Without it, Evers and Hoiseth say, project doesn’t fly; city council is next stop

    Putting their faith in developer Jeff Evers’ abilities, while at the same time rewarding his many investments in the Crookston community and also expressing fear of what might become of his Fournet Building downtown if his redevelopment project doesn’t come to fruition – another Wayne Hotel, perhaps? – the CHEDA Board of Directors on Tuesday unanimously approved the establishment of a Tax-Increment Financing (TIF) redevelopment district for Evers’ project.

    The CHEDA Board vote will next go to the Crookston City Council in the form of a recommendation for approval.

    Speaking to the Times, Evers said that without a TIF district, his project is dead.

    Judging by the council presence in the Valley Technology Park conference room Tuesday and the positive comments attributed to them, the chances of the council green-lighting the establishment of the TIF district seem good. Council members Tom Vedbraaten and Steve Erickson sit on the CHEDA Board; Vedbraaten was absent Tuesday, but Erickson voted in favor. Council member Dale Stainbrook is a “liaison” to the CHEDA Board, and he spoke in favor of the TIF district, too. Of the other council members in attendance Tuesday, including Jake Fee and Clayton Briggs, indicated they were in favor of establishing a TIF district for the Fournet project, and Bobby Baird, while asking several questions, didn’t say anything that would indicate he’s against approving the TIF district.
    
Background

    Evers, who owns several properties in Crookston – including his latest purchase of the former Sisters of St. Joseph/Marywood residence and Glenmore Recovery Center east of Crookston – purchased the Fournet Building in 2017 – a downtown anchor building at perhaps the busiest intersection in town – and soon started to lay the groundwork for a major redevelopment project. He has since secured a tentative 10-year lease agreement with the Tri-Valley Opportunity Council Board of Directors to move the agency across the street from their current location – which Tri-Valley CEO Jason Carlson has said is getting too expensive to maintain – into the second floor of the Fournet. Rent paid by Evers’ two current Fournet tenants, in addition to rent from Tri-Valley, boosts his project’s revenue budget, and, along with his own money, an $800,000 loan from Bremer Bank, and a total of $300,000 in loans from the City of Crookston and CHEDA, Evers comes at least close to breaking even financially on the first phase of his redevelopment project, which is presently valued at approximately $1.2 million.

    Tri-Valley has commenced with preliminary architectural work on the Fournet’s second floor. If their move eventually becomes reality, Carlson has said the agency would do with their current building whatever is in the best interests of the community, whether that means someone else moves in, it is somehow repurposed, or if the building is demolished as part of a larger effort to make the busy corner safer for traffic and pedestrians.

    The terms of the City and CHEDA loans to Evers are similar, and highly unique. In order to free him up to make payments on the principle of his Bremer loan, the first ten years of his City and CHEDA loans involve only interest payments, and the interest rate is only 1 percent. Beginning in the eleventh year and continuing until the fifteenth year of maturity, he’ll make principle payments on the two loans at the prime interest rate at that particular time.

    But none of that flies without a TIF Redevelopment District.

How TIF would work

    There are TIF Housing Districts, TIF Economic Development Districts (such as the district that helped make the construction of Crookston’s New Flyer of America plant), and TIF Redevelopment Districts, which exist to help blighted properties get new life and add to a community’s bottom line.

    Currently, giving the present state and assessed value of the Fournet Building, Evers is paying annual property taxes totaling $3,124. It’s estimated, CHEDA Director Craig Hoiseth explained, that Evers, after the first phase of his project, would be paying around $10,000 more in annual property taxes. Over the 20-year life of the TIF Redevelopment District, it adds up to approximately $208,000 in additional property taxes assessed because of the value added to the Fournet by Evers’ project.

    How the TIF works, Hoiseth explained, is that each year the additional property taxes that Evers would have paid will instead be targeted toward his debt service. Whichever comes first, 20 years or the $208,000 threshold, he said that would officially sunset the TIF Redevelopment District.

    Hoiseth said at its heart, the TIF district is not costing Crookston anything. Evers will still pay the property taxes at the level he is currently paying on the property, Hoiseth noted, and he’s taking on considerable risk, including that he will be able to attract a commercial/business tenant for the third floor of the Fournet as part of his second phase.

    “Jeff is invested in Crookston and he’s betting on Crookston with this projection,” Hoiseth said. “We’ve negotiated this TIF at length, and no matter how we run the numbers it does not get above water without a TIF.”

    It costs around $8,500 just to apply for a TIF Redevelopment District. If things continue to progress, he’ll likely have to pay at least $100,000 for structural engineers to make one final determination that the Fournet Building is sound and able to be redeveloped as he’s envisioning. The City and/or CHEDA is expected to pay approximately $5,000 in fees paid to the financial firm and attorneys that will also be involved in the process of securing the TIF district.

    Evers self-contracts construction and repair work at his other properties. If something significant is found in the engineer’s assessment of the Fournet’s structure, Evers said he could potentially leverage his other properties to finance the necessary fixes. If something especially major is found, Evers could still back away from the project, Hoiseth said, and no one would be committed to anything tied to it.
    
Comments

    Many of the comments around the table Tuesday indicated a willingness to continue to work with Evers to make his Fournet project a reality, and also a fear that his building, if nothing happens on the redevelopment front, will eventually share a similar fate with the historic Wayne/Palace Hotel building at the corner of Second Street and South Main, which fell into tremendous disrepair and even became a borderline public health hazard after several redevelopment projects fell through, and it was eventually demolished. In that case, even after Polk County offered to put up $300,000 and establish a TIF district, an outside developer still backed away.

    Some of the comments from Tuesday:

    • “A 20-year TIF is pretty long, but we’re never going to have the opportunity again to do this at that building,” Fee said. “Whether it’s thinking outside the box or whatever, if we’re really for downtown, we have to do this.”

    • “Without TIF, this goes nowhere,” Stainbrook said. “To move that building forward, TIF is probably the way to go. If you do nothing, you end up with another Wayne Hotel.”

    • “If you look at other options, they’re not very attractive, and the building sits as-is for years,” City Administrator Shannon Stassen said. “In terms of affordability and Jeff with his proven record, this makes a lot of sense.”

    • “We need to get something started; we don’t want another Wayne Hotel,” Briggs said.

    CHEDA Board member Craig Morgan made the motion to approve the TIF district, with Leon Kremeier offering a second.

    If the council follows suit, there’s a 45-day period that involves a required public hearing before final approval. Evers said he will continue to do some demolition work on the third floor in the meantime, but he hasn’t decided yet how much extensive work he’ll do over the coming winter.

    Still, he left Tuesday’s meeting smiling.

    “Thank you very much,” he said to the CHEDA Board members.