Although the full settlement was publicly released, there appears to be some misunderstanding of what it contains and how it differs from the original agreement.
As a recap, the Newman Project involved the construction of the Newman Center near the NDSU campus which included a church, administrative area, faith-based and market rate apartment housing and seven townhomes.
The City’s initial agreement with the Developer required that the construction of seven townhomes be complete by December 31, 2021, unless impacted by unavoidable delays. In conjunction with this agreement, a renewal plan was also adopted by The City for the Tax Increment Financing (TIF) district 2019-02.
The Developer failed to build the seven agreed-upon townhomes by the December deadline. As a result, The City provided a Notice of Default on June 6, 2022. The Developer claimed unavoidable delays contributed to this default, but stated it remains committed to completing the entire project by May 31, 2023.
Below is a breakdown of this new negotiated settlement:
Benefits to Roosevelt Neighborhood and The City of Fargo
- TIF payments to help acquire and clear blighted neighborhood structures will begin sooner and in the first 10 years with a total estimated value of $239,000 (2022, 2023 and some of 2024 funds). The original agreement provided 100% of TIF funds to the Developer until all TIF costs were paid.
- Total amount to be received over the life of the TIF is $2,633,360.
- A completion deadline of May 31 for all seven townhomes with language of unavoidable delays removed (exception remains for catastrophic events, e.g. fire).
- Townhomes will face the street with garages around back and will serve as a buffer between the neighborhood and apartments.
Remediation
- A definitive completion deadline of May 31, with penalties, for all seven townhomes.
a. The Developer will not receive TIF interest from January 1, 2021 (original deadline) until the project is complete. The penalty is approximately $78,000. TIF payments will go to the neighborhood instead.
b. A daily $300 penalty will be applied to each townhome left incomplete (a daily $2,100 if all seven remain) after May 31. - The Developer will still receive a TIF benefit, at the value of $1,419,720.
The City is pleased to advance on this project with these fair and reasonable solutions in place, and recognizes the importance of new housing, as well as investing in existing neighborhoods, to promote strong and healthy neighborhoods. The City remains committed to partnering with both developers and neighborhood residents to achieve successes--while maintaining the public’s confidence-- in The City’s economic development programs.