Grand Forks Herald: The Townhouse Hotel
October 29, 2020
Check out the article in the Grand Forks Herald!
Grand Forks redevelopment proposals would transform Townhouse, Memorial Stadium, St. John’s Block
City Council members voted this week to invite three projects to submit formal applications for tax breaks on tens of millions of dollars worth of redevelopment plans. Once construction is complete, Tax Increment Financing agreements treat a rebuilt or renovated property as if it hadn’t been touched for a yet-to-be-determined number of years.
Written By: Adam Kurtz | Joe Bowen | Oct 25th 2020 – 8am.
Developers are looking at St. John’s Block, at the intersection of DeMers Avenue and North Third Street. Eric Hylden / Grand Forks Herald
A West-Fargo-based real estate development firm wants to transform the now-vacant Townhouse Hotel into apartments, retail space and a plaza for public and private events.
On Oct. 19, the Grand Forks City Council accepted a pre-application for tax incentives from EPIC Companies, under the name of EPIC Holdings II, for the proposed development called The Beacon. The project comes with a price tag of nearly $50 million and is one of a few high-dollar projects also seeking city tax breaks, including one at UND that would redevelop Memorial Stadium and another that would revamp the St. John’s Block building in downtown Grand Forks. The Townhouse Hotel, at 710 First Ave. N., closed in early October amid financial strain brought on by the coronavirus pandemic.
The Townhouse Hotel, at 710 First Ave. N., closed on Oct. 1. An auction was held the following week by Pifer’s Auction and Realty that cleared out most of the hotel and restaurant equipment. Those who made purchases hauled out their new property on Oct. 9. Kimberly Wynn / Grand Forks Herald”Due to the fact that it’s really close to downtown, we really like a walkable area and districts, and mixed-use is all about that live, work and play mentality,” said McKenzy Olson, vice president of marketing and public relations at EPIC.
Plans for the Beacon include up to three buildings, which would include apartments, condominiums, commercial space and above and below ground parking. The buildings would surround a plaza. Proposed uses for that plaza, which by itself is estimated to cost $7 million, include concerts, outdoor fitness classes and car shows. The plaza requires a management team to oversee community programming that would be held there to ensure its success. Plazas appear in other EPIC developments in the state.
“We are really excited to be able to bring it to Grand Forks, and kind of see what we can do there as far as providing some form of entertainment to the community,” Olson said.
Partners in the development proposal include EPIC Companies and Dakota Commercial, which would act as architectural managers. EPIC also would partner with Community Contractors as construction managers. EPIC Companies has nearly 20 mixed-use buildings in cities across the state with two locations in Grand Forks, including EPIC Place on South Third Street, which houses Ely’s Ivy, and has residential units above. The company also owns The Mill, on North Third Street, previously called the Grand Forks Woolen Mills building.
The City Council accepted another tax incentive pre-application on UND’s campus, that would replace Memorial Stadium with a five-story building that would house UND Athletics on its first floor, with market rate apartments above. The plan is to capture the historical character of the stadium, while supporting UND Athletics and making the university more attractive to potential students.
Plans for the development include retaining Memorial Stadium’s north wall because of its historical significance. The athletic field would remain, and a glass-walled walkway, dubbed the Hawkway, would connect the new building with UND’s High Performance Center.
Memorial Stadium has special significance to Steve Burian, of engineering consulting firm Burian and Associates, who, along with Mike Kunz, of ICON Architectural Group, and Craig Tweten, of Community Contractors, are involved with the development. The three are UND alumni.
“Memorial Stadium was our deal,” said Burian, who threw shot put and discus for UND. “There’s a lot of emotional connection to everything.”
And, about 2 miles east, a consortium of developers plan to rehab St. John’s Block, the apartment and business tower across DeMers Avenue from Town Square, as well as an adjacent commercial building immediately east of it. The plan, as submitted to city staff, isn’t as ambitious as the hotel or stadium plans and would keep both Block buildings fundamentally the same: commercial space at street level and apartments or condos above. It might, however, add a rooftop patio.
Mike Kuntz, a principal architect at Icon Architectural Group who is listed as the developers’ representative on the pre-application sent to city staff, did not return a Herald request for comment on Thursday.
Regardless, the proposals for the Beacon, Memorial Village and St. John’s Block still have a long way to go before construction can begin. The development firms have to submit full tax incentive applications, along with a $2,500 fee to cover a third-party financial review. After that, the four local tax eligible entities need to meet as the Local Government Advisory Committee to give initial approval. Those entities — the Grand Forks City Council, School District, County Commission and Parks District — then need to meet and vote on their own.
In all, the three sets of developers estimate that they’ll raise the total taxable value of those properties from a combined $3.8 million to a combined — and loosely estimated — $81.1 million. The land under the stadium project is state-owned and has no taxable value, but the portions of the new building that would be privately leased, such as the planned apartment block, would be subject to property taxes. That project would raise the property’s value from, essentially, “N/A” to a developer-estimated $25 million.
Tax increment financing is a tool that cities across the United States use to spur redevelopment. In essence, a TIF incentive means that a developer will, for a few years at least, continue to pay property taxes on the remade property as if the renovation project had never happened, which can mean a considerably lower tax bill. Stacking North Dakota’s Renaissance Zone tax breaks on top of that, plus other federal tax incentives from Opportunity Zones can mean that a developer continues to pay a relatively low tax rate for more than a decade.
The project at the university isn’t in a city “Ren Zone,” and an earlier developer already used that tax incentive at St. John’s Block, which leaves only the Townhouse project with the Renaissance Zone option.
It’s unclear at present how much each of the three developers would save if the city and other Grand Forks-area governments sign off on their tax increment financing proposals. Developers are required to estimate that figure when they submit a formal, full application for the tax break, but, thus far, none of the three have done so.
City staff are waiting on a similar application from Edgewood Development, which made a splash last year when it put forth plans to remake the Edgewood Corporate Center in downtown Grand Forks into the Olive Ann, a hotel and events center with office spaces and a handful of condos. That project would take advantage of a tax increment financing agreement, a Renaissance Zone and an Opportunity Zone.