The five Minneapolis city blocks whose property taxes have been earmarked to fund a proposed streetcar line have something in common. They either have — or soon will have — cranes hovering above them.
The parcels the city selected for its “value capture district” will soon be home to several sparkling luxury apartment towers.
The projects include the 36-story Magellan Tower, the 30-story 4Marq apartments, the 27-story Nic on 5th, a 286-unit apartment complex and grocery store at 222 Hennepin, Xcel Energy’s new downtown headquarters and a six-story mixed-use apartment building on the site of the old Totino’s Italian restaurant.
That construction will cause a nearly nine-fold increase in the value of the property. The five blocks in question are currently worth $39 million dollars, according to Hennepin County property records. With the new construction, the value will balloon to $332 million, city estimates show.
That increase in the city’s tax base normally would mean lower taxes for everyone else. But instead, the city plans to use the $5-$6 million dollars-a-year in new revenue to help fund a streetcar line.
The value capture district shares some similarities with tax increment financing, which allows cities to subsidize private development using revenue from future property tax growth. But if the district were a TIF, the city couldn’t count the $312 million of already planned construction as growth, because it would have happened regardless of the streetcar line.
This chart, compiled by the city, shows how much the property values are expected to grow, whether or not streetcars return to Minneapolis.