City Council Meeting Date: November 12, 2024
To: Mayor and City Council
City Administrator
Rice County Commissioners
County Administrator
From: Nate Carlson, Economic Development Coordinator
Title
Joint Public Hearing with Rice County Commissioners - Tax Abatement on 115 5th Street (former Northfield News Building)
Body
Action Requested:
The Northfield City Council shall hold a joint public hearing with Rice County Commissioners to contemplate the use of tax abatement for 115 5th Street.
Summary Report:
The City of Northfield acquired key downtown Northfield properties, including the former Northfield News building at 115 5th Street, for future redevelopment. The sale of the Northfield News site to Loon Liquors is emblematic of the City’s commitment to working with the local business community to create winning scenarios for all involved. The City of Northfield is committed to both helping local businesses expand and attracting new business enterprises to Northfield, as we continue to cultivate an environment that keeps Northfield a community with great appeal for everyone.
As a homegrown entrepreneurial endeavor, Loon Liquors is committed to the Northfield area. From its current location on Armstrong Road, the craft distillery has become a regional economic multiplier through its commitments to partnering with local farmers and other local business enterprises and supporting tourism in the region. Loon Liquors is a destination distillery that draws people to Northfield for a unique educational and entertaining experience. The purchase of this site will afford the business an expansion opportunity and contribute to the vitality of the downtown business district. The Loon Liquors team’s proposal has significant
potential to enhance the already popular tourist destination’s ability to draw more visitors to Downtown Northfield by featuring distillery tours, high-quality alcoholic and non-alcoholic craft beverages, and an expanded food menu that captures farm-to-table dining with 90% of its food and beverage supplies coming from farms located within 10 miles of the establishment.
Loon Liquors has achieved extraordinary success and is looking to expand its impact by moving to a higher profile setting that creates a win for its customers, a win for downtown Northfield and a win for Loon Liquors.
The Northfield City Council approved the sale of this property on April 23, 2024, to Loon Liquors, LLC. The Council sold the property for the market appraised value of $960,000 with the understanding that the remaining investment by the City would be recovered through future taxes created from the building and property utilizing the tax abatement tool as intended and authorized by State statutes.
City staff has worked with Rice County staff to coordinate the tax abatement process throughout the due diligence period of the Purchase Agreement. Project needs will be vetted as a determination is made on the tax abatement needed to recover the City’s investment.
A Public Hearing by each taxing authority on the tax abatement for 115 5th Street W. is required by state statute. In an effort for greater efficiency, the Northfield City Council and Rice County Board of Commissioners will hold a joint public hearing. City staff and Ehlers’ Senior Municipal Advisor Nick Anhut will provide a presentation on the Tax Abatement process.
Subsequent and separate resolutions are prepared for the Council and Rice County Commissioners to consider following the public hearing.
Alternative Options:
No action is taken during a public hearing.
Financial Impacts:
The City and County is considering the use of Tax Abatement to recover the initial investment of acquisition and holding costs related to the ownership of 115 5th Street. With the assistance of Rice County, the investment could be recovered within a 15-year time frame. There is roughly a $290,000 “gap” between the initial investment and the sale price of the property which the tax abatement would cover. This is a common approach that cities, EDAs, HRAs and Port Authorities use in related facilitation of redevelopment of property to meet broader community goals.
Annual Northfield City tax abatement is estimated at $15,712.
Annual Rice County tax abatement is estimated at $8,870.
Tax Abatement may not take effect until 2026 following the improvements made by Loon Liquor.
Tentative Timelines:
Council Public Hearing on property sale - April 23, 2024
Council Resolution to approve the Purchase Agreement for sale - April 23, 2024
Council and Rice County Joint Public Hearing on Tax Abatement - November 12, 2024
Council and Rice County resolutions of approval for use of Tax Abatement - November 12, 2024
Closing on property - On or before December 20, 2024