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Launched in 2014 by journalist Sean Baker, Med City Beat is an independent news source covering government, business and culture in Rochester, Minnesota.

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Column | Using TIF, Rochester plants the seeds to help downtown reach full bloom

Column | Using TIF, Rochester plants the seeds to help downtown reach full bloom

Now that the deal is done for the long-discussed Bloom project on the Zumbro riverfront, what does Rochester get for its investment?

The city has OK'ed $20 million in tax increment financing for a project that Olmsted County says will have a market value of about $142 million. About $18 million of that TIF is for "various project gap (financing) and amenities," according to the city, and $2 million is for 41 additional public parking spaces.

Leaving aside the parking, the TIF gap financing is about 12.6 percent of the total project cost.

The city investment also includes real estate, an irregular but prime site along the mighty South Fork Zumbro. The nominal sale price was $8 million, but Bloom will trade 173 public parking spaces in lieu of cash.

Here's what Rochester will get for this big wad of money and property:

  • 215 independent living, assisted living and memory care apartment units for the elderly.

  • 132 residential condos, likely to meet no one's definition of "affordable housing."

  • 181 hotel rooms, at a time when downtown appears to have no shortage of hotel rooms in the works.

  • A total of 214 public parking spaces, which is a drop in the bucket compared with demand, and about a third of the total spaces in the new ramp adjacent to the Hilton.

  • Some retail on the street and skyway levels.

  • "A water feature and elevated green space as public amenities."

The "water feature," etc., almost certainly will be underwhelming. There's so much packed into the gerrymandered site that the plaza and fountain likely will be a playground for tower residents and hotel guests, rather than a destination for city residents. And we'll see how the retail works out but there's no reason to expect home-owned, one-of-a-kind shops.

 Bloom’s rendering of a reimagined downtown waterfront

Bloom’s rendering of a reimagined downtown waterfront

So, it's easy to be jaded about what the project offers other than two new towers on the skyline, at a time when people are losing patience with TIF being doled out to wealthy developers — in this case, to a giant Abu Dhabi-based multinational with interests far beyond real estate.

But five years from now, when the project is expected to be fully open, we'll begin to see its real value: people. More than anything, what Rochester needs is more people living in and around downtown, and that growth is happening. The Bloom project is the biggest and most glamorous project of its kind, but with the Flats on Fourth, First Avenue Flats, the Lofts at Mayo Park, the Riverwalk project and the Titan-Opus project on South Broadway, there are more than 1,000 new housing units open or planned close to the center city.

More apartments and condos downtown mean a living, breathing city center, with more places to go and things to do, see and eat, at all hours. Those people living downtown make the city better for the rest of us. Yes, a lot of the Bloom residents will be seniors needing health care and the condo dwellers likely won't be waiting tables or hanging out at Kathy's, but more people living downtown can make everything else happen.

The Bloom project means more downtown "vibrancy, more housing options for a range of ages, greater economic activity and increased job creation," Kathleen Harrington, president of the Rochester Area Chamber of Commerce, said last week. "All of this is good for our community ... increased population density will drive greater demand for goods and services, and opportunity for business."

Building places for people to live downtown is just a first step to energizing the center city, and the City Council  and business leaders need to take many more steps to encourage the type of diverse, transit-friendly, affordable development that will make downtown Rochester more than just a Mayo campus. But Bloom is a reasonable part of that first step.

 The now-under-construction Residence at Discovery Square apartment building

The now-under-construction Residence at Discovery Square apartment building

As far as the TIF goes, the Bloom project likely will deliver more value to city residents than the incentives that have gone to some other projects, such as the Alatus luxury apartment tower by Saint Marys Hospital. TIF is an incentive used by just about every city to grease wheels that otherwise might not turn, and Rochester has used its authority fairly judiciously. One exception would be the Miracle Mile sinkhole, but even there, the apartments and grocery store will generate tax revenue and spin-off development for years to come.

There's no doubt the city has been on a TIF spending spree since DMC came along. Assistant City Administrator Terry Spaeth estimates that 4.38 percent of the city's property tax capacity will be locked up in TIF by 2023, compared with about 1.5 percent now, and other projects will come down the pike that will strain that further. Though the city's not in the same league with Minneapolis, St. Paul and Bloomington when it comes to incentives — 14.5 percent of Bloomington's property tax capacity was tied up in TIF in 2016 — it's no wonder that city residents and midterm voters are concerned about giveaways.

Those concerns are all good. They make complex projects better and help to keep city officials honest. In the end, Bloom is better for having gone through the mill for three years, and with any luck it will contribute importantly to drawing more people downtown at all hours for restaurants and bars, arts and entertainment, people-watching and a place to live. That's TIF well-spent.

Jay Furst is a Rochester journalist and media consultant. Send email to jpfurst@gmail.com.

Cover photo: Site of planned Bloom waterfront development / Med City Beat

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