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Alexandria gets tougher on TIF

It will soon be tougher for developers to get tax breaks for rental housing projects in Alexandria.

At its meeting Monday night, the Alexandria City Council approved changes to the city's tax increment financing (TIF) policy for housing developments.

The new policy sets clearer income and rental restrictions.

The goal is to make sure developers, if they are approved for TIF, are providing enough affordable housing units to low-income families.

The new policy states that at least 20 percent of the income of the units must be occupied by tenants whose income is 50 percent or less of the area's median income, or 40 percent of the units are occupied by tenants with income of 60 percent or less of the area median income. The previous guideline was based on gross income.

Strict rental restrictions were also approved. The rates must follow the maximum gross rents by family or bedroom size as established by the Minnesota Housing Finance Agency for the Section 42 tax credit program. The old policy did not address rental rates.

The maximum number of years a housing TIF district can last was relaxed from 13 years to 26 years.

Jason Murray, director of the Alexandria Area Economic Development Commission, noted that at least one project in the past was unable to secure private financing because the 13-year TIF period wasn't long enough.

Murray added that in the past, once a developer's TIF period ended, the units returned to market rate. Extending the TIF period will allow the affordable housing rents to continue for a longer time.

The new TIF policy carves out an exception to the rental and income restrictions: On a case by case basis, the city can modify the restrictions if the project includes senior rental housing units that offer a continuum of care, such as assisted living facilities.

The city also changed its TIF policy for tourism projects to make it comply with state requirements.

Such projects must be located in counties where the median income is no more than 85 percent of the state median income (which currently applies to Douglas County); where the city's population is less than 20,000 (which currently applies to Alexandria); and the project, such as a hotel motel or convention facility, is intended to primarily serve people from outside the county.

The fee for applying for TIF was increased from $500 to $1,500.

The council made one change to the economic development board's recommendations. The board had suggested a provision requiring all housing district applications to be reviewed by the Alexandria Housing and Redevelopment Authority for compliance with the city's housing study.

The council thought the word "compliance" was too strong of a word. Instead, it changed the provision to state that all applications "may be available for review and comments in relationship with the goals of the housing study."

In other action, the council:

•Accepted a feasibility report for extending city water to the newly annexed areas in Alexandria Township known as "phase 3, part 1B and part 2."

The project is planned for the following areas - County Road 42 (North Nokomis), County Road 11, Darling Drive, Browns Point Road, Wicken Lane, Ross Garden, Sessions Street, Short Street, Country Club Heights Road, Park Side Road, L'Homme Dieu Drive and County Road 70.

If approved, new eight-inch and 12-inch diameter water lines will be installed. The project also includes valves, fire hydrants, manholes, pavement repair and turf restoration.

According to the study, the total cost of the project is estimated at $2.89 million. Public hearings will be set to discuss landowner assessment costs.

The city will save money on some aspects of the project because it is working with Douglas County, which is reconstructing County Road 42, according to Tim Schoonhoven, city engineer.

He added that the city is also trying to receive funding through the proposed federal economic stimulus package.

The project encompasses 310 residential lots and 17 commercial lots.

•Reviewed correspondence from Alexandria Lakes Area Sanitary District (ALASD) Director Bruce Nelson regarding the city's request to have ALASD pay for a project to extend sewer in South Broadway from 34th Avenue south about 1,200 feet.

It's one of the few areas in the city that is not connected to the sanitary sewer system. The cost of the project is estimated at $91,882.

Nelson provided the city with several documents and letters outlining ALASD's position on the contributing to local sewer projects or interceptors.

The bottom line, said City Administrator Jim Taddei, is that the documents indicate that ALASD is not interested in covering the cost of the sewer extension.

Council members, noting the fact that some of the documents were more than 20 years old, said that the city should set up a meeting the full ALASD board to discuss the sewer project and ALASD's future budget requests.

Council member Sara Carlson said that the city is a huge contributor to the ALASD's budget and that a meeting was long overdue.

Mayor Dan Ness added that ALASD's practice of requesting significant funding increases from the city on short notice couldn't continue in light of the budget cuts the city has to make.

The council directed Taddei to schedule a work session with ALASD. A notice of the meeting, which will be open to the public, will be printed when the date is set.

•Received updated job descriptions for the street department. The descriptions haven't been updated in 10 years, noted Bryan Bjorgaard, public works coordinator.

•Approved standards for public works projects. This includes detailed design specifications for installing pipes, hydrants, water lines, catch basins, manholes, gutters, sidewalks and other improvements.

•Forwarded on many positive comments the city has received about Bjorgaard and the street department regarding ice and snow removal.

•Approved a second and final reading to amend the city's shoreland ordinance.

Changes include requiring shoreland alteration permits and a related definition of "terrace;" adding Lake Carlos to the city's "protected waters" inventory; and creating a provision that allows for the removal of invasive species, such as buckthorn.

•Approved the following licenses: heating - The Jamar Company (renew); peddler's - Hafner's Greenhouse (new); sign hanger - Metro Sign Services LLC (new); fireworks - Kmart (inside store) and Mills Fleet Farm (inside store); temporary on-sale liquor - St. Mary's Church for a fundraising event on September 20, 2009; massage - Therapeutic Massage by Tara (renewal).