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r a' f' M.. } t. COMMERCIAL REAL ESTATE 41, w THE ART OF 1. ECO�NOMIC DEVELOPMENT Creative.funding mechanisms and tax incentives are driving public and private collaborations on real estate deals. BY JACK GORDON f all goes as planned,the St.Paul Saints will open Stadium,and its 12-acre site in the industrial area of tax revenues springing from Energy Park also"made their 2015 baseball season at a brand new 7,000- Energy Park. the city's application[for the state money]stronger seat stadium in Lowertown.Contributing to the When the new ballpark is completed,the Port than it otherwise would have been,"Jambois says. $54 million cost of the regional ballpark will be Authority will knock down Midway Stadium,clean $25 million in state bond funds,$10 million from up the Energy Park site,sell it for commercial or the Saints,and$17 million from the City of St.Paul, industrial use,and use the proceeds to repay itself for Making Things Happen which will own the facility.The project is a high- buying the Diamond Products building. Elsewhere in the state,public officials and community profile example of the public-private partnerships in The beauty of the deal from the standpoint of development specialists are similarly adept at finding real estate that are proving successful around the state. all that is right and good,maintains Port Authority ways to make projects happen.A Cambridge business, Less well-known,but nicely illustrative of the President Louie Jambois,is that Midway Stadium is National Recycling,Inc.,finished construction in 2012 financial mechanics that can underlie such deals,is the not only old and deteriorating,it's in the wrong place on a new 47,000-square-foot building on land pur- story behind the$2 million shortfall suggested by the to begin with."Midway is on a site that should house chased from the city with the help of tax-increment fi- numbers above. industrial development.Diamond Products is on a nancing.The company had to pay only$100,000 down The new ballpark will rise on a site formerly oc- site that should house a ballpark,he says. for the land,says the City of Cambridge's economic cupied by the old Diamond Products building.The Then there are the economics of the deal."Our development director Stan Gustafson.Lower upfront . 600,000-square-foot industrial dinosaur sat empty for history suggests,Jambois says,"that we can put in land costs allow a business to"focus on putting money several years before it was purchased July 31 for at least a 200,000-square-foot building[at Energy into buildings,equipment,and employees,"Gustafson $2 million by the Saint Paul Port Authority,an eco- Park]and create 200 to 300 private-sector jobs."The says.At the same time,"tax-increment financing means nomic development agency established by the Min- development also is projected to bring in an estimated that the city[later]will get paid backf nesota Legislature in 1932. $250,000 in annual property taxes to the city,plus ad- In Lutsen late last year,the Lutsen Mountain Cor- After the purchase,the Port Authority immedi- ditional payroll taxes to the state. poration,which runs the Lutsen ski resort,received ately"flipped"the building to the City of St.Paul in a The land swap with the Port Authority meant that loans from its electricity suppliers to buy new energy- land-swap deal.In return,the city agreed to deed to St.Paul could apply for$25 million in state bond efficient snow-making machinery.The Arrowhead the Port Authority the Saints'current field,Midway funds,not$27 million.The projections about jobs and Electric Cooperative gave the company a loan of MARCH 2013 tcbmag.com TWIN CITIES BUSINESS 8.3 r