Backers insist Heart of the City still a success

The latest setback for Burnsville's highly touted Heart of the City project has given critics one more reason to characterize it as a failure. But Mayor Elizabeth Kautz stands by the 54-acre redevelopment that's providing revenue and a downtown area for the suburb.

"Heart of the City is a success," she said Friday.

She commented during a meeting in which the City Council planned its next steps after a developer backed out of building a $20 million office complex and parking ramp next to Nicollet Commons Park.

The mayor blames the lagging economy for Anderson Builders' decision not to redevelop one of the last parcels in the huge project. The dilemma has left the city once again seeking a developer -- and scrambling to provide parking for a $20 million arts and convention center scheduled to open next fall.

With some of the completed projects already struggling with occupancy rates, one Burnsville developer has called the entire project a failure.

Supporters, however, point to an influx of businesses and private investment around Nicollet Avenue and Burnsville Parkway. The redevelopment has brought housing, offices, retailers, restaurants, a community plaza and a transit center.

It's transformed what was becoming a blighted area, said city spokesman Jim Skelly.

Before redevelopment, the area generated about $200,000 in annual property tax revenue, Skelly said. The same land is expected to generate $3 million to $4 million in property taxes when all projects are completed, he said.

One critic is Gene Happe, developer of about 45 projects in Burnsville. He said there have been many problems with Heart of the City.

"The housing has failed," he said. "The retail has failed, and they're desperate to find a solution. They just keep changing it."

Council Member Dan Kealey said the vast majority of the redevelopment was done with private dollars. The city offered tax increment financing to entice developers, he said.

"The market downturn greatly impacted the town home and the condo sales," he said. "That's where the majority of the 'failure' discussions have focused on, and unfortunately, that market has a life of its own."

Uptown Landing, a $20 million project envisioned as 111 condos in three buildings, went into foreclosure months after the first building was finished in 2005, with just three of 38 units sold.

A fully developed city such as Burnsville has no opportunity for economic development other than redeveloping and filling in, said John Shardlow, a planning consultant to Burnsville.

"The change in development pattern from the pre-existing, worn-out suburban pattern to a dense, mixed-use walkable neighborhood represented a huge challenge," he said. "It's easy to sit back and say the project, or the idea, was a failure. To me, it's one of those major projects that takes both political courage and some stamina in order to see it through."

Skelly said the Nicollet Plaza development in the Cub Foods area was a Kmart building vacant for years. Now, Nicollet Plaza is a $70 million value development, at least a tenfold increase in value.

Land where Grande Market Place and Square are located was once a gas station, small office building, strip mall and vacant parcels. It's now a $30 million development, Skelly said. Park Crest on Nicollet, and the Villas in the Heart of the City were built on vacant land, a $20 to $25 million increase in property value, he added.

Still, Warren Hartwell said he and many other residents don't want more taxpayer money used for the project, including for the performing arts center.

Skelly, however, said construction of the performing arts center is being done without increasing property taxes or using property taxes as a revenue source.

Joy Powell • 952-882-9017