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The Albert Lea City Council on Monday approved a new tax increment finance district and plan for the redevelopment of the former Marketplace Foods building at Skyline Plaza into about 50 units of market rate housing.

The redevelopment TIF district will allow the developers to use the increment of new tax dollars for a set number of years to pay down the overall cost of the project without impacting existing taxes.

Rebecca Kurtz with Ehlers, a public finance advisement firm, who has helped with the project, said the project includes the acquisition of the property and the conversion into housing. Developers previously stated in addition to one- and two-bedroom units, it would also include amenities such as an exercise area and gathering space for tenants and would likely include the option for indoor parking.

Kurtz said construction is anticipated to start in May 2021 with substantial completion in December 2022.

A redevelopment district has a maximum term of 26 years of increment, Kurtz said, with the first increment in 2024 and the last payment no later than February 2050.

She said the plan calls for the city to issue a pay-as-you-go note for $750,000 with a 4% interest rate. The note would be paid in semi-annual payments of 90% of the tax increment going to the developer and the remaining 10% staying with the city for administrative purposes.

Kurtz said there was discussion when working on the agreement with the developer regarding the minimum value for each unit. After working with city and ALEDA staff and the Freeborn County assessor, the city will likely be asked to enter into a minimum assessment agreement as part of the developer’s agreement that each unit will be valued at minimum at $71,000, with the completed project valued at $3.55 million.

Albert Lea Mayor Vern Rasmussen Jr. thanked the developers for working through the project. He said he thinks it will be a great addition to the community.

In other action, the council:

• Approved a letter of intent with the Minnesota Department of Transportation for the city’s involvement with the state’s U.S. Highway 65 project in 2022 in Albert Lea. The city was awarded $2.68 million in bonding funding to raise the roadway near the former Godfather’s Pizza for flood mitigation. The letter outlines the responsibilities and cost shares for the work. As part of the letter, the city will acquire right-of-way for construction of a flood mitigation pond on the north side of the roadway between Clark Street and East William Street, on the former Godfather’s property.

• Approved the extension of the city’s emergency declaration through Dec. 14 because of the COVID-19 pandemic.

• Called a public hearing for the 2021 neighborhood improvement project, which includes the bituminous overlay of various portions of Wilson and Stevens streets, Oakwood Terrace, Waldorf Road and David, Kevin, Kenneth and Eunice drives.

The hearing will be Dec. 14.

• Approved special assessments for miscellaneous accounts receivable. The assessments will be payable with terms of five years at 2.9% interest.

• Welcomed new City Manager Ian Rigg on his first day in the new position and his first council meeting.

Riggs said he was working on meeting with various groups in the community and was trying to make himself available to those who needed to meet with him.

• Approved a gambling permit for the Albert Lea Amateur Hockey Association for gambling at City Arena on Jan. 30, 2021.