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Bemidji City Council hears update on Rail Corridor

The council heard cost estimates for cleanup and infrastructure upgrades, as well as financing options, in a session on May 17.

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The Rail Corridor development area just off downtown Bemidji. (Pioneer file photo)
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BEMIDJI — The development of Bemidji’s Rail Corridor, which has been under consideration since 2017, has finished another key step in planning.

The project would involve the construction of a wellness center, and the city has partnered with Sanford Health and Greater Bemidji after Sanford proposed the idea.

Following that decision, the city entered a Memorandum of Understanding with Kraus-Anderson Construction, which began looking into the project’s feasibility under an agreement that the company would be involved if any development takes place.

“We look at the opportunity here as a pretty rare one,” said Mark McLane, a director with Kraus-Anderson. “(It’s) a development that could really help activate and enhance a downtown.”

After some preparation and preliminary studies, the Bemidji City Council heard an update from the various organizations involved with the project during a special meeting on Tuesday, May 17.

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The report included cost estimates for the sites’ cleanup and what infrastructure upgrades would be needed in order to proceed. It also suggested some financing methods for the development.

Because the site has historically had industrial uses, much of the soil has been contaminated and would require cleanup before other parts of the project could begin.

“With our plans for redevelopment, it’s really to address the residual contamination,” said Mary Sands, an environmental consultant with Barr Engineering.

Around 7,500 tons of contaminated soil would have to be removed and hauled to a disposal facility in Becker, Minn.

Removing this contaminated soil is responsible for the majority of the estimated cost for cleanup, which sits at over $2.5 million.

“The majority of the costs is for the management of the contaminated soil,” Sands said. “What we’re preparing is really something that will provide better protection for the environment moving forward.”

Along with a cleanup of the site being required, the area’s infrastructure would also need to be upgraded. This would include the water and sewer lines that run under the area, some of which date to the 1910s.

“It’s only prudent that we fix these things now,” said Jeff Shopek, a civil engineer with Loucks Engineering. “We’ll be rebuilding all the infrastructure and putting it back in.”

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The Rail Corridor off Bemidji's downtown is bordered by rail lines, the Mississippi River and Irvine Avenue. (Annalise Braught / Bemidji Pioneer)

The new infrastructure would also include streets, since many of the pipes run underneath them. Construction would go up to Second Street, and could potentially extend Beltrami Avenue and First to complete a loop in front of the Beltrami County Historical Society.

This particular part of the proposal led to concern among the council, since the road extension would require the Union Station building to be demolished or moved elsewhere.

“I’m very concerned, for decades we’ve been eliminating our historical buildings in Bemidji,” said Ward 2 Councilor Josh Peterson. “I think we need to preserve what we have remaining.”

Rail Corridor Redevelopment
Concept art of the Bemidji Rail Corridor shows potential redevelopment for the area, which is located by the Great Northern Depot in downtown Bemidji. Submitted concept art

The estimated cost of the site improvements, which would include updating the infrastructure and redoing the streets, is just over $6.1 million.

The entire project, which would include the actual construction of the wellness center, park and other assets, is estimated at over $87 million.

“This is going to be a multi-year process,” McLane said. “We’re at the beginning of the beginning.”

Financing and other questions

Also included in the report to the council were different financing options available to the city. These included grants from the state and beginning the process for a Tax Increment Financing District that would be made up of the development area.

In simplified terms, TIF districts are designed to capture the value of the increased property taxes sparked by developments. The value of the original property tax continues to be paid, but the increased increment goes to pay for the development for an allotted period of time.

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Because it’s redeveloping an area, the project could be eligible for a Redevelopment TIF, which could help pay the project’s high infrastructure costs.

“It’s really helping fill in that financing gap,” said Rebecca Kurtz, a municipal financial adviser with a firm called Ehlers. “There are high infrastructure costs and upgrades that are going to be needed in order to support that new development.”

If a TIF district were put in place, representatives at the meeting made a conservative estimate that it could generate $25 million in 25 years to help pay for the project’s cost.

“Between the grant funds and the TIF,” said Monte Hilleman of the St. Paul Port Authority, “it really allows the benefits of the project in the long-term to pay for itself up front.”

Financing wasn’t the only concern raised by the council, however, as various members brought up possibilities of environmental impact and gentrification.

“It’s a huge project,” said Ward 1 Councilor Audrey Thayer, “gentrification is a concern of mine… we always want to make sure we’re serving everybody.”

In response to these concerns, different solutions were raised, such as instituting protections in nearby neighborhoods to help keep families from being priced out of their homes.

Another key part addressing community concerns is providing opportunities for public input, something Sanford Health has begun on a small scale by hosting community listening sessions and one-on-one conversations.

“There needs to be a pretty substantive public outreach,” McLane said, “that’s going to be the piece that really ties it all together.”

For now, the next step in the process is beginning a TIF analysis, and this summer could see applications for different state grants to help with funding. Representatives at the meeting said construction could begin, at earliest, Spring 2023.

Nicole Ronchetti is a reporter at the Bemidji Pioneer, focusing on local government and community health.
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