DULUTH - The Duluth Council on Monday agreed to pursue a new way to expedite downtown redevelopment by making it more economically feasible for developers.
The council authorized City Administrator Phil McLemore to consult with bond attorney Earle Taylor to determine the feasibility of using a redevelopment financing "tool" to assist developers as an alternative to creating a tax allocation district or TAD.
Duluth's Downtown Development Authority recommended the city explore the alternative method.
DDA Chairman Ken Odum explained to the council that the new tool would allow a developer to transfer ownership of property to the DDA, which could issue bonds to assist with financing the redevelopment. The DDA also could purchase the property or the city could purchase it and transfer it to the DDA.
The ownership transfer to the DDA would make the property tax-exempt. Developers would deposit the amount of taxes they would normally pay into a fund that would be used to retire the bonds. Once the bonds were paid off, the ownership of the property would revert to the developer, who would resume paying taxes.
"We need to meet with the attorney - go to the next step - and determine if this is the right approach," Odum said.
This financing method possibly could be applied to three projects, according to Odum.
These include the proposed mixed-use redevelopment of the old City Hall block by the Milestone Group and Coro Realty Advisors as well as a Mathias Corp. office project under construction on Main Street across from the new City Hall.
Also, this approach could be used to fund construction of additional downtown parking in conjunction with developer Dan Woodley, who plans to build a residential/retail development at Hill Street and Ridgeway Road. Woodley urged the council at its Feb. 4 meeting to speed up downtown redevelopment.
If any initial consulting fees are incurred, McLemore said the cost would be divided between the city and the project developer. City Attorney Lee Thompson said bond attorneys are usually paid later for their services based on a percentage of the amount of bonds issued.