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Delayed Citywalk apartment project seeks creation of TIF district

May 18—ROCHESTER — Tax-increment financing support for a proposed 13-story, 340-unit apartment complex on Second Street Southwest is being considered after years of development discussion. The Rochester City Council, acting as the city's economic development authority, will be asked Monday to approve the creation of a TIF district that could support the project dubbed Citywalk Apartments. Proposed for the southwest corner of the Sixth Avenue Southwest intersection with Second Street, the project has grown in size over the years , starting with a 131-unit proposal in 2021. A report prepared by Rochester Strategic Initiatives Director Josh Johnsen states the anticipated $149.9 million development project — now led by St. Louis Park-based Reuter Walton Development — is hoping to break ground by the end of the year, if TIF support is approved. Potential TIF support will require the City Council to create a specified TIF district on the site, after agreeing the existing buildings that would be replaced are structurally substandard. A public hearing, set to be held toward the end of the council's regular 6 p.m. meeting Monday in council chambers of the city-county Government Center, is planned to take input on the proposed TIF plan. Johnsen states a potential TIF agreement is expected to include a call to maintain two adjacent apartment buildings — 225 Sixth Ave. SW and 620 Second St. SW — as "naturally occurring affordable housing." The plan would require the developers to enroll the properties in an Olmsted County program that requires maintaining specific rent levels in exchange for a reduced tax classification. "This will preserve 76 units of naturally occurring affordable housing for a period of 20 years, ensuring long-term affordability in an area experiencing increasing demand and rising housing costs," Johnsen wrote of the proposed agreement. "By preserving affordability in such close proximity, this project ensures that frontline healthcare workers and support staff can continue to live near their place of employment." Johnsen states that maintaining the existing housing will help provide housing for people of varying incomes within blocks of the planned Mayo Clinic' "Bold. Forward. Unbound. in Rochester" expansion. "These units offer critical affordability within walking distance of downtown jobs, services, and transit, helping to reduce commuting burdens and support a vibrant, mixed-income urban core," he wrote to the council. The proposal comes months after Wayzata-based DM Cos, which led earlier development efforts, purchased a 10-unit boarding house at 219 Sixth Ave. SW for $1.4 million to clear the way for construction of the Citywalk project. DM Cos. is listed as the provider of property management and maintenance services for the Citywalk projects in materials sent to the City Council ahead of Monday's economic development authority meeting. The report sent to the council doesn't put a dollar amount on potential TIF support for the proposed Citywalk project, but it notes the amount will be included in a future development assistance agreement. The plan does point to the potential for 25 years of collecting TIF, which uses property taxes collected on increased values as a property is developed. While local entities would continue to collect property taxes, anything beyond the level collected when a TIF district is created becomes available to support development, if a financing gap is documented. Johnsen said the property's current assessed value of nearly $3.2 million is expected to increase to $86 million once the project is completed, with opening targeted by 2028. Meetings scheduled to be held during the week of May 19 include: Rochester —City Council, 6 p.m. Monday in council chambers of the city-county Government Center, 151 Fourth St. SE. The meeting will livestream at and be available on Spectrum cable channel 180 or 188. The council will also meet as the city's economic development authority. —Public Utility Board, 4 p.m. Tuesday in the Rochester Public Utilities community room, 4000 East River Road NE. —Public Music Board, 4 p.m. Tuesday in room 320 of City Hall, 201 Fourth St. SE. —Library Board, 4:30 p.m. Wednesday in the first-floor meeting room of the Rochester Public Library, 101 Second St. SE. Olmsted County —Physical Development Committee, 1 p.m. Tuesday in conference room 1 of the Government Center. —Health, Housing and Human Services Committee, 2:30 p.m. Tuesday in conference room 2 of the Government Center. —Administrative Committee, 4 p.m. Tuesday in conference room 1 of the city-county Government Center. —Board of County Commissioners, 6 p.m. Tuesday in the board chambers of the Government Center. —Sheriff's Civil Service Commission, 8 a.m. Wednesday with the location to be posted at —Soil and Water Conservation District Board, 8 a.m. Thursday in conference room 109 at 1188 50th St. SE Rochester Rochester Public Schools —School Board, 5:30 p.m. Tuesday in the boardroom of the Edison Building, 615 Seventh St. SW. Destination Medical Center —DMC Corp. Board, 9:30 a.m. Thursday at Mayo Civic Center, 30 Civic Center Drive SE —DMC Corp. Board collaborative session with the Rochester City Council, Olmsted County Board of Commissioners and DMC Economic Development Agency board, 1:30 p.m. Thursday in the fourth-floor ballroom of Hilton Rochester Mayo Clinic, 10 E. Center St.