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New Brighton looks at ways to solve Quadrant mess

February 21, 2008 at 4:25AM

By any description, the immediate status of New Brighton's big Northwest Quadrant redevelopment project isn't very good.

Grim, City Council Member Sharon Doffing said of the project's estimated $4 million deficit within the next two years.

Troublesome, City Manager Dean Lotter said of a home builder's decision last fall to pull out of the project.

Shocking, Council Member David Phillips said of the factors -- market-driven and otherwise -- that have left officials scrambling for other development options.

The city has had grand plans for the Northwest Quadrant -- a 100-acre mixed-use business and housing redevelopment project at Interstates 694 and 35W -- since it began acquiring former industrial properties there in the late 1990s.

While commercial development hasn't been entirely unsuccessful, housing has lagged along with new home-building elsewhere.

A Feb. 7 financial summary paints a stark picture for the city after developer Rottlund Homes terminated an agreement in October.

Since 2001, according to the report, the city has raised $46.7 million in land sales, bond sales and grants to cover $55.8 million it spent in acquiring property, building infrastructure and doing environmental cleanup.

But assuming the city is able to generate $13.7 million in additional grants, as it hopes to do, it still will owe $4.1 million by 2009, according to the report.

By 2010, the report says, the picture worsens, with the Quadrant potentially costing the city $12 million more in expenses than it will have made in revenue.

Developer Rottlund Homes once planned to build about 180 new homes on the project's west side, between Round Lake and Old Hwy. 8. By the city's estimates, the total market value of those homes would have been about $40 million.

But in October, Rottlund terminated the deal, saying the city had defaulted by not keeping to an agreed-upon schedule for a land transfer.

That issue now is in the courts. The two sides are scheduled for mediation to be completed in June.

Phillips, who was elected to the council last fall, said the whole project has an unfortunate history. Every step of the way, he said, the reality has been worse than what was anticipated, whether it's in higher costs to acquire property and do environmental cleanup, or lower market values for what has been built or will be built. But that's in the past, he said Wednesday.

"I think everybody agrees that the only fix here is to build our way out of it. We have to build something," Phillips said.

The challenge, he said, is maximizing the value of whatever's built "or at least minimize the [city's loss]."

Eric M. Hanson • 612-673-7517