Although some council members are not thrilled with the developer who's handling the project, the council has agreed to set up a TIF district to subsidize the redevelopment.
Despite reservations by some City Council members, Richfield has taken steps to aid redevelopment on the city's premier downtown building site, the former Lyndale Garden Center.
Earlier this month, council members voted to establish a 25-year tax increment financing (TIF) district on the site at 6400 Lyndale Av. S. That means the city will subsidize development there with the increased taxes generated by property value increases fueled by improvements on the site.
While council members seem united in the view that the 10-acre plot is the best and most important redevelopment site left in the city, they have been split on whether The Cornerstone Group is the right company to handle the job.
Cornerstone has a purchase agreement on the property, which has been deteriorating since the garden center closed in 2006. Tentative plans include constructing three buildings on the site with up to 120 units of housing near Richfield Lake as well as creating retail and public space.
Council Member Fred Wroge has been the most persistent skeptic of Cornerstone President Colleen Carey's ability to complete a quality project on the site. Wroge voted with the rest of the council to establish the Lyndale TIF district, but later said he did so reluctantly.
"I've never been comfortable with this," he said. "We have a developer who doesn't have the wherewithal to do [the development] the right way."
Wroge said he worries about what he sees as fuzzy plans for the site and about the apparent dominance of rental rather than owner-occupied housing in the project. He doesn't like the fact that Cornerstone's other main Richfield property, a 2004 retail and housing development called Kensington Park, recently went into foreclosure.
"To me she walked away because she was upside down ... and now she wants to take our most prestigious piece of real estate, which is downtown and on water, and do what she can afford to do," Wroge said. "I guess we will let her go down this road and see how far she can get. ... I keep pounding on her because I want her to give us something we can believe in."
Carey said last week that the recession has made things tough for developers but that the city's TIF designation will help move the project forward. She said she has assembled financing for half of the $3.6 million purchase price of the site and hopes the final piece will fall into place at the end of September.
"Right now there aren't any certainties. Everyone's waiting for us to get financing lined up before we get commitments," Carey said. "We're moving forward. Everything we've tried to get, we've gotten."
Carey said her development firm is small and focuses on "transformational projects that are a catalyst for change in communities." She said the project's emphasis on sustainability, ties to nature and art and active living are helping to build support for the project.
"We do projects that the big guys don't want to do, because they don't see the reward in the risk," she said. "We have a pretty good record of completing projects, and I don't doubt that we will complete this one."
The $34 million project would be built in three phases. Work on renovating the Lyndale Garden Center building would start next spring, followed in fall 2012 or spring 2013 by a multi-story building on Lyndale Avenue with offices and housing. Late in 2013, a multi-story building with market rate housing would be built near the lake.
Potential tenants for the first two buildings include a co-op grocery and Minnesota Life College, a residential school for young adults with learning disabilities.
Kathryn Thomas, executive director of the college, voiced support for the project at the council meeting. She said the college, which now uses Richfield townhouses as student residences, has been looking for new and larger space. A five-story building at the Lyndale Garden site could include 22 units for students, 22 units for college alumni and a first floor for retail or college and classroom space.
City staff assured the council that even if Cornerstone could not complete the project, the TIF district would remain as an incentive for development. The agreement also has "hooks" in it to hold a developer responsible for completing various phases of development or it will cut financing to the project, said John Stark, city community development director.
Council Member Pat Elliott echoed some of Wroge's concerns about Cornerstone's lack of specificity, saying, "We don't have anything at the end of the rainbow yet." But council Member Sue Sandahl said she was pleased that after years of frustration with the site's out-of-state owner, Carey was able to negotiate a purchase agreement "with a very difficult seller."
Mayor Debbie Goettel later said she has faith in Cornerstone and Carey, who held several meetings to gather public input about what should be included on the site. The mayor said Carey is not the only developer who has had issues with projects that have gotten caught in the financial crisis.
"Things are not like they were five years ago," Goettel said. "She has a lot of ideas we like in this city. ... Colleen has been really transparent about funding. We know where she's at."
Goettel called the project "vital."
"I actually courted Cornerstone for it because I like [Carey]," she said. "She has got to do one thing at a time. It takes some time to pull things together."
According to Carey, the last day to close on the property is Nov. 20.
Mary Jane Smetanka • 612-673-7380