Edina HRA weighs city-backed financing to restart 70th & France development

The Edina Housing and Redevelopment Authority on March 27 discussed a developer proposal to change how tax-increment financing (TIF) would pay for a planned parking garage at the approved 70th & France development, and whether the city should use its borrowing power to secure tax-exempt debt backed by the city or an HRA pledge.

The proposal, presented by Bill Neuendorf, Edina’s economic development director, and developer representatives from Orion Investments and Mortenson Development Company, would replace the previously planned pay-as-you-go TIF note with tax-exempt borrowing supported by a city or HRA repayment pledge so the project could obtain lower interest rates. Neuendorf said the change is intended to close a financing gap created when market interest rates rose: “we could move this project forward most efficiently if we combine the tax exempt financing supported by a repayment pledge from the city.”

If the HRA or a special-purpose entity used the city’s credit to issue the debt, the tax increment generated by the project would still flow to debt service, but the mechanics would change: instead of the developer taking a TIF note and borrowing privately, the public issuer would borrow and the TIF increment would be used to pay the debt service. Staff and the developers described that arrangement as a way to lower the effective borrowing rate and close what…