Submitted artist rendering A mixed-use development that APX Construction Group is proposing to build in downtown Marshall. The building would include commercial space and about 56 apartment units, and would be located on vacant property on the same block as the Varsity Pub.

MARSHALL — A Minnesota-based developer has a proposal to fill vacant lots on a prominent block of downtown Marshall — but there are a lot of details that need to be worked out first, Marshall city staff said.

That’s why members of the Marshall City Council were presented Tuesday night with a preliminary agreement, laying out conditions that will have to be met before the city and the developer can move forward any further on the proposal.

Council members voted 6-1 to approve the pre-development agreement with APX Construction Group, of Mankato. The agreement includes deadlines for APX to submit information on the financing of the project, construction schedules, and a formal development proposal. At the same time, the city will have its financial consultant analyze whether the project is feasible, and whether city participation in the project through Tax Increment Financing is appropriate.

“The purpose of the pre-development agreement is really to establish a partnership between the city and the developer,” said Mikaela Huot, of Baker Tilly, the city’s financial consultant.

Representatives of APX brought their proposal to the city council on Sept. 24. APX wants to build on what is now several city-owned lots on Block 11 in downtown Marshall. Block 11 is the same block, at the corner of Main Street and College Drive, where the Varsity Pub is located. APX is proposing to construct a mixed-use building, with about 33,400 square feet of commercial or office space on the ground floor, and around 56 apartment units on the upper floors.

The proposal, as presented to the council two weeks ago, didn’t yet have a lot of specific details. Some of those details would be worked out through a pre-development agreement, said Huot and Marshall EDA Director Tara Onken.

Huot and Onken presented a draft of the pre-development agreement at Tuesday’s council meeting.

The agreement covers a relatively short period of time — 90 days — and will help the city make sure the project is feasible, Huot said.

Under the agreement APX would have to meet certain requirements by set deadlines. Within 30 days after entering the agreement, they would need to give the city financial information on the proposed development, including sources of funding for the project, development costs, and financial statements for the developers.

Within 60 days after entering the agreement, APX would have to give the city information including a proposed schedule for development, a formal development proposal, and a letter from a financial institution stating a commitment to provide financing for the project.

The city would also have requirements to meet under the agreement, Huot said. The city and Baker Tilly would need to analyze whether the project is feasible, and whether the property would qualify to be in a TIF district. The city would also need to consolidate the parcels of city-owned land that would be bought for the development, and draft a purchase agreement for the property.

If both the city and the developers meet the requirements of the pre-development agreement, they can move on to negotiating a purchase agreement.

“I think this is a good process,” said Marshall Mayor Bob Byrnes. The requirements in the pre-development agreement would help provide answers that both the city and developers need before moving forward with the proposed project, he said.

“This is a long-term goal project that the city has had, to get Block 11 to where it is,” said council member Craig Schafer.

“What is the potential cost, as we enter into this agreement, to the city of Marshall?” asked council member James Lozinski.

Onken said that there would be some cost to combine the parcels of land that would be affected by the development proposal. However, she said the city would likely have to do that at some point anyway before Block 11 could be redeveloped.

Under the terms of the pre-development agreement, APX would also put $7,000 into escrow that the city could draw on for shared costs. If the city doesn’t move forward with a purchase agreement with APX, the city would reimburse APX up to $7,000.

If APX were to seek reimbursement between $7,000 and $15,000, it would need to be requested ahead of time and approved by the Marshall city administrator. Reimbursements greater than that would need to be approved by the city council.

A motion to approve the pre-development agreement passed 6-1, with council member Glenn Bayerkohler casting the dissenting vote.