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| By Melissa Van Der Stad |
This article originally appeared on InForum.
A new building project in downtown Fargo, which includes the new home for the Fargo-Moorhead Community Theatre, 145 apartments, the Herbst Building redevelopment and the city of Fargo parking garage, is one step closer to its goal.
The Fargo City Commission on Monday, Nov. 14, unanimously approved a development agreement to construct a parking garage, which is the city’s portion of the project.
The garage will boast 450-490 parking spots and will address the parking needs downtown for the next 15-20 years, said Jim Gilmour, director of Strategic Planning & Research.
The commission’s vote pushes the entire project, all located at 602-636 NP Ave., Fargo, closer to its anticipated completion in 2025.
Mayor Tim Mahoney said the garage is a benefit to the public to have parking options when they are downtown.
The development agreement to build and operate the parking garage is between the city of Fargo and Great Plains NP Holdings, LLC, a group whose investment fund is run by the Kilbourne Group.
Erik Johnson, assistant city attorney, said the project will provide the community more downtown parking, generate revenue and help bring community theatre to downtown.
Some commissioners on Monday, however, were hesitant to approve the agreement, citing Fargo’s ownership of the parking garage, putting the city at financial risk.
“The shortfall comes to us (the city),” Johnson added.
Financing will begin with a $4 million cash investment from the city. The remaining $16 million will be financed with annual appropriation bonds taken out by the city, according to Baker Tilly Municipal Advisors. The group was hired by Fargo to evaluate financing options.
Fargo will provide $450,000 for project design, and up to an additional $20 million for the parking structure itself.
Bonds will be issued and payment will begin in 2023. Final maturity on the bonds will be in 2045.
Money made from the project will ultimately not cover the debt on the bonds between 2023 through 2030, advisers said, adding the city would need to find $3.5 million to cover the funding shortfall during those years.
Terri Gayhart, finance director, said the initial project shortfall can be covered by the city with funds made available following the 2020 refinancing of four large city bonds.
The regular bond payments are now much lower than they were, Gayhart said, and the city can use that difference to fund the parking garage’s financial shortfall.
Commissioner John Strand pointed out the funds, if not used to cover the shortfall, could instead be put into savings.
The city’s various parking incomes and fines could also go toward paying off the $16 million bond. In addition, the city plans to create a new TIF zone, according to the financing plan.
Work will now begin on the renewal plan and the financing plan following Monday’s approval.
Commissioner Denise Kolpack called the project a great addition to the downtown community. “It’s an incredibly… innovate approach and a solution for the community theater,” she said.
Global Development will soon be making their Renaissance Zone application and Kilbourne Group will be applying for Renaissance Zone and TIF funding.
Commissioner Arlette Preston asked how the project’s outcome could be affected should Cass County not participate in the TIF funds. Cass County recently elected to not participate in TIF funding that Fargo gave.
“If the county or the school district were to opt out, that could put the tax exemption that Kilbourne is relying on in jeopardy,” Gilmour said, adding it will be a hurdle to pass when Kilbourne has been granted TIF funding from the city.
Strand, meanwhile, conveyed concerns over how the project has taken shape, namely why other developers were not able to compete for the deal or land in question. He called the land a “public asset” and expressed hope that the city would give more opportunity for competition in the future on partnership projects.
Gilmour said that it was not the city’s official decision to pick the developer for the project. Partner Global Development chose the developer, Gilmour said.
KILBOURNE GROUP
210 Broadway, Suite 300
Fargo, ND 58102