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Tri Valley demolition cost more than doubles earlier estimate; council told to plan for bonding
Summary
City staff told council that an updated AE2S demolition estimate for the Tri Valley property exceeds $1.3 million (excluding tipping/disposal), prompting staff to raise the deed-redevelopment grant request to $984,000 and to plan for city matching and potential bonding to meet demolition timelines tied to a 2027 MnDOT Highway 2 reconstruction.
City staff updated the council on the Tri Valley redevelopment grant and demolition planning, saying that AE2S’s updated demolition estimate is just over $1.3 million (approximate and excluding tipping and disposal fees). The original deed-redevelopment grant request, submitted Jan. 20, was $650,000 (a 50% grant, requiring a city match). Based on the new AE2S estimate, staff said they increased the requested grant amount to $984,000 before submittal so the city would remain eligible for required costs.
Staff warned that demolition needs to occur in 2026 to coordinate with the Minnesota Department of Transportation’s 2027 Highway 2 reconstruction project; if the grant is not awarded now, the next application window opens Aug. 1, which would likely preclude demolition in 2026. The city said it will publish an RFP for demolition and explore bonding options, including temporary bonds (interest-only payments for up to three years) or rolling projects into a general‑obligation bond. Staff said they will meet with bond counsel to develop amortization schedules and payment estimates for council consideration.
Council members asked whether salvageable materials could offset costs, about tipping fees, and whether the building is more than 50 years old (which would trigger historic‑review steps). Staff said they will perform a more detailed walkthrough, consult architectural historians if necessary, and return with refined cost estimates and a bonding plan.
Staff emphasized the risk that a private buyer might purchase the building and delay redevelopment; the grant includes a five‑year development requirement that would trigger grant repayment if not met. No final council vote on demolition or bonding was recorded in the transcript; staff said they would return with formal documents and schedules.
