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HEDRA selects City Properties to work on former Hudson building

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HEDRA selects City Properties to work on former Hudson building
Hastings Minnesota 745 Spiral Boulevard 55033

The next step in redeveloping the former Hudson Manufacturing building is here. Last Thursday evening, the Hastings Economic Development and Redevelopment Authority voted unanimously to give City Properties Group an exclusive predevelopment contract.

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It’s been a long process, but it finally looks like the end is in sight.

“We’ve had a long road and we’ve spent a lot of time pursuing development of the Hudson property,” Community Development Director John Hinzman said.

When HEDRA first purchased the property in 2010, initial talks with developers resulted in little interest. On Thursday, the commission had three developers to choose from.

“That’s quite a remarkable change from where we were at just a few years ago,” Hinzman said.

Choosing one of the three was a difficult decision.

“We’re incredibly fortunate to have three great choices,” said commissioner Kurt Keena.

The other two proposals came from The Beard Group, which proposed either turning the whole building to apartments or mixing apartment space with commercial and restaurant or event space, and Artspace, a non-profit developer that creates live-work spaces specifically for artists.

Bill Weyland, owner of City Properties Group, partnered with local developer Pat Regan to propose a redevelopment concept plan that included hotel and apartment space alongside public space. The initial proposal noted opportunities for a terrace overlooking the river and potential for a rooftop venue.

City Properties has experience working on historic restoration projects in Louisville, Ky. Regan led the development of Hastings’ Schoolhouse Square and is the owner of the Hastings Bus Company.

A leading factor in HEDRA’s decision was money. Currently, HEDRA pays about $300,000 each year to keep the building, which includes repaying the debt it took on to buy it and all maintenance costs.

“I’m anxious not to spend $300,000 a year on an empty building,” Keena said.

The other financial factor was that Artspace’s project could potentially require significant funds from the city in order to complete its predevelopment work. Because both The Beard Group and City Properties Group required a predevelopment agreement, both those developers would pay all predevelopment costs out of pocket. Predevelopment costs were estimated to be between $300,000 and $600,000.

“We don’t have that money at our disposal at this point,” Commissioner Danna Elling Schultz said.

And given the poor economy over the past several years, and the fact that this is the first year since the recession that the city budget is back on balance, Schultz said she wasn’t sure the city should choose a road that would lead to more debt and a longer timeline.

The timeframe was another deciding factor that led HEDRA to opt away from Artspace. Both The Beard Group and City Properties estimated a one-year predevelopment agreement leading into a certificate of occupancy around the end of 2015. Artspace’s process was estimated to take three to five years, Hinzman said, putting their project in the ground anywhere from the end of 2016 to the end of 2018.

Keena noted that the city doesn’t have the luxury of time, since development opportunities in downtown Hastings aren’t always available.

Once the decision came down to two, HEDRA commissioners said the decision came down to which developer they felt provided the best value and best met HEDRA’s and the community’s goals.

Features like adequate public space, downtown synergy, a mixture of uses, a rooftop venue and space for some sort of art were key points for HEDRA members, and it was City Properties that convinced them their goals could and would be achieved in the final project.

The next step in the process will be to create and approve the predevelopment agreement. HEDRA expects to vote on the agreement at either its January or February meeting.

The predevelopment agreement gives City Properties exclusive rights to the site for a given time. It is likely to be in place for one year. During that time, the developer will be able to do more detailed studies into the structure and site and will use the specific information to create a final site plan.

The city will be expected to work in tandem with the developer by assisting with things such and grant applications, establishing a tax increment finance (TIF) district and other outlying matters.

“The hope is that if you have one-year predevelopment agreement, by the end of that year you’re replacing it with a full development agreement,” said Stacy Kvilvang, senior financial advisor with Ehlers & Associates, the city’s independent financial advisor.

Art still in the picture

Although Artspace’s concept for the Hudson building wasn’t chosen, the organization succeeded in getting HEDRA and local artists excited about the potential for the arts in Hastings.

“Artspace has brought forward a very enticing proposal and I think that they will have an opportunity to be a force in the community,” Schultz said.

Commissioner Michael Kelley said he strongly believes in promoting and supporting the arts, and that art is a way for Hastings to develop an identity and become a destination spot.

Commissioner Dennis Peine noted that there may be other sites in Hastings that Artspace might have some interest in.

The Hastings Prescott Area Arts Council paid for the initial study that brought Artspace to Hastings. The next step in the Artspace process involves a more detailed market study. HPAAC has secured additional funds through a grant to pay for the second study.

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Katrina Styx
Katrina Styx has been a reporter for the Hastings Star Gazette since 2010. She has a bachelor's degree in English with a minor in journalism from the University of Wisconsin - River Falls. Prior to coming to Hastings, Katrina reported for weekly newspapers in Jordan, Minn., and River Falls, Wis.
(651) 319-4501
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