Kandi Mall abatement approved by city, county

Kandi Mall abatement approved by city, county

September 8, 2016

Kandi Mall abatement approved by city, county

WILLMAR — In a unanimous vote Tuesday, the Willmar City Council approved a 10-year tax abatement for Willmar’s Kandi Mall. A public hearing was held before the vote.

The Kandiyohi County Board also met Tuesday and unanimously approved the county’s share of the abatement.

RockStep Capital, who purchased the mall last year, is planning on a major rehabilitation project at the mall. It includes the remodeling of the old Kmart store space at the south end, constructing a new retail building on the southwest side of the property along with new signage and parking lot improvements. The project is estimated to be worth around $6 million and the tax abatement will help fund the project.

“Tax abatement is an economic development tool,” said Aaron Backman, Kandiyohi County and City of Willmar Economic Development Commission director, speaking Tuesday at the Willmar City Council meeting.

The mall currently pays the fourth-largest property tax in the city of Willmar, Backman said. After the renovation and new construction are completed, the boost to the mall’s assessed value will make it the second- or third-largest property taxpayer in the city, Backman told both the council and the County Board during separate Tuesday presentations.

The city’s abatement will be for a total of $375,260 over 10 years. The agreement abates taxes for the increased market value of $11.4 million of the mall and any increase in market value coming from the project improvements. One hundred percent of those taxes will be abated in years 1-8, and 80 percent will be abated for years 9 and 10.

The city will continue to collect taxes on the $9.2 million value of the mall before the sale to RockStep Capital. The market value increased after the 2015 sale of the property.

Bruce Peterson, Willmar Planning and Development Services director, said if the increased property value and the value of the mall improvements were added to the city’s annual budget and then the abatement was approved, a $100,000 house in Willmar might see a $3.66 per year increase on its taxes to help cover the reduction in city revenue because of the abatement; a $250,000 house could see a $9 increase. A $200,000 commercial property in Willmar could see a $15 increase in taxes, with a $300,000 commercial property seeing a $22.50 tax increase per year.

RockStep will have to meet certain benchmarks to be set in a development agreement, which will need to be approved by the city, county and school. Benchmarks will include at least 60 new jobs paying at least $12 per hour.

“If RockStep doesn’t perform, they don’t receive the expected abatement,” Backman said.

When asked if RockStep would do the project without the abatement, Tommy Stewart of RockStep said he would no assume they would, but that RockStep wants to do what is best for the mall.

“We would try. We want to make the mall successful,” Stewart said.

There were some concerns about the fairness of tax abatements. Councilman Ron Christianson read a letter from a Willmar retail property owner who said tax abatements made for an unfair business environment.

Despite the concerns, all council members voted to approve the abatement.

“What this should do is bring more people to our community. This should have a very positive spin on our economy,” Councilman Denis Anderson said.

When the Kandiyohi County Board discussed the matter Tuesday, Commissioner Rollie Nissen said one of the reasons Willmar is a regional center is because of the mall.

“I would speak loudly and in favor of it,” he said.

The Willmar Public School district has approved the public hearing for the abatement, required before a vote can be taken.

West Central Tribune by Shelby Lindrud