Sewer credits could draw developers to Southeast Minneapolis neighborhoods

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The City of Minneapolis has a new way to draw developers to a University of Minnesota-area neighborhood.

Minneapolis already offered developers incentives like tax credits, land-use grants and lower interest loans for building in underutilized areas. Prospect Park recently came across a new incentive in the form of sewer credits.

To fund sewers, the Metropolitan Council collects money from businesses and residents through the Sewer Availability Charge Program. When a structure on raw land needs a connection to the city’s sewer system, developers usually pay high costs upfront.

Prospect Park received 1,600 sewer credits — worth nearly $3.9 million — after a potato processing plant left the area and couldn’t keep them. The Metropolitan Council will allocate these credits to approved developers in the area.

Minneapolis principal planner Haila Maze said the city is using the sewers as motivation because planners have identified Prospect Park as a high-priority redevelopment area for decades.

“We have to keep growing and investing in our city,” she said. “A city can’t remain static.”

When it comes to incentives, Maze said, sewer credits are rare because they can only transfer to new developers in phased developments, like the ones in Prospect Park.

“There’s not a whole lot of things that work quite like this,” Maze said.

Local nonprofit Prospect Park 2020 is in charge of creating a framework for incoming projects. Prospect Park East River Road Improvement Association President Christina Larson said she hopes new industry will improve the community.

Surly Brewing Co.’s $20 million brewery and taproom is the first major development in line for the credits, which came as a surprise for the Brooklyn Center brewery.

Surly owner Omar Ansari said the credits were nice but were not a major factor in the company’s decision to build in Prospect Park.

“That’s always a plus for a development … because that’s some pretty big checks you have to write,” he said.

Surly chose the Prospect Park location mainly because of the old potato factory’s on-site well and the proximity to transit, Ansari said.

“The sewer credits being there was just an additional thing we sort of came to realize later,” he said.

Ansari said the neighborhood is keeping him informed of its frequent discussions with developers. Hotels, apartments and retail are among the possible future projects.

“It seems like everything is going to change around back there,” he said. “It’ll be interesting to see what all ends up moving in, in the next few years.”

Maze said several developers are in preliminary discussions to build in the area and approved projects will presumably get the credits until they run out.

Developers could receive credits for properties in the industrial sectors near the neighborhood’s abandoned grain elevator and the Westgate light rail station, Maze said.

Overall, urban redevelopment is a boon for the city because it increases tax revenue and jobs, Maze said.

“This opportunity came along, and it seemed to line up really well with what we were already trying to do there,” she said.