Eminent domain law won't affect city project: (St Paul MN) Pioneer Press, 6/29/06

New restrictions don't apply to plan adopted in 2004

By Maricella Miranda

Property owners and businesses in Rosemount [MN] had hoped a new, stricter eminent domain law would keep the city from seizing their land for redevelopment. It won't.

The new law, which protects homes and businesses from being bulldozed by cities and counties for larger tax-generating commercial developments, will not apply to Rosemount's downtown project. But if the city doesn't acquire the downtown properties by Feb. 1, 2008, analysts say the city would be required to offer more compensation to landowners and businesses, according to the new law.

The new law restricts eminent domain to projects that have a public purpose. It also states that cities and counties can only acquire properties if the land is severely blighted, environmentally contaminated, abandoned or a clear public nuisance.

City officials say a clause in the new eminent domain law would grandfather in the project because the city created a tax-increment financing district and plan for the downtown project before Feb. 1, 2006. The plan, which was adopted on April 20, 2004, says the city can seize any property in the downtown tax-increment district.

However, it's still unclear exactly what the new law would mean for projects currently underway.

Only a handful of projects will be grandfathered under the clause, said Louis Jambois, executive director of the Association of Metropolitan Municipalities. Eminent domain has been used for about 30 development projects in the past six years.

The Rosemount project runs a block east and west on both sides of Minnesota 3, from 143rd Street to the north to County Road 42 to the south. The city still needs to acquire four remaining properties, which house six businesses, for the project's first phase, Core Block East.

Kurt Hansen owns three homes in Core Block East, which he rents to three businesses. Before the city chose Contractor Property Developers Co. of Roseville to develop the area, Hansen approached the city wanting to redevelop the project himself. Officials from the city and CPDC proposed a financial partnership with Hansen for Core Block East a few months ago. But the partnership hasn't moved forward since then.

"I need more information. I'm interested in a partnership, but I have no information to base the partnership on," Hansen said.

City Administrator Jamie Verbrugge said the details of the project are still unclear.

"The city normally will want to make sure that we have a viable project before we would consider taking … an extraordinary measure" such as eminent domain, Verbrugge said.

The next step for Core Block East is for CPDC to find potential users for the site, which could include offices, a restaurant, stores and urban housing. Once there's a clear vision, the city and CPDC will negotiate on a final agreement, most likely in the fall.

City officials also will decide in the agreement how much tax-increment financing the project will get from Rosemount. Tax-increment financing diverts tax revenue generated by new development to offset building costs initially paid for by the developer.

Mayor Bill Droste said the final redevelopment agreement can't be made until the city owns all the properties in Core Block East. But he said the city isn't working on a deadline.

"This is a long process," said Droste, adding that the city has been trying to acquire land in Core Block East for 15 years. "To move a business or to relocate a business — those are big decisions."

Kim Mohrhauser, co-owner of Fluegel's Farm Garden and Pet, 14700 S. Robert Trail, won't sell part of her property in Core Block East unless CPDC finds a place to relocate a Quonset hut there now, she said. The developer is working on a space-needs study.

"We've tried to come up with solutions, but we just haven't found any that could work for us," Mohrhauser said. "We don't have property to build the size of building we need. Are they willing to take a part of our business that we need to function?"

While the city tries to buy all properties in the first phase, city officials also are moving forward with plans to develop Core Block West, an area across the street. Early concepts include preserving some historic buildings. Once city officials review initial ideas, they will ask developers to submit redevelopment plans and the city will choose one among them.

Although property owners fear the city using eminent domain, Verbrugge said, "The intent is to accomplish redevelopment without having to resort to eminent domain."

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