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The Albert Lea City Council on Monday approved establishing a tax increment finance district at the Blazing Star Landing to aid in the cleanup and correction of soils at the site ahead of development there.

The district specifically will be set up as a soils condition TIF district, which is possible when there are hazardous pollution and contaminants in the soil and the cost of the removal and remediation far exceeds the fair market value of the land, said Rebecca Kurtz with Ehlers, a public finance advisement firm.

Tax increment financing is a tool communities have to provide gap financing for projects without impacting existing taxes. Through it, a municipality diverts the increase in property taxes that comes because of the new development on the parcel for a set number of years to pay for development expenses. Kurtz said the property that is developed will pay full taxes — there is not a reduction in taxes paid — but the TIF district just directs where a portion of the tax revenue goes.

In this case, the TIF district could include an estimated up to $1.7 million over 21 years. The district includes the site of the future Kwik Trip, as well as what the city hopes will be future housing and commercial development. The goal of the district would be to clean up the soil and prepare the site for proposed development.

Ehlers said one of the benefits of tax increment financing is that the city is able to do so without the approval of the other taxing jurisdictions, in this case Freeborn County and the Albert Lea school district. The two entities received a draft plan with the estimated fiscal impacts, Kurtz said.

She said statewide taxes for commercial and industrial buildings, as well as the base value taxes and market value taxes such as school referendums, cannot be included with the TIF.

Kurtz emphasized that the action did not approve any future obligation or commit the city to providing assistance to any future developers but that it would simply put the tool in place.

The site previously was the location of a meat-packing facility for almost 100 years. The Farmland Foods plant burned down in 2001, and the Blazing Star area has remained mostly vacant for decades due to soil contamination and related remediation costs.

The city in recent years has been rededicated to trying to figure out how to get the soil remediated and sold.

Third Ward Councilor Jason Howland asked how much funding the city had received through the Minnesota Department of Employment and Economic Development tied to the cleanup of this portion of the site and if the TIF district would affect receiving funds through DEED.

City Manager Ian Rigg said the city had received about $300,000 for the portion of land included in this TIF district, though it had asked for more.

First Ward Councilor Rachel Christensen said though she recognized there is a great deal of expense in this project, she nonetheless supported it and said she thinks it’s time to move forward with the parcel.

In addition to the establishment of the TIF district, the resolution also authorizes an interfund loan of up to $250,000 from various funds for qualified costs and administrative expenses involved in establishing the district until a bond is secured in 2025 for these costs and eligible cleanup and infrastructure costs.