County Fair to expand if city helps
February 26. 2013 2:01PM
County Fair Food Stores wants to expand by moving its Dell Rapids operation to the west side of town, but won’t do it without some help from the city.
John Clarke, owner of the food store, is beginning his second attempt at convincing the city planning commission and city council to establish a tax increment finance district, also referred to as a TIF, on his property at the northeast corner of Highway 77 and 10th Street.
A TIF district must be established before a bond or loan is taken out against a city’s credit to pay for public improvements like utilities, curb and gutter and lighting in connection with a specific private development project. The bond is paid down by the developer or property owner over a period of no longer than 15 years.
The city planning commission, which denied a TIF request by County Fair Food Stores in 2007, will hold a public hearing March 12 at City Hall to again consider establishing a TIF.
Justin Weiland said Clarke’s TIF proposal would cover the $689,000 in upgrade costs for utilities, grading, entrances and sidewalks surrounding the property. The TIF would not pay for any construction costs, which Clarke estimates to be about $3.2 million for a 30,000 square-foot store. The existing store is about 15,000 square feet.
Right now, the city, school board and county collect property taxes based on the valuation of the land. After construction is completed, those three governments would still collect what they had been, but additional property taxes would be used to pay down the TIF bond.
The difference between the current proposal and the unsuccessful TIF proposal of 2007, Weiland said, is that the bond is solely the responsibility of the developer.
“If it’s expected that there is going to be (a certain) number of dollars generated in additional tax revenue and it comes in underneath that, the developer is responsible for coming up with the difference,” he said.
In the last TIF proposal, the city would have been on the hook if valuations didn’t meet projections.
“When the TIF’s paid off, then the city, school district and the county will collect 100 percent of the taxes,” Weiland said. “We’re just waiting.”
Weiland told the city council at its Feb. 19 meeting that counties and school districts sometimes object to TIF district because they divert property taxes toward paying a bond. However, he said he doesn’t expect opposition from the Dell Rapids School District with the County Fair project.
Councilor Craig Lauritzen said in this case nobody will see increased revenues without the TIF.
“If it doesn’t happen, they’re not getting that extra revenue anyway,” he said.
Weiland said if County Fair builds a new store at the corner of Highway 77 and 10th Street, more commercial and residential growth can be expect in the area, a plus for the local economy.
“When you think about from an economic development standpoint, if we’ve got a brand new grocery store anchoring that area where housing is set to expand – it’s more houses and more opportunity,” he said.
Because Clarke expects a bigger store to draw more customers, the city expects to see increased sales tax and alcohol sales revenue increase as well.
Clarke said he hopes to begin construction this summer if the city rules in favor of the TIF. Now employing about 60 at the Dell Rapids grocery store, Clarke said expanded operations will require an additional 15 to 20 employees on the payroll.
“It will be a real plus for the community of Dell Rapids,” he said. “We wouldn’t build it if we didn’t think we could draw more customers and we’re going to be able to offer more to our current customers.”