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Winona’s Port Authority is sending plans for one tax district ahead to the City Council for final approval while holding another back for more study.

The two Tax Increment Financing districts — or TIF districts — will leverage property taxes to assist in paying for development projects.

The first, for a Rivers Hotel Group development at the end of Mankato Avenue, will be going back to the City Council Oct. 16 for a final approval.

The district would repay the developers for $480,000 in soil remediation costs at 950 Mankato Ave., the site of Perkins and the former Quality Inn.

The overall cost of putting in a new four-story, 96-room Fairfield Inn and Suites by Marriott Hotels is estimated to be $8.25 million, without the soil remediation.

The previous building was bought in 2013 for $1.1 million and torn down over 2014 and 2015.

Developer Mike Rivers said his group still is finalizing who will do the contracting and other work on the project but could begin the soil remediation — which involves removing the current soil to about 14 feet down and replacing it with sand — during this fall and winter.

“But there wouldn’t be any construction until the spring,” Rivers said.

The second TIF under consideration would aid in the redevelopment of a blighted building in downtown Winona.

The three-story, 34,000 square foot building at 102 Walnut St. had housed InTech until it was vacated after a fire in 2015.

It is being redeveloped by Latsch Development LLC, which previously refurbished the Latsch Building nearby, at an estimated cost of $7.6 million.

The TIF district would repay the developers $450,000.

The development agreement was sent back to staff and will return to the Port Authority at the Nov. 9 meeting, allowing for discussions on the lenght of the TIF and how the city wants to pay for reconstruction of public utilities and city property around the building, including the alleyway and sidewalks.

The plans include demolishing the building at 163 E. Second St. and negotiating with the Port Authority further to establish off-street parking at 163 and 167 E. Second St. The end use is planned for a mix of retail, commercial and residential, with about 70 percent going to business use.

City manager Steve Sarvi said the question was whether to extend the amount of time the tax district was in place so that the city could use some of the collected taxes for those projects instead of trying to fit them into the rest of the city budget — potentially ahead of where they would normally be — or leaving them undone while the rest of the block is refurbished.

The TIF district could be extended to as much as 25 years.

“The developer is asking whether we would perhaps time that along with his project,” Sarvi said.

The decision to pause the public hearing on the issue until next month was approved 3-2, with commissioners Dana Johnson and Mike Hansen dissenting.

Laurie Lucas, who made the motion to postpone the hearing, said the group should wait until it can get word from staff on how the move — which was suggested by Latsch Development managing partner Peter Shortridge — would affect the project and the city.

“I’d like it much more clear,” Lucas said.

60 Main Street

The Port Authority also gave the go ahead for city staff to apply for a grant to aid with the soil remediation for the planned development at 60 Main Street, currently a public parking lot behind the Winona 7 Theater.

According to the city, the site has environmental issues related to past uses and it’s estimated that the 8,000 cubic yards of material would have to be removed from the area.

Lucy McMartin, director of community development, said the city has used the grants from the Department of Employment and Economic Development before and they will pay up to 75 percent of the cleanup costs.

The city would apply for the grant, which has a deadline of Nov. 1, with a cost estimate of $650,000, though it is still getting estimates and it could come in much cheaper.

“This is the worst case,” McMartin said. “When writing a grant, it’s better to ask for what you might need.”

Since the grant is not a lump sum paid up front, the city would be able to draw what was needed, not necessarily the full amount.

This spring, Winona’s Port Authority entered into negotiations with the Minneapolis-based firm Sherman Associates to develop a mixed use building on the site, which has been a parking lot since the buildings were removed for redevelopment in the 1970s.

The proposed six-story building would provide space for around 94 market-rate apartments, a 60-room hotel and around 130 parking stalls in a first- and second-floor parking garage, along with commercial space on the ground floor, likely for a restaurant.

Those numbers, however, are not set in stone and subject to change in the planning process.

The soil work also would not predate the project by too long.

“We would want to coordinate this project closely with the development of sixty main so that the parking could remain as long as possible,” McMartin said.

Sherman estimates a development cost around $30 million. Though there’s no set timeline yet, in initial presentations to the city the developers said it could begin as soon as 2018 with completion the year after.

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