Officials again reviewing options

Albert Lea officials are again reviewing options for the Freeborn National Bank and Jacobson Apartment buildings.

City Manager Chad Adams presented the update Monday night to the Albert Lea City Council after the buildings came up one point short of receiving tax credits in the grant round from the state for a proposed renovation project.

Council action on a direction for the buildings is planned for Dec. 12.

Adams said the city is reviewing options with Kansas-based developer Cohen-Esrey and Minnesota Housing Authority, adding that it will likely cost $5 to $6 million to repurpose and redevelop the buildings.

Adams said the low-income housing tax credit would account for $3.5 million over 10 years.

“That just shows the substance and significance of how important these tax credit programs are,” he said.

State and federal historic tax credits — worth about $1.75 million for one year — can be used if the building is developed within the historical standards of state and federal departments, Adams said.

Cohen-Esrey called for turning the buildings — on the corner of Broadway and William Street — into 21 apartments on the upper floors, with The Albert Lea Art Center and The Interchange Wine & Coffee Bistro on the ground level. The community would also have been able to rent out space for events.

Options Adams presented included continuing to work with Cohen-Esrey and the Housing Authority for the possibility of a 4 percent tax credit program, which would likely create a funding gap. The city could solicit proposals on a widespread scale, then narrow down the proposals, or the city could hold public forums to gauge interest and solicit tenants for the spaces either this spring or summer before seeking approval.

Adams discussed possibly soliciting a larger area for redevelopment — possibly the entire block — based on interest, adding that the city could sell the property to a private developer or demolish the buildings, an option which Adams said staff would not support.

“We’ve been working on this project for a long time,” he said. “We’ve invested a lot in it. I think we should continue to invest in it. But if we don’t — or the community doesn’t put more support into the project, or we can’t find a developer — we’re going to be down to the options of ether putting in more money or looking at demolition in the future, but I don’t think we are at that point now.”

The first two floors of the Jacobson Building were built in 1888. The Freeborn National Bank building was built in 1922.

The city bought the two buildings for $75,000 in 1998 and invested about $2 million in them in 2007.

Adams said Monday that about $400,000 in payback has been entered into the city’s general fund from the investment.

“We are expecting to come up short at least a few hundred thousand dollars in payback from the 2007 restoration project, where we invested approximately $2 million in the building’s exterior, roof and some interior demolition,” Adams said.

The city had meetings in 2013 to gain community feedback and signed a contract with developer Cohen-Esrey in 2014. A second contract was signed with Cohen-Esrey in 2016.