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Public Market idea fails in Railyard; developers pay back TIF money to change original contract
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Public Market idea fails in Railyard; developers pay back TIF money to change original contract


City leaders hoped a public market, with smaller spaces and lower leases for small local retailers, would add a Nebraska flavor to the Railyard, across from Pinnacle Bank Arena.

In exchange for about $400,000 in tax-increment financing, the Railyard developers agreed to create a space called the Public Market as part of the lower level of stores.

But the market idea didn’t live up to its promise. Today just two stores — Maize Popcorn and Breezyland Ice — operate in the space; the other half is empty.

So this week, the group that oversees the West Haymarket agreed to let developers out of their contract requirements to maintain the Public Market in the Railyard.

Developers TDP Phase One, a partnership between WRK LLC of Lincoln and Chief Industries of Grand Island, will repay $266,666.67 in TIF funds, representing the next 10 years of the 15-year TIF period. In exchange, the West Haymarket Joint Public Agency agreed to eliminate the portion of the Railyard agreement related to the Public Market.

That money will go to the West Haymarket JPA, which purchased $3.5 million of the $4.5 million in TIF bonds used to develop that Railyard area, according to Brandon Kauffman, the city's finance director.

Some of the bond funds went to reimburse the developer for a portion of the costs of the Public Market, including the exterior shell and interior improvements, according to TIF agreements with the city.

The change in the Railyard agreement does not affect how the large video screen, called The Cube, is operated, nor change any rules related to the use of the public plaza area in the Railyard. 

The agreement eliminates only the Public Market portion of agreement, said Abby Littrell, an assistant city attorney.

Fast-food restaurants and the sale of services were prohibited in that area under the original agreement.

The agreement also required that consumable food products make up a minimum of 65 percent of the Public Market, and no single vendor could occupy more than 25 percent of the floor area, unless otherwise approved by the mayor.

“The primary purpose of the Public Market is to serve as a community-gathering space and a venue for the sale and consumption of local or Nebraska-based products or goods,” said the original TIF agreement.

“The Public Market will be designed for small tenant spaces that provide smaller businesses an opportunity to sell their products without incurring large overhead capital and rent expenses. Suggested tenant uses include, but are not limited to: consumable goods, tenants of the Farmer’s Market, fresh produce, meats, cheeses, wine, deli, desserts, snacks, soups and sandwiches,” the agreement said.

The new agreement, approved by the JPA this week, eliminates those rules. It notes that the Public Market idea hasn’t worked out as planned and the developer needs the restrictions removed in order to operate the area in a “sustainable manner.”

“Notwithstanding the use of TIF and despite best efforts by the company, the company has and continues to operate the Public Market at a significant and unsustainable loss, and the company has significant concerns about the long-term viability of the Public Market as currently structured,” the agreement stated.

Among previous tenants in the space were the Doughnut Hole, the Normandy, KD Designs and Sanders Specialty Meats.

This has not been a very successful business model, Littrell told the West Haymarket JPA. The new agreement provides for a clean break, she said.

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Nancy Hicks reports on Lincoln city government, but she’s been following the leaders of local and state government for more than 40 years.

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