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Perham creates new TIF district downtown; United Community Bank to begin major expansion project this month

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business Perham,Minnesota 56573
Perham Focus
Perham creates new TIF district downtown; United Community Bank to begin major expansion project this month
Perham Minnesota 222 2nd Avenue SE 56573

A new Tax Increment Financing district has been established in downtown Perham, and at least one business is already taking advantage of it.


The new district is comprehensive; it brings a number of smaller TIF parcels together under its umbrella, and adds some new ones, as well.

City councilors approved the new TIF district at a meeting Monday. 

At the same meeting, councilors approved TIF financing within this new district for United Community Bank. The bank is planning a major expansion, estimated at $2.8 million.

The new TIF district is a redevelopment district. Any increase in property taxes that results from redevelopment is used to help finance the costs of those projects, such as land assembly and removal of blighted structures. 

The idea is that business owners will save money during the redevelopment process, while the city will benefit from increased tax revenues in the future.

District 2-36, as the new TIF district has been named, consists of 29 parcels previously encompassed by other, smaller districts. Some of these parcels were set to expire or lose TIF eligibility soon; bringing them together under this new district will keep those areas viable for longer.

"We saw some opportunity to expand the life of some TIF districts in the city," said Todd Hagen, a senior financial officer with Ehlers, which has been working with Perham on the TIF plan.

The new district will also include five new parcels: the former U-2 Gift store being contemplated as a new site for Brew, the former With Love Floral Shop, Hair Haven, a rental home near Westside Services, and parcels that contain the cattle barns on the fairgrounds. 

All the properties meet the definition needed to qualify for redevelopment TIF, and all were chosen because they could be candidates for some type of project.

According to a memo from Perham's Economic Development Director, Chuck Johnson, the cost of forming a TIF district changes very little by adding a large number of parcels, "thus it makes sense to make a new TIF district as comprehensive as possible."

The city has done similar things before. Hagen called the move "an efficient way of doing things."

The formation of District 2-36, Johnson said at Monday's meeting, "helps stretch the core downtown commercial district. It'll basically be a block bigger. It's a good project for UCB (United Community Bank) and it'll also be a good project for neighboring businesses downtown."

UCB President Charlie Cavanagh told councilors the TIF financing will allow the bank "to do some things that we probably wouldn't have done absent of this."

UCB is acquiring the former Farmers State Bank facility, and will be expanding it to the west. They are also acquiring the Brad Helmeke building and will be converting it to parking.

The expansion is likely to have "a resoundingly strong impact on Perham's downtown retail sector," according to Johnson, because it will help interconnect the core downtown area with Ma's Little Red Barn, renters in the Meyer Building and Perham BP/Papacito's Burritos.

UCB is hoping to begin construction on the project mid-month, and to occupy the new facility in 2013. They will be selling their existing facility to an unrelated party.