Oakdale Mall Developers, City Have Reached Development Agreement Pending Council Approval

The City of Oakdale has reached one more milestone along the way to purchasing the Oakdale Mall site—a development agreement with Ryan Companies and Wellington Management, Community Development Director Bob Streetar told the Oakdale Planning Commission at its meeting Thursday, Feb. 3.

The agreement will go before the City Council for approval at its Feb. 8 meeting, Streetar said.

City officials are working toward a March 31 deadline to close on the purchase of the vacant mall property near 10th Street and Hadley Avenue.

As part of the development agreement, the Planning Commission was asked to approve the concept plan for the site, which is based on the city’s comprehensive plan, but refined to reflect market conditions, Streetar said.

For example, the city’s comprehensive plan—a document that guides land use—called for 258 units of condominiums on the site, Streetar said.

“Nobody’s building condos for the next five years,” Streetar said in an interview. “If there was still a demand for condos … there’d be condos.”

Instead of condos, the developer plans to put senior housing on the site, which a market study showed is in demand, he said.

The comprehensive plan also called for a hotel, which is not included in the refined concept plan. The current plan does include medical office, office showroom, retail and restaurant space.

The commission also talked about the way the project is being funded—specifically the portion of the funding that's coming through tax increment financing.

About $15.3 million of the city’s project costs will come from tax increment revenue, according to a report by consultant Springstead Incorporated.

Tax increment financing is a method cities can use to pay for redevelopment projects that wouldn’t otherwise make sense financially for a developer, Streetar said. In the Oakdale Mall project, the city is paying to demolish the current building, construct new streets and make other improvements that will prepare the site for redevelopment.

Funding will come from the “increment” or difference in property taxes for the site before and after redevelopment, he said. For a set number of years, instead of the extra tax money going into city, school district and county coffers, it goes to pay off the debt the city took on to make the improvements.

“Tax increment is the way for development to pay for itself,” Streetar said.

In addition to the tax increment financing district at the mall site, extra money from the district established previously at Bergen Plaza will also be used for the project to cover a city guarantee on the bonds.

Planning Commission member Duane Ellertson said he was concerned about pulling money out of the Bergen Plaza district because that shopping center might also need to be redeveloped in the near future, and the money wouldn’t be available for that.

Streetar said the Bergen Plaza money could be tied up for a period of time, but if the development goes as planned, the city won’t need to spend that money, and so it will become available again for future redevelopment projects.