CY41-24

Request of the Planning Agency to review Mankato Development District No. 50 Plan (“Plan”) to determine conformity of said plan to the General Development Plan for Development or Redevelopment of the Municipality as a whole. The Plan is proposed in conjunction with the redevelopment of property for two adjoining hotels totaling approximately 250,000 square feet. Planning Commission review of the Plan is a prerequisite requirement for the City to approve the use of tax increment financing assistance to aid development of the project. The subject property is addressed 101 E. Main Street, 121 E. Main Street and 118 S. 2nd Street. 

The anticipated date of council action is October 15, 2024.

The applicant is the Planning Agency.

The applicant is requesting to review Mankato Development District No. 50 Plan (“Plan”) to determine conformity of said plan to the General Development Plan for Development or Redevelopment of the Municipality as a whole. The Plan is proposed in conjunction with the redevelopment of property for two adjoining hotels totaling approximately 250,000 square feet.

The subject property is located at 101 E. Main Street, 121 E. Main Street and 118 S. 2nd Street. The subject property will be described as "Lot 1, Block 1, Hotel Mankato Redevelopment" once the property has finished the replatting process.

The subject properties are currently home to the vacant City Center Hotel, the vacant Landmark Building, a parking lot, and a vacated alley. 

The subject properties are zoned CBD-C, Central Business District Core. 

The Planning Commission reviewed an amendment to the preliminary plat and the final plat at their August 28, 2024 meeting. Final action on that request occurred at the September 9, 2024 City Council meeting. 

The Planning Commission reviewed the preliminary plat, the alley vacation, a conditional use permit and a certificate of design compliance at their June 26, 2024 meeting. Final action on that request occurred at the August 12, 2024 City Council meeting. 

There are no known environmentally sensitive areas on the site. 

The site is currently served by public utilities and the proposed redevelopment will continue the use of public infrastructure. 

On June 26, 2024, the Planning Commission reviewed the preliminary plat, alley vacation, conditional use permit, and certificate of design compliance to allow the redevelopment of the properties located at 101 E. Main Street, 121 E. Main Street, and 118 S. 2nd Street for the purpose of vacation of an alley; a conditional use permit to allow two hotels in the CBD-C, Central Business District Core; and a certificate of design compliance for the construction of a new, approximately 250,00 square foot development including a 169-stall underground parking garage in the Downtown Gateway Overlay District and the Downtown Design District. The request was subsequently reviewed by the City Council at their August 12, 2024, meeting.

On August 28, 2024, the Planning Commission reviewed an amendment to the preliminary plat, and the final plat of Hotel Mankato Redevelopment Subdivision associated with the redevelopment, combination, and reconfiguration of 101 E. Main Street, 121 E. Main Street, and 118 S. 2nd Street. The request was subsequently reviewed by the City Council at their September 9, 2024 meeting.

The proposed project is the redevelopment and demolition of existing substandard buildings that include Landmark Center and City Center Hotel, with development accompanying the adjacent parking lot to maximize development opportunities and allow for construction of two Marriott hotel brands, including a rooftop restaurant, ground-floor lounge and 282 guest rooms with shared parking. 

The level of private investment associated with the redevelopment is approximately $92,710,000. Financing of specific activities with tax increment revenues and other public and private sources of funds will occur following the review and approval of the project, Development District Plan, Tax Increment Financing Plan, and Development Agreement by the City.

The City of Mankato has received a request from the developer to consider financial assistance in the form of tax increment financing (TIF) to off-set the redevelopment costs. The Development District is subject to Planning Commission review, not the tax increment district. Approval of the creation of the TIF District, Development District and development agreement are under the purview of the City Council, which will be considered at a future public hearing held by the City Council.

The map in Section C, "Development District No. 50" of the Development District Plan outlines the proposed development district area. This area includes the vacant City Center Hotel at 101 E. Main St, the vacant Landmark Building at 121 E. Main St, the parking area at 118 S. 2nd St, the alley behind 117 S. Front St, the extent of Riverfront Drive between 101 E. Main St & 112 S. Riverfront Dr, the extent of E. Main Street between Riverfront Drive and 2nd Street, and the western half of the 2nd street ROW to the west of 111 S. 2nd St.

The creation of Development District No. 50 allows the use of tax increment financing (TIF) to fund eligible redevelopment costs. The Development District that encompasses the area shall include the entirety of the Riverfront Drive and East Main Street right-of-way adjacent to the subject property, as well as the Western portion of the 2nd Street ROW adjacent to the subject property. 

The Development District Act, Minnesota Statutes, sections 469.124 to 469.133, requires that areas proposed for development district designation must be found to be located in areas of the community that are “already built up”. For the following reasons, the proposed Development District qualifies:

1. The vicinity of the Development District is urban. Existing land uses in the vicinity include commercial offices. Zoning in the vicinity corresponds to the land use pattern.
2. City sanitary sewer, storm sewer, and water lines are available throughout the Development District and surrounding vicinity.
3. The vicinity of the Development District includes existing City streets and roadways.
4. The City’s comprehensive plan has designated the Development District as an area for mixed-use development.

Minnesota Statutes, section 469.126, subdivision 2, in part, authorizes a municipality to accomplish the following activities: “Within these districts the municipality may adopt a development program consistent with which the municipality may acquire, construct, reconstruct, improve, alter, extend, operate, maintain or promote developments aimed at improving the physical facilities, quality of life and quality of transportation. The municipality may acquire land or easements through negotiation or through powers of eminent domain.”

Activities proposed within Development District No. 50 will assist private property redevelopment to include demolition and redevelopment of the existing Landmark Center, City Center Hotel, and adjacent parking lot to allow for construction of two upscale Marriott hotel brands, including a signature rooftop restaurant, ground floor lounge and 282 guest rooms with shared parking, which accomplishes the goals of preventing blight, creating employment and housing opportunities, enhancing the tax base, and improving the general economy of the community and state.

Minnesota Statues, sections 469.124 to 469.133, authorizes the City a broad array of powers to undertake a Project. The City will perform all Project activities pursuant to the statute and in doing so anticipates that the following activities may be undertaken:

1. Acquisition. The City may acquire property for the development of public improvements and private projects. Land acquisition will be completed within the requirements of the Uniform Acquisition and Relocation Act.
2. Site preparation and construction of buildings. Properties acquired by the City may be prepared for development, which may include street, curb, gutter, bituminous, flood prevention improvements, subsoil correction, and the establishment of greenways, walkways, and common access corridors. In addition, the City may choose to construct new facilities.
3. Incentives for private development. The City may provide financial incentives for the redevelopment and/or expansion of mixed-use developments.
4. Public improvements. The City may construct public facilities such as streets, traffic signals, sanitary sewer, storm drainage improvements, including the separation of storm and sanitary sewers, waterlines, parking, and such other facilities as it deems necessary and desirable for the implementation of the Project.
5. Maintenance. Maintenance of improvements undertaken by the City may include the improvement to public lighting, streetscaping, parking, signs, traffic control devises, and pedestrian improvements.

It is not under the Planning Commission's purview to determine whether the project is eligible for project financing. Rather, the Planning Commission is requested to consider adoption of a resolution stating that the objectives of the development district comply with the general planning objectives of the City. 

Staff respectfully submits the following findings of fact:

1. The proposed development district conforms to the goals for commercial areas in the Land Use Plan.
2. The proposed development district conforms to the locational criteria as listed in the Land Use Plan. 

Staff recommends approval of Development District No. 50 and recommends adoption of said resolution.