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Edina HRA reviews lease‑revenue, lease‑to‑own plan to restart stalled 70th & France development
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Summary
At a Feb. 19 Edina HRA meeting developers outlined a lease‑revenue structure that would finance a parking garage via a tax‑exempt special purpose entity, using office tax increment to pay lease costs; commissioners asked for detailed risk, timing and governance analysis and made no commitment.
EDINA, Minn. — The Edina Housing and Redevelopment Authority on Feb. 19 discussed a proposed financing approach to revive the long‑stalled redevelopment at 70th Street and France Avenue, but the board made no commitment and asked staff and the developer team for more risk analysis and clearer financing visuals.
The proposal described to the HRA would separate the parking structure (Site C) from the office building. A tax‑exempt special purpose entity (SPE) would issue bonds to fund construction, the HRA would ground‑lease the property to the SPE and then lease the completed garage back, and incremental property tax revenue produced by a new class‑A office building would service lease payments. When the lease is paid off the improvements would revert to the HRA.
Why it matters: The 70th & France project was approved with a mix of office, retail and residential but has failed to secure private financing amid higher interest and construction costs. Staff and developers say the office portion still attracts demand in Edina and that completing an office building could generate significant tax increment and jobs; commissioners worried whether the proposed structure swaps one form of public risk for another.
Economic development manager Bill Neuendorf, who led the city presentation, told the HRA the project has roots back to 2019 and said traditional financing and the original tax‑increment assumptions no longer work. “If it were easy, it would have been finished already,” Neuendorf said, urging frank feedback rather than a decision.
Developer Ted Carlson of Orion Investments emphasized local demand for high‑quality office space and argued Edina remains attractive for class‑A tenants. “We remain bullish that if we can figure out a financing mechanism, we can complete the office piece of this project,” Carlson said.
Dan Lesser of Mortenson described the deal mechanics: once the office project is sufficiently preleased and financed, site C would be conveyed for the garage, an SPE would own improvements and issue tax‑exempt bonds, and lease payments—sized to match the tax increment the office produces—would flow 1:1 to debt service. Lesser said the SPE would be independent and that ownership would revert to the city once the lease/mortgage is paid.
Commissioners pressed several areas that must be clarified before any decision. Treasurer/Commissioner Jackson asked whether the plan would affect Edina’s AAA bond rating; the developers and staff said the lease construct is generally treated differently from direct municipal debt and is typically a contingent liability rather than a general obligation, but outside financial advisors will need to model exact impacts.
Other questions focused on risk allocation, the parcel’s size and function, and public benefit. Staff said Site C comprises roughly 1–1.2 acres of a six‑acre TIF district; staff also noted the city created the TIF district in 2023 and that incremental collections will begin this year but are small initially. Neuendorf said recent state legislation extended certain deadlines, giving the project more runway (he cited 10 years); staff also said they would study whether longer durations—up to 25 years—might be necessary, and that any TIF modifications would require additional public hearings and concurrence from taxing jurisdictions.
Several commissioners said they do not favor the city ultimately owning a parking structure but were open to studying the idea if developers could present tighter visuals on phase‑by‑phase risks, mitigation steps and governance. Commissioner Pierce said the board was “lukewarm” on the specific option but open to further exploration; Commissioner Agnew said she disliked the idea of the city paying for and owning a parking ramp but acknowledged interest in creative options to make the overall project viable.
Developers said the garage could be phased so initial construction matches office demand; they estimated an office building of this size would take roughly 24 months to construct while a ramp could be built in about six months. The team said weekday parking would prioritize the office, with public access available evenings and weekends to support nearby retail and events.
A resident’s concern that the city would issue $20 million in debt was raised in prior meetings and referenced by staff; Neuendorf told commissioners that the developer is not asking the HRA to issue $20 million of general obligation debt and that the lease structure is intended to avoid a direct municipal bond commitment.
No formal vote or action was taken. Commissioners asked staff and the developer team to return with a more detailed risk matrix, phase‑by‑phase cash‑flow visuals, an organizational chart for the SPE, and analyses of bond rating impacts and TIF duration options. The HRA adopted the meeting agenda and previous minutes earlier in the session and adjourned after the discussion.
What’s next: Staff and the development team said they would continue work and bring more detailed financial modeling and governance proposals to future meetings; the HRA’s next regular meeting was scheduled for March 5.
