Edina HRA Tables 70th France Financing Restructure
The Edina Housing and Redevelopment Authority tabled discussion of a proposed financing restructure for the 70th and France development project Thursday, pending legislative approval of a tax increment financing district extension.
The original $22 million TIF agreement has become insufficient due to rising interest rates, creating a $4.7 million shortfall, according to Economic Development Director Bill Nindorf. Staff proposed having the city co-sign debt or enter long-term leases to secure better borrowing rates, but commissioners expressed concerns about the increased risk profile.
"With a pay-as-you-go note, the risk is all with the developer and the city just uses TIF as a reward when they're finished," Nindorf explained. The new structure would shift some risk to the city if tax increment revenues fall short of debt payments.
Ted Carlson of Orion Investments said the restructure would allow the office building and residential components to be developed independently. The developers are seeking to decouple the financing between the two sites to move forward with the office building while the residential portion remains on hold.
Commissioners questioned whether the city should take on additional risk when private markets won't finance the project. The HRA will revisit the proposal after the legislature decides on extending the TIF district's five-year deadline to 10 years, expected by May.
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Areas of Interest (5)
- City HRA debates shifting from developer-risk TIF models to city-backed bond structures to save stalled high-profile development at 70th and France.
- Concerns mount over increased municipal risk as HRA contemplates backing private development with full faith and credit of the city.
- Developers claim current market conditions, including high interest rates and inflation, render original 2022 development agreements for 70th and France unworkable.
- Proposal floated to treat city-owned parking structures as public utilities to secure tax-exempt interest rates for private developers.
- Long-term financial exposure: HRA members question future budget impact of owning and maintaining a massive parking garage at 70th and France.
Votes (2)
Approve the meeting agenda as published
Moved by Mr. Jackson · Seconded by Commissioner Agnu
Adopt items on the consent agenda
Moved by Mr. Jackson · Seconded by Commissioner Pierce
Notable Quotes (3)
If we go with an alternative structure as we're discussing here today that Tiff note goes away but the same Tiff dollars that are coming in the door would go out the door to pay for the bond.
In order for us to make this project happen we need to be able to decouple the financing between the two sites.
It feels to me based on what you said that we as a city would be assuming more risk in this.
People (5)
Scott NeilExecutive Director / City ManagerCoordinates the meeting and facilitates discussions.
Coordinates the meeting and facilitates discussions.
Bill NondorfEconomic Development DirectorLeads the presentation on the 70th and France development financing restructuring.
Leads the presentation on the 70th and France development financing restructuring.
Ted CarlsonRepresentativeFrom Orion Investments, explains the need to decouple site financing.
1 quote
From Orion Investments, explains the need to decouple site financing.
“in order for us to make this project happen we need to have need to be able to decouple the financing between the two sites”
Justification for moving away from combined project financing.
Nick An-HutConsultantFrom ERS, advises on financial modeling and economic feasibility.
From ERS, advises on financial modeling and economic feasibility.
Chair HubandChairPresides over the HRA meeting.
Presides over the HRA meeting.
Places Mentioned
Events & Meetings (1)
- January 7, 2025 - 7:30 a.m. ATA Housing and Redevelopment Authority Meeting
Source document
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Other Topics from This Document
Economic development and financing restructuring for 70th and France project
Proposal to move forward with office site development at 70th and France
Discussion of tax-exempt financing and credit backing by the City/HRA
Potential use of Special Purpose Entity for development
Mitigation strategies for financial risk to the city
Conceptual shift from pay-as-you-go TIF notes to bonded debt models
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