality that this project might slow down, as far as the development side, for a number of years," Lotter said. "One of our goals was to go back and look at the project and say, 'What's going to keep it financially solvent so we can weather the economic storm?'"

The city went last year to the Legislature, seeking a three-pronged rescue. The Legislature balked at issuing $5 million to $10 million in requested bonding money. But the city was successful in its request for special legislation to extend the life of the Northwest Quadrant tax-increment financing (TIF) district by four years to 2032, allowing the city to better position itself for future proposals. And, most importantly, the legislation allowed the city to pool and tap into surplus TIF funds from three thriving districts, the one that's home to Main Street Village residential and retail complex, another that houses the Brightondale senior housing complex and a third, a business park that includes Qwest Communications, off old Hwy. 8.

When the city developed those three parcels, the difference between predevelopment and postdevelopment tax revenues, the tax increment, was set aside to pay for each district's development and maintenance. In each case, taxes generated exceeded needed funds. In general, TIF funds from post-1990s development cannot be transferred from district to district, but the Legislature made an exception for the Northwest Quadrant, freeing up more than $3 million cash, and the promise of as much as $17 million in tax revenues over the life of the three districts.

The new flexibility gives the city more time to do the environmental work right, and to seek out grant money to reimburse the work that's been needed to remediate contamination from a refinery and a solvent manufacturer that once were on the west side of the site.

And as proposals come in, the city will be able to choose the best ones, operating from a position of security, rather than panic.

"It puts the City Council in a financial position where they can say, we're going to demand the highest quality developments," Lotter said. "We don't have to take the first proposal."

Maria Elena Baca • 612-673-4409