State Farm site plan may need state help

Steve Wellington says he can put 2,000 new jobs in a vacant Woodbury office building. But it will take some state assistance to make it happen.

Wellington's company, Wellington Management Inc., has plans to transform the abandoned 100-acre State Farm campus at the corner of Interstate 94 and Radio Drive into a $118 million mixed-use development that could test the political rhetoric on efforts to create jobs in Minnesota.

Wellington Management unveiled plans that include renovating State Farm's 420,000-square-foot office building, and add a 200-unit senior housing center and a 150,000-square-foot Costco store.

"That building can have 2,000 jobs in it -- and it should have 2,000 jobs in it," Wellington, the company's president, told the Woodbury City Council at a workshop Wednesday night. "And that's not an exaggeration."

However, to get the plan off the ground, and to complete its purchase from State Farm, Wellington said, the company needs help from both the Legislature and the city. The company will be looking for assistance from the Legislature on financing -- either through bonding, tax credits or exemptions from tax-increment financing (TIF) rules, he said. For the city's part, it must revise its comprehensive plan and rezone the site, which currently is zoned as office park space.

State Farm had been Woodbury's largest employer, and finding a new use for the property has been a priority for the city. The property is also costing State Farm $200,000 a month to maintain.

Tanya Bell, vice president of development and acquisitions at Wellington, said the company has met with City Council members and Woodbury staff about the rezoning issues. "Even though we don't own the site, we behave as if we do," she said.

The first phase -- the renovated building, the senior housing center and the Costco -- would cost $68 million. A second phase, which includes a 120-room hotel and three office buildings, is estimated to cost another $50 million.

The centerpiece of the development is the abandoned office building. State Farm Insurance of Bloomington, Ill., closed the eight-year-old Woodbury campus in 2004. Most of the company's jobs were moved to Lincoln, Neb., and into a smaller office in Mendota Heights.

Wellington and State Farm agreed to a short-term extension on the purchase agreement that ends this month. "We're working with the buyer on a longer-term solution that allows them to put all the pieces in place and ensure a sale in 2011," said Ann Avery, a spokesperson for State Farm.

Bell said Wellington needs confidence in the city's commitment to rezone the property to negotiate a longer-term extension with State Farm. Wellington's option to buy the property expires at the end of January. However, if negotiations go smoothly, that may be extended to this fall.

"We don't think we're proposing a huge quality compromise," she said. "We'd love to invest in it and take the 10-year risk."

Next week, the City Council likely will vote to enlist the help of the Minneapolis law firm of Faegre & Benson to help in the three-way negotiations involving the city, Wellington and State Farm.

"Something needs to happen, but we think some priming of the pump is going to be needed," said Clint Gridley, Woodbury city administrator. Both Gov. Mark Dayton and legislators have voiced support for jobs and economic development, and "this could be a good poster child."

Both State Rep. Andrea Kieffer and State Sen. Ted Lillie, Republicans from Woodbury, said they had not yet been approached about a specific assistance plan for the project, but they would support efforts to help, taking the state budget deficit into consideration. "To just hand over money probably won't happen, because we just don't have it," she said.

Mayor Mary Giuliani Stephens and council members said they are eager to get the process moving. "From my perspective, it's all about growing the tax base," said Council Member Paul Rebholz.

"Time is of the essence," Gridley said. "This may not be achievable, but we'd certainly like to try."

Instead, Wellington is looking to spend $5 million to $10 million to subdivide it for multiple tenants.

Costco, which is based in Issaquah, Wash., and is the nation's third-largest retailer, has been interested in a Woodbury location for about 10 years, Wellington said. If plans unfold as envisioned, construction on the $20 million, 150,000-square-foot store could begin in spring 2012.