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Proposed TIF district could fuel more housing in West Duluth

The Duluth Economic Development Authority will consider an agreement Wednesday night that could spur the growth of the Ramsey Village Townhomes development.

If approved, the package would provide tax-increment financing for the project, which is expected to result in the construction of at least another 20 townhouse units and perhaps 24 to 28 more in the future if additional land can be acquired by the developer, Thies & Talle Properties.

The authority is being asked for $522,536 in tax-increment financing to support the first 20 units of housing and up to $26,237 for each additional unit constructed as part of the townhouse project. If all 48 units were built, the TIF package could total nearly $1.26 million.

Tax-increment financing — often called TIF for short — is a form of subsidy that captures new taxes generated by a project and uses them to cover certain qualified development costs. The proposed TIF district would last for 26 years, after which time the full value of the property would hit the tax rolls.

Thies & Talle owns enough land in the district to build two eight-plex buildings and one four-plex. But Ken Talle, president of the Chanhassen, Minn.-based firm, said he hopes to acquire more properties and expand the scope of project if he finds enough willing sellers.

The present market value of existing properties in the proposed TIF district is less than $1.2 million, but that is expected to climb to at least $5.5 million after the townhome project is completed.

To date, 92 townhome units have been built at the Ramsey Village development in the past 20 or so years, and the pending expansion would mark the fifth phase of the project.

"We've been very pleased with the market reception," Talle said.

But he noted there are challenges to redeveloping an older neighborhood that already has been built out, making TIF support an important ingredient.

"It's critical, because it's very expensive, the land acquisition, where essentially we're acquiring older homes that we believe have outlived their useful life. ... There would probably be continued deterioration, including health and safety issues with those homes, if they continued to be occupied," he said.

Looking back at Ramsey Village's development so far, Talle said: "Without the tax-increment, none of it would have been built."

The townhomes will be about 1,300 square feet in size. Most of the units have two bedrooms, although some feature three bedrooms. All of the townhomes have two full bathrooms. A garage also will be included in the rent, which Talle expects to be about $1,500 per month.

If he gets the nod to proceed, Talle said construction could begin this spring, with the first units ready for occupancy by the fall.

The Duluth City Council also will need to sign off on the proposed TIF district before the project can proceed, and it's expected to take up the matter on April 9.

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