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Proposed apartment project may get tax break

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Proposed apartment project may get tax break
Alexandria Minnesota 225 7th Ave E
P.O. Box 549
56308

A $5.2 million project to build two new apartment buildings in Alexandria might receive tax increment financing (TIF).

At its meeting Monday night, the Alexandria City Council called for a public hearing on the request from Lakewood Terrace. It will take place on Monday, December 22 at 7:30 p.m. at City Hall.

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The owners are proposing to build two four-story buildings, each containing 16 units of two and three bedroom apartments. The location is 3705 South Broadway - south of the Minnesota Eye Institute.

Because it would be a TIF housing district, 20 percent of the units must be rented to low-income families or individuals with incomes 50 percent below the county's median income.

TIF is an incentive cities use to encourage development or affordable housing. The taxes on a proposed site to be developed are frozen at their current level for a specified period time, in this case 13 years. The tax difference between the undeveloped land and the land after development - the increment - is used to help finance the project. The city keeps 10 percent of the increment for administrative fees.

The Lakewood Terrace project would generate an estimated increment of $41,188 per year. The value of the land would increase from $167,900 to $3.8 million and after the TIF expires, the taxes would increase from $1,542 to $64,971.

Council member Cindy Bigger expressed some concerns about the application, saying that she believes TIF is a privilege, not a right.

Jason Murray, director of the Alexandria Area Economic Development Commission, noted that the application meets the state and city requirements. He said that in the future, the city could decide to enact a tighter policy.

The proposed rates for the apartments would range from $875 to $1,450 a month, depending on the number of bedrooms.

The partners for the project, listed in the TIF application, are Randy Roers, Scott Kluver and Harold Jesh. They hope to start the project this January and finish it next September.

The project is expected to create two full-time jobs and four part-time positions.

During the public comment portion later in the meeting, John Widmark of Alexandria, who is a manager of other apartments in the city, said that allowing TIF for this project would be a "dumb move."

Widmark said he didn't have a problem with more apartments opening here but that the proposed rent would be too high for low-income families to afford. He said they'd be spending 58 to 67 percent of their income on rent.

He added that some other apartment projects that have received TIF are covering the low-income rental requirement by filling the units with college students, which defies the purpose of TIF.

He said the city should re-think the formula for TIF and low-income apartment rates.

In other action, the council:

--Approved an abatement plan to help finance a new floor and refrigeration equipment for the ice rink at the Runestone Community Center.

The city's financial advisor, Springsted Inc., recommended the plan, along with the city's economic development board.

Taxes paid by residential property owners near the RCC will be reallocated over a 20-year period to help pay for the RCC improvements, up to $1.25 million.

The taxes paid by the property owners in the abatement area will not change; their taxes will just be earmarked for the RCC improvements, according to Springsted.

The abatement area includes the following neighborhoods - Felt-Anderson, Kinkead Commons, Kloehn's Subdivision, Lake Agnes Estates, Sterling Pines and Whispering Pines.

Typically, the city would issue revenue bonds to pay for such a project but according to Springsted, the abatement plan allows the city more flexibility because the abatements would not be subject to levy limits imposed by the state.

In a related action, the council approved an amendment to its tax abatement policy that would allow the city to use abatement bonds to improve or construct city facilities.

Another amendment restricts the total amount of property taxes abated by the city to no more than 10 percent of its net tax capacity per year, or $200,000, whichever is greater.

A public hearing was held before the abatement was approved. No one from the public spoke.

--Approved a request from the Douglas County Food Shelf to close the intersection of 8th Avenue and Nokomis Street from 1 to 3 p.m. on December 15.

This will allow the Holiday Train to make a stop in Alexandria to raise awareness and collect food and money to battle hunger.

This will be the third year the Holiday Train is stopping in Alexandria. It includes singing performances by well-known, award-winning acts.

--Denied a conditional use application to allow group quarters at 811 Roosevelt Street.

Jonathan Lee was asking for the city's permission, after the fact, to allow up to five unrelated persons to rent the house.

The council, following the recommendation from its planning commission, cited two main reasons for denying the request: It was not consistent with the city's comprehensive plan, which calls for low-density residential use; and it was not consistent with the character of the surrounding area, which is mostly single-family residential.

--Approved a conditional use application from Cowing Robards to allow open and outdoor storage, sales and rental at its property at 1110 North Nokomis NE.

The permit allows the business to display up to 50 cars and 12 portable storage units.

--Gave preliminary approval to LBR Properties to rezone 55 acres of land east of Pioneer Road, across from the site of a proposed high school and south of a soon-to-be-built elderly housing complex.

The applicant, Ben Zacher, wants to rezone the property from residential-vacant agriculture to medium-density residential.

--Approved three zoning-related requests from Knute Nelson for its planned unit development at 4213 Pioneer Road SE.

The project will be carried out in phases. It will begin with 33 units - a mix of assisted living and individual living for seniors, similar to Nelson Gables.

The next phase will include a skilled nursing center, townhomes and apartments. Phase three will include a higher density toward the road. The timing will be driven by the market.

The city approved a conditional use application, rezoning request and a subdivision application for the multi-phased project.

--Was presented with a detailed environmental study called an "Alternative Urban Areawide Review" (AUAR) for a 550-acre parcel of land south of 18th Avenue and east of Nokomis Street known as the "Johnson Family" land.

It's located in phase two of an orderly annexation agreement with Alexandria Township.

City Planner Mike Weber explained that an AUAR is an alternative form of environmental review that allows local governments to examine the impacts of potential different land use alternatives in a particular geographic area.

Three building scenarios are under consideration: proposing park, low density residential, high density residential and non-residential. Scenario three is consistent with the comprehensive plan.

A public comment period on the AUAR ended this past August. The next step is to distribute it to state agencies for their review.

The council is expected to look at the AUAR in more detail at its November 10 meeting.

--Accepted a feasibility report to pave Thomas Drive from South Oak Knoll Drive to East Oak Knoll Drive. Residents petitioned for the report and the improvements.

The cost, according to the report, is estimated at $250,100. The city will cover 20 percent, or $50,020. Benefiting property owners would pay the rest through assessments.

A public hearing to discuss the costs is set for November 27 at 7:30 p.m. at City Hall.

--Approved an engineering agreement with Widseth, Smith, Nolting and Associates for milling and overlay work on South Broadway, from 22nd Avenue to 34th Avenue.

The engineering costs are estimated at $26,418, based on a total project cost of $173,192.

It will also include some striping work, including adding crosswalks by the Midway Mall Cinema, Bennigan's and the Broadway Ballroom.

--Received a brief update on the Fillmore parking lot reconstruction.

Paving is expected to begin this week and, barring any more weather delays, work should wrap up soon, according to City Engineer Tim Schoonhoven.

--Scheduled a board of canvas to confirm the results of the November 4 election. It will take place on Thursday, November 6 at 9 a.m. in the council chambers.

--Authorized city staff to request proposals for architectural services for making improvements at the city-owned Plaza Liquor.

The city is considering adding storage space to the building and making renovations.

City Administrator Jim Taddei noted that a potion of the building's siding was damaged during a recent attempted break-in. Nothing was stolen.

--Appointed council member Harvey Weisel to lead the meeting in Mayor Dan Ness' absence.

--Approved the following licenses: charitable gambling to American Legion Post 87 to conduct bingo on November 13 at the VFW and on December 14 at the Elks Lodge; tobacco to Northside Super America (renewal); temporary liquor license to the Alexandria Area Arts Auditorium to sell liquor for a fundraising event on December 5.

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