Jeff Evers’ redevelopment of the historic Fournet Building in downtown Crookston cleared a huge hurdle Monday evening when the Crookston City Council unanimously approved the establishment of a Tax-Increment Financing (TIF) District for the project, which Evers said from the beginning was a must if his plans were to proceed. (Ward 2’s Steve Erickson was not in attendance.)
But another resolution on the agenda relating to the TIF District that would have approved and authorized the execution of the development agreement with Evers regarding the TIF was tabled until the council next meets on March 25 because Evers hasn’t yet completed the process of securing a life insurance policy.
The duration of the TIF district is 20 years and it totals $208,000. With inflation and interest, City Finance Director Angel Weasner said the total dollar amount could reach $308,000. A TIF District essentially reallocates funds from property taxes to encourage investment within the district. Any increased tax revenues collected as a result of an increase in property values then go into the TIF fund and can be used for a wide range of purposes within the TIF to promote redevelopment.
While Evers is eyeing multiple phases for the redevelopment of the Fournet, the first phase is critical because it gives him a primary tenant on the second floor to provide him necessary revenue from the lease to make his financing package feasible. Tri-Valley Opportunity Council, which is looking to relocate from its headquarters across the street at the corner of Robert Street and North Broadway because the building is becoming too cost prohibitive to maintain, has committed to moving to a renovated second floor in the Fournet, contingent on Evers’ plans becoming reality. Future phases could involve a redevelopment of the third floor and the main/first floor, which for years was home to Four Seasons Clothing before Evers purchased the building. Evers has said he’s open to just about anything potentially occupying the first floor, from a restaurant of some kind to a suite of offices.
The Crookston Housing & Economic Development Authority (CHEDA) Board of Directors previously approved a $50,000 loan to Evers for the project, and the city council approved a $250,000 loan through the city’s Intermediary Relending Program (IRP) for the project. While the loans were approved some time ago, the understanding among the decision-makers all along was that the money would not actually be allocated to Evers until the TIF District was secured because without the district he had no project. He’s been doing some demolition work inside the Fournet in the meantime.
During Monday’s meeting, At Large Council Member Tom Vedbraaten, echoed by At Large Council Member Bobby Baird and Mayor Guy Martin, led the push to table the vote on the TIF District because Evers hasn’t finalized his life insurance policy. Asked by Vedbraaten why it was taking so long, Evers said he’d undergone a physical exam and blood tests and the policy would be finalized very soon. “I can show you the email trail if you want,” Evers added.
Vedbraaten reiterated that the life insurance policy is a must so that the City “isn’t out $250,000 if something happens” to Evers.
When it seemed that a vote to table the TIF District resolution was imminent, Mikaela Huot of Springsted, Inc., the City’s financial advisor, told the council and mayor that they could approve the TIF District itself without risk to the City, which would give Evers the opportunity to secure a building permit and start construction. “The developer can’t proceed until the TIF is approved,” Huot explained. “I understand there are pieces to the overall financing puzzle, but if you delay the TIF you delay the developer.”
With the TIF District approved but not yet certified by Polk County and without an approved and executed development agreement, Huot said that Evers, if he chooses to start construction in the building, will be doing so at his own financial risk and not the City’s risk. “Then you can consider the development agreement at a later date once the life insurance policy is done,” she added. “It’s the developer’s risk if he starts construction and doesn’t get the life insurance; we wouldn’t request county certification until we’re certain we have a project. You’d be moving the process along (by approving the TIF District) but you’re not obligating the City to anything at this point.”
“(The TIF District) is one of the last pieces of the puzzle; clearly, we need to get the life insurance done,” CHEDA Executive Director Craig Hoiseth added. “It’s all coming together at the end, but in order for Jeff to get going and meet the needs of his potential tenant…he’s been holding off because I’ve been telling him to hold off (until the TIF District approval).”
Speaking to the Times Tuesday, Hoiseth said a life insurance policy is not an explicit requirement of securing a TIF District, but that if CHEDA or the City give out loans, they typically ask for a life insurance policy with CHEDA or the City as beneficiaries for the principles of loans being provided in the event of a “worst-possible scenario.”