Developers of the Wayzata Bay shopping center site are seeking to change tax rules to help jump-start construction of the retail and senior housing complex -- a project already set back a year due to the lagging economy.
The Wayzata Bay Redevelopment Co. is asking the city and the state Legislature to approve changes to the project's Tax Increment Financing, or TIF, plan that the developer says could speed construction.
Presbyterian Homes and Services won city approval in 2008 for the mixed residential and commercial development space. Plans call for more than 250 senior housing units plus retail and office space, condos, a hotel and a public plaza. The project -- then estimated to cost $160 million but now projected to have a $225 million value upon completion -- would replace Wayzata Bay Center, an aging retail complex on 14 prime acres.
Local governments provide TIF assistance to developers to encourage them to redevelop under-utilized properties, in recognition of the fact that it can cost more to redevelop a site than to start from scratch on an open tract.
The TIF approach "levels the playing field" by diverting the difference between the property taxes paid before and after the redevelopment back to the developer to cover costs associated with the construction, such as building demolition and street infrastructure, said Jay Lindgren of Dorsey and Whitney, Wayzata's TIF attorney.
"The whole point of the legislation is to create jobs," Lindgren said.
The developers are asking that the TIF district's 25-year lifespan begin in 2017, five years later than under standard TIF rules, to capture more savings. Starting later would allow time for the project to be more fully developed before TIF kicks in.
After discussions earlier this month, the proposal still needed approval from the Wayzata City Council as well as the state Legislature. The developers were expected to present more information to the council at its meeting this week. So far, the city has supported the proposal, City Manager Al Orsen said.
However, on March 2, the council did reject a proposal from the developer that would have levied no tax on the land for 25 years.
Over that period, the proposal would have cost Hennepin County $2 million in tax revenue and the Wayzata School District about $1 million. The plan also would have cost the city's general fund $1 million in tax revenue, but Presbyterian Homes would have promised to pay the city $40,000 a year, Council Member Mary Bader said.
"That would still leave the school district and the county hanging out there without these taxes," she said. "It was a terrible idea."
Tara Bannow is a University of Minnesota student on assignment for the Star Tribune.