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Sunday, January 25, 2009

New Brighton Northwest Quadrant - The Non-Fiction Version

Although most of us have had enough of elections and campaigns recently to last a long time New Brighton residents should keep in mind that 2009 is an election year for the Mayor and some of the City Council. As in the past few elections, the Northwest Quadrant project and those responsible for the mess that it is will probably be a major campaign issue, as it very well should.

A few weeks ago the Star and Sickle ran a piece that appeared to be an attempt to provide political cover for those responsible for the failed Northwest Quadrant redevelopment project. For those of us who have opposed the project from the beginning and now see the results pretty much as we predicted (or, arguably, even worse), the Strib article attempted to put a positive spin on a negative situation for the benefit of Mayor Larson and his supporters in city government.

The overall theme of the piece was that the project was largely the victim of bad luck and the recent economic troubles rather than primarily the result of poor planning and ill-advised decisions over the last several years (a time period of robust economic growth and very favorable market conditions). It also suggests that the long absence of tangible progress is actually the result a cagey strategy by the project advocates doing things behind the scenes that will result in a glorious and triumphant fulfillment of the advocates long-time "vision" when the upcoming tidal way of hope, change, and prosperity rolls in. As stated by City Manager Dean Lotter in the linked article:
"We're getting in position here," he said. "The only thing that will be restraining development is the market."
The article goes on to put a positive spin on the financial shenanigans creativity of the city government:
With the first payments on the property due in early 2010, the city had to get creative to maintain its AA3 credit rating and to avoid passing the debt to taxpayers...

The city went last year to the Legislature, seeking a three-pronged rescue. The Legislature balked at issuing $5 million to $10 million in requested bonding money. But the city was successful in its request for special legislation to extend the life of the Northwest Quadrant tax-increment financing (TIF) district by four years to 2032, allowing the city to better position itself for future proposals. And, most importantly, the legislation allowed the city to pool and tap into surplus TIF funds from three thriving districts, the one that's home to Main Street Village residential and retail complex, another that houses the Brightondale senior housing complex and a third, a business park that includes Qwest Communications, off old Hwy. 8.

When the city developed those three parcels, the difference between predevelopment and postdevelopment tax revenues, the tax increment, was set aside to pay for each district's development and maintenance. In each case, taxes generated exceeded needed funds. In general, TIF funds from post-1990s development cannot be transferred from district to district, but the Legislature made an exception for the Northwest Quadrant, freeing up more than $3 million cash, and the promise of as much as $17 million in tax revenues over the life of the three districts.

The new flexibility gives the city more time to do the environmental work right, and to seek out grant money to reimburse the work that's been needed to remediate contamination from a refinery and a solvent manufacturer that once were on the west side of the site.
By now many of you long time New Brighton residents are either experiencing indigestion, falling out of your chair laughing, or looking for a nomination form for the "Best Work of Fiction in a Newspaper Story".

For those of us interested in the non-fiction version of the NWQ saga, long time New Brighton resident and member of the New Brighton Economic Development Commission Dennis Flahave has submitted an excellent piece on the situation as a guest columnist in the latest edition (week of 1/18/09) of the Sun Focus newspaper.

Mr. Flahave presents a concise summary within the limited space alloted that, from my perspective as fellow long time resident who has closely watched the debacle, is much more accurate than laughably positive spin in the Strib. His Sun Focus editorial is reproduced below in its entirety with my emphasis added in bold:
Resident questions City of New Brighton's decisions

By Dennis Flahave, Guest columnist
(Created: Wednesday, January 21, 2009 11:57 PM CST)

New Brighton Resident/Economic Development Commissioner

I am writing this as a New Brighton resident with concerns about the Northwest Quadrant redevelopment project. About six years ago when the City's consultants provided "cash flow" projections, I brought two prominent developers to the site to get their opinions of the viability of the project. I told then-city manager Matt Fulton of the developers' opinions: one stated that the project was too dense. The other did not feel that we would receive the high-end dollar projections on the townhomes due to the proximity of the two freeways and the noise associated with these freeways.

Let me make an analogy of the density issue. At The Lakes development in Blaine, the project has a density of approximately 9 units per acre. The density at the Northwest Quadrant is at 15 units per acre. To me this would be like backing out of your garage and into your neighbor's living room. However, the City decided to proceed with these cash flow projections.

The City awarded the initial development agreements to two excellent developers. After 18 months of sales efforts, only 17 units had an indication of interest for pre-sales, therefore, this was not enough in pre-sales for the developers to draw down on their bank financing commitments. In this same time frame the City took $10.7 million out of surplus from other T.I.F. districts and put the money into the Northwest Quadrant in the form of infrastructure such as roads, light poles, curbs, etc.

The City then purchased the Midwest Asphalt property for approximately $19 million on a non-contingent basis. With commercial purchase agreements in Minnesota it is normal to include environmental testing and inspection clauses. Why is this important? Answer, because if a property is found to be environmentally contaminated, the purchaser faces a potential unlimited liability to clean it up. I asked why the City waived its right to test and was told, "if we had done the testing, Midwest Asphalt would not have sold us the property."

Under the agreement with Midwest Asphalt, Midwest was to stop operations, and they did, and then Midwest proceeded to move a short distance north to Bel Air Properties and again they commenced with operations. Also, within this time frame the State of Minnesota stated that the Midwest Asphalt property was contaminated and had to be cleaned up before any development could take place. In 2008 the City of New Brighton hired Bel Air Excavating to do the cleanup of the Midwest Asphalt property.

The City is recently taking great pride in going to the Legislature to get permission for the pooling of our funds. This simply means being able to co-mingle funds - not a good thing as it makes it easier to obfuscate the performance of the individual Tax Increment Districts, no doubt a goal the City desires particularly as it relates to the Northwest Quadrant.

My question to all our residents is this: "Why did the City ever take on the role of developer and banker, and expose the taxpayer to such a risk?" We have approximately 33 T.I.F. districts in New Brighton and I believe the City of St. Paul has 17.

In conclusion, we are currently $100 million in debt and have sold two commercial lots. We are exposed to an unlimited environmental cleanup liability on contaminated sites. Finally, the City now has permission to co-mingle funds making it harder to track the accounting by project. I feel that this is a total breach of fiduciary responsibility.
Mr. Flahve pretty much covers it. I applaud him for having the courage and making the effort to get out the truth about what has been going on with this disastrous project and also give a tip of the hat to the Sun Focus for publishing a viewpoint that will probably not be real popular with many people in New Brighton city government. More efforts like this will help the voters of New Brighton to make an informed decision in the election this fall.

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2 Comments:

Anonymous Anonymous said...

Great writeup.

I heard rumors that a dog park was one of the contingecny plans for some of the area where nothing can be built. Then I ran across this a posting at jungbauer 2010 (http://jungbauer2010.blogspot.com/2009/01/representative-rick-hansens-dog-park_27.html) that makes me think the idiots in New Brighton may still try to push the idea.

Someone please tell me this dumb idea will never come to be!

1/27/2009 7:22 PM  
Anonymous Right Fielder said...

Flahve has done what the Bulletin and Sun should have done many times over the last few years and deserves many kudos. Letters from residents like Flahve and a couple of bloggers have been the only people to question the insanity of the whole sorry NWQ project as the stupidy was being carried out.

It's a sad commentary on how much our local so called 'news' papers are willing to just accept whatever city hall tells them to print without question.

And as far as the dog park idea goes I've never heard any final rejection of it on the televised commission meetings. The city is so desperate to do SOMETHING that I'm afraid that it could actually happen. I'm not sure there are enough votes on the City Council to stop the stupidity.

1/28/2009 11:19 AM  

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