By Barbie Porter


A new Tax Increment Financing district that includes 25 parcels was approved by the Frazee City Council during a special meeting on  Monday, Feb. 8.

An estimated $1.43 million bond will be issued. The projected breakdown of those funds are divided between project and capital costs. The project and capital costs account for $1.12 million and would:

Photo by Barbie Porter
The TIF District was made to assist in downtown development, including the proposed business center to be built in the vacant lot along Main Avenue in Frazee.

• Provide $100,000 for land acquisition. The TIF document states property that could potentially be acquired in the district includes 25 parcels downtown on the east side of the road, as well as about five properties connected to the downtown area. Discussions have been had about purchasing the current Seip Drug, post office and Sanders Oil buildings. No action has been taken on any of those discussions.

• Provide $250,000 for demolition and renovation, $250,000 for site improvements and $523,867 for utilities.

The finance cost for the bond, note interest and administrative costs totaled $3.05 million, which is the same amount for estimated tax increment revenues.

The city’s financial advisor from David Drown Associates explained the city already had three TIF districts, one for the former turkey plant location, one in Red Willow and one for All In All. He said to honor the previous TIF agreement made with the owners of All In All that TIF agreement would remain in tact. However, the other properties in that TIF district with All In All would be removed and added to the new one. He added not all buildings qualified for TIF, as about 70 percent in the district had to be substandard or with blighted conditions projected in the next six years. 

The target of the new district is to create a new business center in the empty lot along Main Avenue. Currently, the space is used as a skating rink in the winter and a farmer’s market in the summer. Past discussions on what would go in the new building have included Seip Drug, a shake shop and potentially the post office. 

Councilman Mark Flemmer asked how the TIF district would impact current buildings?

The advisor explained while there are many buildings in the TIF district, ultimately the council decides who gets TIF. He said the reasons to provide TIF generally includes addressing blight, creating jobs or adding significant value to a structure.

The council approved the adoption of the TIF district.

How TIF works

TIF is available to encourage developers or to pay for public improvements, such as streets or sidewalks.

TIF uses additional property taxes paid as a result of development in the district. For example, if a new building was constructed, the market value of the property would rise, increasing the amount of taxes captured above the original tax capacity.