January 12, 2016

Kilbourne Group plans $8 million investment into Black Building

The Black Building on Broadway in downtown Fargo as seen Jan. 6, 2016. Photo by Dave Wallis / The Forum

This article, by Tu-Uyen Tran, was published in The Forum of Fargo-Moorhead on January 11, 2016.

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Downtown developer Doug Burgum has plans to pour $7.7 million into the Black Building and the adjacent Scan Design building, according to documents his firm has filed with the city.

That investment is much larger than the $2.5 million value the city assessor’s office calculated for the buildings based, in part, on the income they’re expected to earn in their current rundown condition.

Burgum’s Kilbourne Group has not disclosed how much it will pay for the buildings, but documents it filed with the city pegs their value at $8.3 million.

The firm is seeking 20 years of tax breaks, though exactly how much will vary from year to year. In return, the city would be able to collect much more in property taxes after the breaks expire.

The Black Building, which will turn 86 this year, is now home to 85 tenants, but Burgum has said he believes space is not being used efficiently and there could be more. Kilbourne Group said in its filing it plans to target startups, tech companies, retailers and other small businesses.

Adrienne Olson, Kilbourne Group’s spokeswoman, said the goal is to increase the number of people working there from 150 to more than 500.

General Manager Mike Allmendinger said he met with the architecture team Wednesday and is excited to get started, but he doesn’t have a lot of specifics yet including whether the artificial tree in the Black Building’s atrium will stay or if new floors will be added, as Burgum earlier suggested was possible.

The first order of business is updating the heating and cooling system, giving each floor its own temperature control and replacing nearly 280 inefficient windows, Olson said in an email.

Allmendinger said more substantive discussions would kick off after Jan. 20, when Kilbourne Group closes on the deal with current owners DTL Properties.

That date is intentional because Jan. 19 is the night the City Commission is scheduled to vote on the tax breaks.

City Assessor Ben Hushka said the firm is asking for 10 years of 100 percent exemptions followed by 10 more years at 55 percent. He said he believes the city will offer 10 years of 100 percent exemptions followed by five years at 72 percent.

Property taxes for the two buildings are now about $39,000 a year, not including discounts. For comparison, after Kilbourne Group finishes renovations, the building would be worth $16 million and, based on the current tax rate, pay $255,000 a year.