Support the Timberjay by making a donation.

Serving Northern St. Louis County, Minnesota

Time to assess for improvements along Tower’s riverfront

Posted

Build it and they will come. That is, essentially, the idea behind Tower’s harbor project, and I remain confident that that’s exactly what’s going to happen— eventually.

There’s real interest from prospective developers and the timing is right. By next year at this time, the new campground at the Lake Vermilion-Soudan Underground Mine State Park will be open, and that’s going to substantially increase visitation at the new park. Over the next several years, the amenities at the park will only expand, and visitor numbers will grow along with it, and that makes development at the harbor all the more attractive.

But the city has a problem— one that could pose a challenge to development along the harbor and the riverfront for years to come. Development requires land and much of the best land for development near the harbor and along the riverfront is in private hands. And the improvements along the river and the harbor certainly haven’t escaped the notice of those property owners, some of whom have apparently decided they’re now sitting on modern-day gold mines, all thanks to the millions of dollars of public investment in improvements to this historic corridor.

I have no objection to folks making money on their real estate investments, but we have a conflict here between the desires of some private individuals to cash in on the river and harbor improvements and the needs of the city to attract potential development.

Any successful developer, the kind that the city is looking for, knows better than the pay too much for the land they hope to develop. There are plenty of prospective developers and business owners who are interested in projects around the harbor. But, to date, they’ve been mostly tire kickers, who have been scared off by the exorbitant price tags now placed on some of the nearby properties. In some cases, property owners around the riverfront are asking as much as six times the county-assessed value for their properties. By contrast, other commercial properties in Tower are currently listed for sale for about 1-1.5 times their assessed value. While county assessments aren’t always the best indicator of a property’s value, few people are willing to pay twice the assessed value, much less six times.

Of course, since these riverfront property owners are paying taxes on the assessed value, rather than their imagined premium value, most can afford to hold out quite a while in hopes someone comes along with stars in their eyes. In the meantime, the pace of development at the harbor and along the river is likely to languish.

Fortunately, the city has a sensible way to respond, one that would encourage development of private land around the harbor as well as provide a funding mechanism for additional improvements that the city currently can’t afford.

I’m talking about an assessment, which is something cities commonly impose on property owners as a way of paying for public investments that increase private property values.

Assessments aren’t common on the Iron Range, but that’s mostly because the Iron Range Resources and Rehabilitation Board has typically funded many of the infrastructure improvements in area communities, and that’s made assessments unnecessary. But elsewhere in Minnesota, assessments are commonplace, and they certainly aren’t unheard of in our area.

By assessing commercial property along the river and near the harbor, the city creates a funding mechanism to pay for bonds that could finance things like expanded docking, trails, sidewalks, and other amenities needed at the harbor. All of those amenities continue to add value to private property along the riverfront.

At the same time, an assessment provides a financial incentive for property owners in the area to do something— either to develop their property in a way to generate the revenue to pay their assessment or to sell it to someone who will.

The city should have established an assessment to help pay the costs of dredging, which inarguably benefitted those commercial properties along the river. I argued as much to city officials at the time, but they had no appetite for it. But it may not be too late. Additional improvements and ongoing maintenance are still needed at the riverfront and harbor and as the city devotes more of its own limited resources to the project, it’s only fair to ask those who gain financially from those improvements to pay some of the cost. When the state repaved Tower’s Main Street a few years ago, commercial businesses were assessed the cost of sewer line replacements, and those improvements likely added little actual value to their commercial properties.

Undoubtedly, the property owners who would be subject to such an assessment would protest. But such complaints are tough to justify when these same folks claim their properties are now worth so much more than their assessed valuations. When a property owner is paying taxes on land assessed at $220,000, while claiming it’s worth almost $1.2 million dollars (in large part because of publicly-funded improvements to the river and harbor), they can’t very well complain if their taxes come closer to reflecting the premium value they now attach to their property.

Assessments, in this instance, are reasonable and they advance the city’s dual interests—providing a funding mechanism for further improvements, while encouraging development at the same time. It’s a win-win, and it’s a step that’s worth exploring.