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AGENDA RECOMMENDATION |
Item No: 4.C.
Economic Development Authority
- Meeting Date:
- 08/10/2026
Agenda Item:
Preliminary review of possible tax increment assistance for Quarry View; by request of Skilbred Development.
Recommendation/Action(s):
Review and discussion. The EDA has the following options:
- Request staff provide clarification or provide additional information to be reviewed at a future meeting; or
- Adoption of a motion directing staff to prepare materials for a hearing on October 13, 2026, regarding the creation of tax increment district and approval of a development agreement.
Summary:
The City of Mankato has received a development proposal from Skilbred Development (the “Developer”) to develop property located at 2004-2134 8th Avenue. It is proposed to complete the horizontal infrastructure, public improvements, and pad preparation to deliver 16 pad-ready residential lots intended to support for-sale townhomes. The Developer would serve as the project sponsor and land developer and will not construct or sell the residential units. Vertical construction would be determined by third-party homebuilders following acquisition of the finished lots.
The City Council approved a Land Use Plan Amendment to change the guided land use from Light Industrial to Medium Density Residential at their May 12, 2025 meeting. The City Council also approved a vacation of a portion of Lind Street adjacent to 8th Avenue at their March 23, 2026 meeting and a Final Plat of Quarry View Addition at their May 11, 2026 meeting.
Tax Increment Financing Review
The Developer is requesting pay-as-you-go tax increment financing (TIF) from the City through the creation of a Housing TIF district. The TIF assistance would be used to assist with the development costs for eligible horizontal development costs associated with the project. Housing TIF districts have income limit requirements to qualify. For owner-occupied developments, the income limits are 115% of the area median income for Housing TIF districts. The owner-occupied income limits apply only to the first purchaser.
The Developer would be eligible to receive an increment annually on a pay-as-you-go basis, from the remaining increment that is not retained for the City’s 5% admin retainage. This remaining increment would be used to reimburse the Developer for project costs incurred for the development.
The City contracts with Baker Tilly to review financial assistance requests. Baker Tilly’s analysis found that the project would not be likely to proceed “but-for” the requested TIF assistance.
The anticipated principal value of this pay-as-you-go note is $380,512, plus 7.5% carrying interest costs. The TIF projections assume the Developer will receive TIF reimbursement in the amount of $46,340 in years 2029 through 2043. The City Council’s policy decision is to limit the tax increment reimbursements for 15 years for the additional tax capacity to be realized before significant depreciation in the asset is realized. Attached is a memo from Baker Tilly summarizing their analysis in greater detail.
The economic development policy states eligible projects include infrastructure improvements and the development of affordable housing. Of the 10 guiding principles of the Economic Development Policy, the Quarry View project aligns with the following principles: 3.10 Addressing identified housing needs of the community. Additionally, the proposed development conforms to the Jefferson Quarry Redevelopment Plan, which was adopted by the City Council at their September 11, 2023, meeting. Specifically, the proposed development proposes low density residential at the site, serving as a buffer between the single-family neighborhood to the east of 8th Avenue, and the former quarry.
The EDA is asked to review the proposal, provide comments, and request additional information if necessary. If acceptable, the next step in the process would be to direct staff to prepare tax increment documents for a public hearing. The public hearing could be set on August 24, 2026, for the October 13, 2026, meeting.
The City Council approved a Land Use Plan Amendment to change the guided land use from Light Industrial to Medium Density Residential at their May 12, 2025 meeting. The City Council also approved a vacation of a portion of Lind Street adjacent to 8th Avenue at their March 23, 2026 meeting and a Final Plat of Quarry View Addition at their May 11, 2026 meeting.
Tax Increment Financing Review
The Developer is requesting pay-as-you-go tax increment financing (TIF) from the City through the creation of a Housing TIF district. The TIF assistance would be used to assist with the development costs for eligible horizontal development costs associated with the project. Housing TIF districts have income limit requirements to qualify. For owner-occupied developments, the income limits are 115% of the area median income for Housing TIF districts. The owner-occupied income limits apply only to the first purchaser.
The Developer would be eligible to receive an increment annually on a pay-as-you-go basis, from the remaining increment that is not retained for the City’s 5% admin retainage. This remaining increment would be used to reimburse the Developer for project costs incurred for the development.
The City contracts with Baker Tilly to review financial assistance requests. Baker Tilly’s analysis found that the project would not be likely to proceed “but-for” the requested TIF assistance.
The anticipated principal value of this pay-as-you-go note is $380,512, plus 7.5% carrying interest costs. The TIF projections assume the Developer will receive TIF reimbursement in the amount of $46,340 in years 2029 through 2043. The City Council’s policy decision is to limit the tax increment reimbursements for 15 years for the additional tax capacity to be realized before significant depreciation in the asset is realized. Attached is a memo from Baker Tilly summarizing their analysis in greater detail.
The economic development policy states eligible projects include infrastructure improvements and the development of affordable housing. Of the 10 guiding principles of the Economic Development Policy, the Quarry View project aligns with the following principles: 3.10 Addressing identified housing needs of the community. Additionally, the proposed development conforms to the Jefferson Quarry Redevelopment Plan, which was adopted by the City Council at their September 11, 2023, meeting. Specifically, the proposed development proposes low density residential at the site, serving as a buffer between the single-family neighborhood to the east of 8th Avenue, and the former quarry.
The EDA is asked to review the proposal, provide comments, and request additional information if necessary. If acceptable, the next step in the process would be to direct staff to prepare tax increment documents for a public hearing. The public hearing could be set on August 24, 2026, for the October 13, 2026, meeting.