The Cottage Grove Economic Development Authority (EDA) unanimously approved a resolution July 27 formally designating the long-vacant Majestic Ballroom as a substandard building, completing a legal step intended to preserve future redevelopment options for the property through tax increment financing.
The special meeting, held solely to address the Majestic Ballroom property at 9165 West Point Douglas Road, followed an earlier EDA meeting at which members were unable to act because a quorum was not present. Once host to musical performances including polka and rock, the building is deemed unsalvageable.
Economic Development Manager Nate Carlson told members the building has sat vacant for more than two decades. Ballroom operations ended around 1999, with the last tenant, an equipment business, leaving in 2005. Since then, he said, the structure has deteriorated significantly after rooftop HVAC equipment was removed without repairing the opening, allowing water to enter the building for years.
Carlson said the prolonged exposure has resulted in mold, asbestos concerns, standing water and wildlife intrusion. Based on inspections conducted by city staff and LHB as a third-party consultant, the building has been determined to be unsafe and beyond repair.
Carlson said the action before the EDA was to adopt findings that the Majestic Ballroom is a structurally substandard building under Minnesota Statutes § 469.174, subdivision 10, a requirement for establishing a redevelopment tax increment financing (TIF) district. The statute defines a redevelopment district as one in which more than 50 percent of the buildings are structurally substandard to a degree requiring substantial renovation or clearance. It also defines a structurally substandard building as one with significant defects in structural elements or essential building systems that justify substantial renovation or demolition.
Carlson emphasized the designation does not guarantee future TIF assistance or commit the city to a redevelopment project. Instead, he said, it preserves the city's legal ability to establish a redevelopment TIF district within three years after demolition should a future developer demonstrate the required "but for" need for TIF assistance. He described the action as "strictly a proactive measure" supporting the city's long-term Innovation Village redevelopment strategy, adding there is currently no imminent redevelopment proposal for the site.
Carlson also reviewed actions already taken by the Cottage Grove City Council on July 15. Those included declaring the building substandard, approving a deferred assessment waiver to allow future reimbursement of demolition costs, awarding the demolition contract and authorizing demolition pending EDA approval.
EDA member Tony Khambata asked why the city had not pursued demolition sooner.
City Administrator Jennifer Levitt said officials had spent years working with the property owner as various redevelopment and reuse possibilities were explored.
"It was really the property owner," Levitt said. "We were trying to work with the property owner. He had looked at a variety of options for redevelopment and reuse of the facility, and then when it became evident, especially by the photos and the documentation that we have, that the building was not salvageable for redevelopment, then we were able to enter into an agreement with him for the demolition of the building, so hopefully now that this site, not having that liability on it, will be back on the market in a strong position."
Khambata also sought clarification on how demolition costs would be repaid.
Levitt explained the Economic Development Authority would initially finance the demolition, with reimbursement occurring when the property is sold through a deferred assessment recorded against the property.
"The city through the EDA fund would actually front the money for the demo work, and then the deferred assessment waiver indicates that once he sells the property at time of sale, we would get the reimbursement for that," she said.
When asked whether the city would have priority over other creditors, Levitt said the deferred assessment mechanism differs from a traditional lien.
"The way the deferred assessment works is different than a lien that would be put on the property. At time of sale that would be captured because it is recorded against the property. So I guess in one respect, I would say we're first in line," she said. "We're essentially trumping the liens on the property at time of sale."
EDA Vice President Justin Olsen noted the board had been unable to vote on the matter at its previous meeting because of the lack of a quorum and thanked members for attending the special meeting.
The EDA unanimously approved Resolution 2026-004 designating the Majestic Ballroom as a substandard building in accordance with Minnesota redevelopment tax increment financing law.
Following the vote, Olsen asked about the demolition schedule.
Levitt said a pre-construction meeting was expected later in the week, with the contractor anticipated to begin mobilizing to the site within approximately two weeks.
"That is correct, sir," Levitt said when Olsen remarked that the project appeared to be moving quickly.
With no additional business on the agenda, the Economic Development Authority adjourned.