Full industrial park, Mankato attempts a new approach to privatized economic development | Local News

MANKATO — The city of Mankato is finalizing the sale of the last available parcel in its industrial parks, which have attracted hundreds of new jobs and tens of millions of dollars in additional tax base over the past half-century.

But city leaders aren’t rushing to buy more land for future industrial growth. Instead, they rely on a new approach centered on keeping land sales private.

“It’s one of the most innovative approaches I’ve ever come across for a city,” said Tom Halter, owner of land on the east side of Mankato, a new industrial development hotspot.

Five years ago, the city proposed a development agreement with Halter and other landowners just outside the city limits. Mankato, with the help of a state economic development grant, would extend Adams Street east through their properties to Blue Earth County Road 12, providing transportation access and services public to agricultural land.

As part of the deal, the owners would provide the land for the road at a reduced price. Landowners would be free to sell their land to any buyer they chose, but the appraisals associated with the cost of building the road and utilities would only be forgiven if the buyer was a manufacturing company creating well-paying jobs.

If landowners, on the other hand, were selling to developers planning residential subdivisions or low-paying businesses such as strip malls, they would have to pay infrastructure assessments — bills that could range from $200,000 to over $300,000. for each of the seven parcels totaling 170 acres.

“That means we as landowners have become selective about who the potential buyer is,” Halter said. “…It’s kind of a carrot and stick deal.”

To date, one development has bitten the carrot and another accepts a slap from the stick.

Halter has sold 24 acres of land to Truck Center Companies of Omaha for a new Freightliner truck sales and service center, which will relocate and significantly expand a dealership currently located on Fourth Avenue. The $9 million project will create a two-story concession totaling 119,000 square feet — larger than the Target store in Mankato — while creating and retaining 83 jobs initially and growing the workforce to around 125 on five years.

Job creation means that ratings will be forgiven.

Across Adams Street, Kato Moving and Storage is planning a self-storage building with virtually no associated full-time jobs being created. Thus, the city will be reimbursed through appraisals paid by the landowner and/or Kato Moving and Storage for the share of this property in the Adams Street extension.

The previous model

Of course, if the city owned the land, through a municipal industrial park, the city council could be even more directly involved in choosing buyers who are committed to creating jobs that pay decent wages.

Such was the case in the council’s recent decision to authorize the sale of a five-acre parcel on Energy Drive for $303,000 for the construction of a 30,000 square foot building at a cost of $4 million. which will be used by Dakota Supply as a wholesale distribution center. for building, plumbing and electrical.

“That would translate to about $25,000 a year in municipal property taxes when fully developed,” said Community Development Manager Paul Vogel.

The company will employ six to eight people with wages of at least $18 per hour plus benefits and one or two positions that pay significantly more.

“For example, the branch manager at this facility would make over $100,000 a year,” Vogel said.

Less than a year ago, the city sold 11 adjacent acres for $523,000 to the rice companies for the construction of a 50,000 square foot multi-tenant building for rent to contractors, small manufacturers or businesses in need of warehouse space.

The $6 million project is expected to pay municipal taxes of $42,500 per year. Rice Companies will be a major tenant, initially employing seven people, growing to 15 within five years, and wages and benefits averaging $32 an hour.

Rice Companies is constructing this multi-tenant building on the second-to-last available parcel in the Eastwood Energy Center industrial park in Mankato. The city is now in the process of selling the final lot.

The company did not identify other planned tenants, but said one would create 11 jobs paying an average wage of $29 an hour plus benefits and two others would provide 12 combined jobs at an average hourly wage. at least $25 plus benefits.

The Eastwood Energy Center Industrial Park was established in 2008 with the purchase of 70 acres of farmland. Not counting the two most recent sales, six developments have taken place in the park totaling nearly 287,000 square feet of building construction and nearly $20 million in estimated market value, according to city documents. These six pay $533,000 annually in property taxes, including $141,000 to the City, and have created or maintained approximately 300 jobs.

Previous industrial parks dating back to the 1970s resulted in the development of over 170 acres and created over $57 million in market valuation.

The new approach

Mankato’s history of buying and selling land for job-creating development has been a successful one, and Vogel said the council may decide in the future to re-enter the land sector. industrial parks.

But the new strategy appears to be working just as well and avoids criticism of the government, through municipal industrial parks, competing with the private sector in land sales.

Halter, who worked as a planning and zoning administrator in southern Minnesota in the 1970s, found himself on the other side of the table when he and other family members inherited farmland of their parents.

Mankato could have tried to buy the land along Adams Street and create another industrial park. But these types of agreements have often created bitter feelings in other communities, according to Halter.

City staff and elected officials, who typically negotiate with farmers when trying to buy land for an industrial park, bid low to avoid public criticism that they are paying too much. The sellers, who are generally reluctant to part with land that has been in their family for generations, want a premium but fear they will be subject to eminent domain powers if they do not accept the city’s price.

The new approach, leaving land sales in the hands of the private sector but providing incentives for high-quality job-creating development, avoids such “collateral damage”, Halter said.

“Everyone is pulling in the same direction,” he said. “There is no animosity. Good common sense thinking.

With the two most recent sales to the Eastwood Energy Center, the only vacant lots remaining are where Kato Cable and EI Microcircuits have the option to purchase the land for possible future expansions of their operations. Under the options, the two companies maintain the plots and pay the property taxes.

Look forward

Vogel said the lack of city-owned industrial development opportunities leaves would-be companies hard-pressed to buy from landowners on Adams Street if they want to set up shop in Mankato. Other options are available.

A 2020 redevelopment plan opens up land along Highway 169, including the former, mostly vacant, 15-acre Year Around Cab complex in the southwest quadrant of the intersection of Highways 169 and 14 This year, the city will begin planning for the redevelopment of the old quarry across the Minnesota River.

“While the entire quarry redevelopment is unlikely to be targeted for industrial development, there is freeway frontage to the north of the Cleveland (Street) extension that could also be an attractive development,” said Vogel.

As spaces fill up, the city could look south to replicate the Adams Street model. The area surrounded by Highway 22, Blue Earth County Road 90, Monks Avenue, and 200th Street—over 1,000 acres approximately one mile south of the current city limits—is being considered for potential future growth.

“This may be an attractive area for additional industrial development, especially as you get closer to County Road 90,” Vogel told council at its last Economic Development Authority meeting.

The first step would be an “alternative urban area-wide assessment,” something that has already been done for the lands between Mankato and Eagle Lake. This involves the city working with county, state, and federal officials to identify development issues and concerns and determine what type of use would be appropriate in which areas.

Council member Karen Foreman questioned whether the city, with $800,000 in proceeds from final land sales in the Eastwood Energy Center, should seek to fund the purchase of land just south or l east of the city limits for the next industrial park.

Vogel said council could make that choice, but staff would recommend continuing to use the private sector-based approach that appears to be driving increased activity along Adams Street. He also noted that the EDA is allowed to use proceeds from previous land sales for priorities beyond job creation.

“I want to remind the EDA that these funds can be used for other purposes such as housing and promoting affordable housing,” he said.