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Betting Big On Fargo’s Future

Black Building

Rendering by JLG Architects

When the Black Building cornerstone was being laid on Broadway in 1930, downtown Fargo was bustling with commerce and services, ripe with hotel rooms and theaters, and on a trajectory to create the urban neighborhood we know and love today. Downtown was Fargo and big bets were being made on Fargo’s future. 

In 1930, Fargo was closing in on 60 years as a City and its population density was 5,800 people per square mile. Most recent Census results in 2010 put Fargo at 2,200 people per square mile. The growth in our city limits has far outpaced the growth in our population. Our city leaders have fine-tuned the use of special assessments and investment of tax dollars into new infrastructure to ensure a constant supply of new subdivisions to keep Fargo growing. This growth in new housing helps attract people to our metro area and meet market demand. It also adds to the cost of operating the city. 

In 1999, Fargo city leaders recognized the need to balance the growth of the physical size of the city, with reinvestment into the areas where it all started. The city contributes to new subdivisions through city special assessment, financing of new infrastructure costs and building new infrastructure with tax dollars. But existing neighborhoods already have the infrastructure in place so the same type of assistance doesn’t work. The Renaissance Zone was launched in 1999, allowing the city to contribute to downtown projects through five years of property tax deferral, which lowered the cost of projects and helped to attract return-seeking private investment into an existing neighborhood.

Fargo’s PILOT (payment in lieu of taxes) program essentially extends the Renaissance Zone property tax benefits beyond the five years, allowing for larger projects. The PILOT is only used when a project wouldn’t otherwise happen and is constantly re-evaluated by the City of Fargo and the state legislature. It has evolved over time to encourage and incentivize more multi-family housing in downtown Fargo. More downtown housing is a goal identified in the Fargo InFocus Downtown Comprehensive Plan, as well as the overall Fargo GO2030 plan, both of which were driven through citizen-input.

Rendering by ZW Design
Rendering by ZW Design

The idea is that in exchange for waiting to collect on higher taxes to allow projects to move forward, the City experiences a big payoff with dramatically increased property values downtown, which pay dramatically higher taxes once the incentive period is over. The idea works. Since 1999, property tax values in downtown Fargo have grown from $200 million to more than $700 million. Each year more projects come off the incentive period and pay higher taxes. According to the city of Fargo, this has created more than $4 million in property taxes for Cass County, Fargo Public Schools and the city that would not otherwise be available.

For decades, multi-family housing projects (apartment buildings) were pulled toward the outskirts of town due to lower up-front and construction costs and higher expected investment returns. Through these programs, these kinds of projects have become better investments and are now also happening downtown over the last couple of years.

The formula is being adopted across the region and state. New mixed-use projects in downtowns are being announced in West Fargo, Moorhead, Bismarck, Grand Forks, Minot and more. And the payoff for taxpayers is great.

Downtown development incentive programs draw private money to where public infrastructure already exists. This lowers the cost to and risk assumed by the government. Infill development in existing neighborhoods creates the highest return for taxpayers.

Downtown Fargo and new subdivisions provide neighborhoods for two different markets, depending on personal lifestyle choices. Kilbourne Group envisions building a city that provides a neighborhood for everyone. The city of Fargo is creating policies to make both financially viable.

Rendering by Zerr Berg
Rendering by Zerr Berg

Today, 90 years after that big bet on the Black Building, downtown Fargo is embarking on another wave of economic and demographic growth. City and business leaders have worked to create an environment that draws new investment and new people into the heart of our city. A growing downtown Fargo residential population strengthens the city’s core and supports the budding local retail, restaurant, and entertainment ventures that bring vibrancy and energy, and a unique flavor to our city. Downtown Fargo is once again a place that can transform impressed visitors into new residents. It’s a thriving economy that is attracting major companies to set up shop downtown. It’s our picturesque postcard to the world and it’s something we can all support and enjoy.

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