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Serving Northern St. Louis County, Minnesota

EDITORIAL: Harbor project, Tower City Council needs patience now that the pieces are in place for success


City officials in Tower would be wise not to pull the rug out from under a proposed town home project at the city’s harbor, at least for now.

The city council, last month, gave the developers of the project a Sept. 26 deadline to sign a revised development agreement for the project, or the city appears willing to cancel the deal. That deadline was arbitrary, and it comes even as the developers continue to work in good faith to make the project succeed.

The threat to cancel the project— which has been in development for two-and-a-half-years— is inappropriate, particularly since the final platting and permitting of the project were just completed a few weeks ago. Under state law, the developers of the project could not legally sign purchase agreements with prospective buyers until platting was final.

From the beginning, the developers and city officials had agreed that the project would move forward based on sales as a means of limiting risk for both parties. Now, after more than two years, the groundwork has finally been laid to make those sales possible. For the city to abandon the project just as the developers are finally in a position to begin to convert legitimate interest in the project into contracts would be self-defeating.

There is no doubt that the delay in the project, and subsequent finger-pointing, has been frustrating for both city officials and the developers. But that’s hardly cause to terminate the only project that’s currently in the development phase for the city’s harbor.

Right now, the biggest hold-up is a decision by the city to change the terms of the development agreement in a way which puts significant additional financial risk onto the developers. A little history here is in order. The city originally attracted Orlyn Kringstad and his development team, which operated at the time as Nordic Business Development, Inc., with a request for qualifications under which the city sought a variety of development services for a town home project that the city planned to develop on its own. Once NBDI showed interest, however, the city proposed that the company take on the role of developer, rather than the city. That change in the arrangement meant added risk for the development group. They subsequently agreed to the change, with the clear understanding that the city would be providing the land and would pay to install necessary infrastructure, including streets and utilities.

But earlier this year, city officials changed their minds, again, and demanded that the developers agree to back financing for the streets and utilities, either through a letter of credit or a pay-as-you-go tax abatement scheme.

The developers, not surprisingly, balked. Eventually, they agreed to consider a phased tax abatement plan, but the city still doesn’t have assurance that St. Louis County will agree to the idea, and probably won’t know before Sept. 26. To demand that the developers sign a revised development agreement without fully understanding their prospective financial liability is unfair, to put it mildly.

If the city had another prospective developer and a realistic alternative proposal waiting in the wings, the sudden rush could be understood. But if such an alternative exists, it has certainly never been discussed at a public meeting.

As things sit today, the plan put forward by Kringstad and his group is still the most likely option for development at the harbor, and the only option that could conceivably begin construction in 2019.

The city council shouldn’t let their frustrations over project delays push them into an unwise decision. There is little harm, and much potentially to gain, from letting the developers spend the fall and winter on project sales, with a mind towards a construction start in spring of 2019. The city’s own market study demonstrated strong potential interest for town homes at the harbor. Now that all the pieces are in place to begin the sales effort, pulling the pin on the project is senseless. If the developers could have 6-10 purchase agreements signed and delivered by early next spring, which is certainly possible, the risks surrounding the project will have diminished greatly and the city can comfortably proceed with a major project that is almost certain to spark additional development in the harbor area. City officials in Tower have demonstrated patience in the past regarding this project. They need to show a bit more to make sure it succeeds.


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