Desperate to bring a boutique hotel to its downtown, the City of Shakopee has given a developer a helping hand by buying up two properties for $500,000, and then selling it to them for $1.
Not able to afford the demolition and construction costs required to redevelop the land at 339 and 321 First Ave. W., Shakopee City Council agreed at a meeting in June to simply buy the properties and hand them to development company CPM for a buck.
A third property, owned by the city and worth $90,000, will also be sold to CPM as part of the $1 deal. The developer will then set about building a $16 million, 110-room boutique hotel on the land.
A tenant for the hotel is yet to be found, but depending on which brand takes it over in the future, it could also include a full-service restaurant and 6,000 square feet of meeting space.
Only one city councilor, Matt Lehman, voted against the sale, with the Shakopee Valley News reporting he said: "The government shouldn’t be in the business of using tax dollars to buy private properties to give away to developers, period."
But Shakopee Director of Planning and Development Michael Kerski said the city was motivated by finding a developer for the land who would pay for demolition and redevelopment, saying: "We’re selling for a dollar to get someone to invest in the property here. We don’t have the cash to put into it."
The city also sold city hall for $1
The city is also teaming up with CPM to redevelop the soon-to-be-former Shakopee City Hall at 129 Holmes Street, again transferring the property – worth $2.1 million – to the developers for a single buck.
CPM in return agreed to invest $8 million in a 70-unit market-rate housing development on the site, including a parking lot with space for 50 cars.
It has set a deadline of demolishing the city hall and building the housing units by the end of 2018, and a deadline of the end of 2019 to get the hotel built on 1st Avenue.
It's not uncommon for local governments to sell land cheaply to private companies in order to spur regeneration.
CityPages reported in November that Minneapolis was offering two Northside properties to developers for $1 provided they rehabilitate them, and did the same in 2015 with the Hollywood Theater in northeast.
Minnesota State Colleges in May announced a $1 asking price for someone to take over and rehab the H. Alden Smith House near Loring Park in Minneapolis.