Low-income housing plan in Alexandria gets tax break
A project to build a 24-unit townhome development for low to moderate income families will receive a tax break from the city of Alexandria.
At its meeting Tuesday night, the city council voted 3-2 to approve a tax increment financing (TIF) request for Deer Ridge Townhomes. The Alexandria Housing and Redevelopment Authority (HRA) and a private developer, DW Jones Inc. of Walker, are partners in the $4.2 million project.
The vote came with controversy. Five residents in the neighborhood objected to it, citing concerns about density, crime, the burden on taxpayers and whether the project was a legitimate use for TIF.
City council member Virgil Batesole also opposed the plan for many of the same reasons. He also wanted more details of the agreement between the HRA and DW Jones and questioned the need for the project. He made a motion to delay taking a vote until he could examine the HRA contract. The motion died when no one seconded it.
The development would be located on a five-acre site owned by the HRA in the Burgen Sunrise Living Addition, east of the new high school and north of another new housing project in the area, StoneManor.
Deer Ridge will target "families with children, single heads of households with children, families of color, physically disabled and long-term homelessness," according to DW Jones and the HRA.
"This will be a high quality project the city can be proud of," said Skip Duchesneau, president of DW Jones.
Housing market studies in 2009 and 2012 determined there is a need for low-income housing in Alexandria, according to Jeff Hess, HRA director.
The last time low-income housing occurred in the city was 15 years ago when Lincoln Square was built, Hess said.
Rents would range from $580 to $696 a month. Tenants will have to meet income eligibility requirements.
Four units will be reserved for households with incomes at or below 50 percent of the area's median income. This amounts to less than $24,300 a year for a family of two or less than $30,350 for a family of four.
Nineteen units will be reserved for households with incomes at or below 60 percent of the area's median income, or $29,160 for a family of two and $36,420 for a family of four.
The remaining unit will be occupied by a caretaker and wouldn't be income restricted.
The project is receiving tax credits from the Minnesota Housing Finance Agency that would not be awarded without assistance from the city, according to Duchesneau. "Without TIF, the project would not go forward," he told the council.
The market value of the land is $102,400 right now. After it is developed, the value is expected to increase to $2.1 million, yielding $21,210 in taxes, according to Jason Murray, director of the Alexandria Area Economic Development Commission.
The TIF district would last for 26 years, generating a tax increment of $17,961 per year. The city would retain 10 percent of that for administrative expenses, leaving $16,165 for the developer to use for the project.
During the public hearing on the TIF request, Dean Krebs, who lives on Snowbird Lane, asked how much the HRA paid to purchase the land. Hess said $400,000, including the existing infrastucture. Krebs said that paying that much for property that has an assessed value of $102,400 was disconcerting to him.
Hess noted that assessed value does not always equal market value. He said that the HRA will recover "every dime" it spent on the property. He added that the HRA Board considered many parcels in Alexandria for this type of project and favored this one because it was site ready.
Krebs was also concerned about the density in the area - a new high school, Grand Arbor, StoneManor and now this development - and whether crime would increase. He said the amount of people living in that small section of town would be comparable to the city of Osakis.
Krebs said that the HRA spending $400,000 for the property followed by 26 years of TIF places an unfair tax burden on city residents. "Not every development is a good development," he said.
Four other residents spoke at the hearing. They echoed many of Krebs' concerns and asked the council to deny the TIF request.
Batesole was also worried about density in that neighborhood. He also questioned whether the partnership between the HRA and DW Jones was legal.
Mayor Dan Ness asked the city's TIF consultant, James Casserly, to address Batesole's concerns. He said the project was "absolutely legal" and the TIF process was being done in accordance with state statutes. He described the process as a normal, run-of-the-mill request.
When council member Sara Carlson asked about the density issue, Duchesneau said that the site is zoned for this kind of use, medium density residential, and the project meets all the setback requirements. The site is being subdivided into four lots and the allowable density would be 88 units.
The council voted 3-2 to create a TIF district for Deer Ridge. Batesole and Owen Miller voted against it.
The project is expected to break ground this January and be completed by the end of 2013.
Read Friday's Echo Press for more council news.
A public hearing for the Deer Ridge preliminary plat will take place at the Alexandria Planning Commission meeting on November 19.
The developers are applying for a subdivision application intended to convert the present 5.09 acre tract of land into four separate parcels, and to provide a public road, utilities, etc. to serve those parcels, according to City Planner Mike Weber.
The commission will make its recommendation on that preliminary plat to the council on November 26 and the final plat could come back for commission and council approval as early as December, assuming any conditions on that preliminary plat have been, or will be, satisfied, Weber said.
Once the final plat is recorded the developer could seek permits to construct the townhomes as well as the necessary permits for the public road, stormwater/drainage facilities and so on, Weber said.
WHAT IS TIF?
Tax increment financing is a local economic development tool that helps revitalize cities through redevelopment of blighted areas, construction of low and moderate income housing, and assistance with needed economic development that would not occur without the assistance. The property taxes generated from a new development are designated as tax increment revenues for a term of years. Tax increment revenues are used to finance the construction of public improvements, such as streets, sidewalks, sewer and water and similar improvements necessary for the development. Once these improvements are financed, tax increment revenues revert back to local property taxes.
DEER RIDGE DETAILS
The 24 townhome units will be larger than traditional apartment-style units in the city. Two-bedroom units range in size from 1,359 to 1,453 square feet and the three-bedroom units are 1,637 square feet. Amenities include a play area for children, underground sprinkler system, dishwashers, central air conditioning, one and three-quarter bathrooms in the three-bedroom units, water softeners, single attached garages, green-certified flooring, low volatile organic compound paints and caulking, high efficiency furnaces and water heaters, Energy Star rated appliances and light fixtures, and formaldehyde-free particle boards.