Legislature OKs bill key to Eden Prairie Center redevelopment

A step critical to the possible redevelopment of Eden Prairie Center was accomplished this week, as a small provision in the state tax bill passed by the Minnesota Legislature makes it easier for city officials to provide tax-increment financing (TIF) for a mall project.

The legislation would allow the city to establish a TIF district and provide financial assistance to the redevelopment project without meeting one of the current requirements of state law: that the buildings being renovated or replaced be structurally substandard.

“We just did not think the mall would meet that particular test,” said David Lindahl, the city’s economic development manager, who testified on the bill before several committees this past legislative session as well as in 2024.

TIF is a financing tool used to support local economic development, redevelopment and housing – projects typically seen as benefiting the broader community.

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Under state law, cities may use TIF to capture the increased property taxes generated by a redeveloped property and apply those tax increments to help pay for improvements. After the TIF district expires – often after 25 years – all of the tax revenue flows to local governments for general-fund use.

The city and the mall’s owner have discussed a mixed-use redevelopment concept where the vacant JCPenney store, its parking lot, and perhaps some of the mall’s north-side interior would be replaced by new development, including residential and retail development. Both the mall and the city would contribute to the costs.

In March, that concept also included a hotel and office space, but Lindahl said this week that market forces may prohibit some of these ideas, as may the high cost of building demolition. 

“The plan is fluid,” he said, and no application for development has yet been provided to the city for formal review.

The clock is ticking, however, since the TIF provision written into law for Eden Prairie expires on Dec. 31, 2026.

Redevelopment of the shopping center is seen as having a beneficial effect on Eden Prairie’s tax base.

The city used TIF to redevelop the mall in 1996 as part of a broad plan that resulted in a new entertainment wing with theater screens and restaurants, and a new Von Maur department store.

That project was considered a success, as it raised the taxable value of the mall and its anchor stores from $23 million to $132 million, a $109 million increase far outpacing the $71 million hike that was predicted at the project’s start. The city’s commitment to that project was $13 million, according to city staff.

But the taxable value of the shopping mall and the property taxes it pays have declined over recent years. For property taxes payable in 2025, the value of the mall plus its anchors has dropped to about $88.6 million and its total property-tax bill has fallen to $2.6 million. The mall, about 1.4 million square feet on 87 acres, reports having more than 100 stores.

Lindahl credited lobbyist Ann Lenczewski of Lockridge Grindal Nauen PLLP with helping shepherd the city’s legislation through the Minnesota House and Senate. She served in the Minnesota House from 1999 to 2015, representing Bloomington.