City commissioners on a 4-1 vote approved Monday night, Oct. 7, a wide-ranging, public-private development agreement that will have the city owning and financing the new 370-vehicle parking garage which will be attached to a six-story, 100-unit apartment building with commercial space on the first floor along Fourth Avenue North and Broadway on the site of the former Goodyear service station.

Other unique features of the Mercantile Building project, which city officials said would make use of an underutilized block downtown, are that the city plans to lease space on the first floor for a police substation, parking department office and public restrooms and also work with a separate developer who plans to build and sell nine towns home on the northeast side of the structure. The city will also hire a Minneapolis firm for $58,000 to review plans and monitor the parking garage construction that could start in November.

City Strategic Planning Director Jim Gilmour said they have been working on the development agreement and plans for more than six months and also have been working closely with neighboring properties — Great Northern Bicycle Co. in the old depot and the Fifth Floor Apartment building on Broadway.

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The $20 million, L-shaped apartment and commercial multiuse building with store fronts and apartments facing both Fourth Avenue and Broadway will be owned and leased by Great Plains Mercantile Holdings, an opportunity zone fund organized by the Kilbourne Group.

The town homes, on the northeast side of the project, will be developed and offered for sale by Great Northern owner Tom Smith.

The parking garage, with an entry and exit point on Fifth Street North, will be tucked behind the other buildings and will cost an estimated $12 million to $13 million.

Gilmour said there continues to be a big demand for downtown parking as there are waiting lists by more than 10 businesses for parking spots for their employees as well as a need for parking spots for shoppers and other downtown visitors.

It's hoped the new ramp can be done by next September so more parking can be available during the day when the newly opened Block Nine parking garage will be used during the day by employees of R.D. Offutt and Co. and hotel guests in the new Block Nine building. That ramp, however, as well as the two-year-old Roberts Commons parking ramp, are open free of charge at nights and on weekends.

Gilmour said the new parking garage would be financed by the city selling bonds for $11 million and a loan of $2 million with no interest for 10 years from the North Dakota State University Research Park Ventures via Gate City Bank. Payments would come from an increase in rates at existing parking facilities that would raise about $243,000 a year and the sale of a 77-car parking lot on the north side of Main Avenue near Broadway across from Bank of the West, as well as future Tax Increment Financing funds.

Gilmour said a Duluth company is looking at purchasing the Main Avenue parking lot for future development.

Commissioner Tony Gehrig, the lone vote against the development agreement as well as the five-year Renaissance Zone property tax break approved Monday night for Great Plains for the apartment and commercial building, said if businesses downtown want parking they should build it themselves.

"The taxpayers of Fargo shouldn't have to pay the bill," Gehrig said. He also said the project shouldn't be driven by property tax incentives and should be more market based.

Gilmour responded that the parking garages benefit all of downtown.

Commissioner Dave Piepkorn added that the filled-to-capacity Roberts Common parking garage and multiuse building has been a "phenomenal success" and that after a property tax payment of only $2,015 for that strip of property in 2015, it will be worth $500,000 when the tax breaks are over.

Piepkorn said downtown Fargo is "unique" and that it needs parking spots to continue to grow.

Commissioner John Strand favored the project but said he didn't really like the idea of raising parking rates at other facilities and also wondered if parking garages wouldn't eventually be obsolete with other modes of transportation.

He also asked if Great Plains was receiving any other property tax breaks such as PILOT or TIF breaks on the new multiuse building. Gilmour said they are only receiving the five-year Renaissance Zone break of $1.27 million. The apartments and commercial building will open in 2021, after the parking garage.

The development is on the site of the old Fargo Mercantile Co. which was torn down in 1966 and then replaced by the Goodyear Tire and Service station.