Plans for new downtown apartments vex Victoria residents

The Victoria City Council crossed many area residents last week with its approval of a five-story luxury apartment building at a prominent downtown corner, a project that many say is too big, will make parking more difficult, and gives an unnecessary tax break to the developer.

"It's essentially going to dominate the cityscape," Larry Gubbe said of the apartment building, called Victoria Flats. "It's like plopping down the Jolly Green Giant in the middle of a cornfield."

Residents also fault the city for a lack of public information about the 81-unit, $16.7 million project and its speedy timeline, which they say gave them little chance to voice objections. The project funding includes tax-increment financing (TIF).

City officials insist the project is good for Victoria and meets many long-term goals set by the Metropolitan Council and the city's comprehensive plan, including higher-housing density.

"We want to provide housing options that we currently lack," said Laurie Hokkanen, city manager. "We've got people we know are leaving town and would like to stay here."

At an Oct. 24 public hearing, city officials explained project details to a room packed with 65 observers, many wearing "vote no" stickers. The planning commission approved the building project unanimously in October. It also won endorsements from the Victoria Business Association and many area residents.

Derek Gunderson, a planning commission member and City Council candidate, said he hears repeatedly that people want a grocery store downtown. He said two-thirds of the residents he spoke with expressed support for the apartments if it helps the city lure and retain a place to buy food.

The project reveals deep political divisions in Victoria and an ongoing distrust of city officials by some residents. The rancor is especially evident as the election nears. In April, a Carver County judge found in a lawsuit filed by 13 residents, including Gubbe, that three council members and Mayor Tom O'Connor had violated the state's open meetings law multiple times.

"The apartment complex was kind of a final straw for me," said resident Amy Schesso. "I've never seen division this bad."

O'Connor said "a lot has changed" since those court proceedings. Many new city staff members have been hired.

"We admitted we made some mistakes," O'Connor said. "We wanted to pay the fines and move on."

The building's developer is the Beard Group, a Hopkins-based company behind a variety of Twin Cities residential and mixed-use projects.

O'Connor said many naysayers at the recent public hearing "largely still didn't understand or embrace the details of the project."

They also don't fully comprehend TIF, he said, which has helped fund five other city projects.

TIF funding allows cities to divert future property tax revenue from a project, or several projects in a district, toward the funding of that project as an incentive to a developer.

The city will use $1.2 million of property taxes from the TIF district to create city-owned parking for 37 to 54 more cars for a net gain of 50 to 70 slots, and $2 million to reimburse the Beard Group for additional parking and a new crosswalk.

Some people think the city is simply handing cash to the Beard Group, Hokkanen said. But without that assistance, the project wouldn't get off the ground, she said, because a developer wouldn't invest in a development with such a small profit margin.

"[Residents and city staff] love our small, quaint, walkable downtown and we worked really hard to ensure that this project continues that character," she said.

The project will break ground later in November, with completion scheduled for the winter of 2017-18.

Erin Adler • 612-673-1781