A $6.9 million project to build a three-story apartment building in Alexandria with 33 units for low-income and homeless people may get a tax break.

At its meeting Monday, the Alexandria City Council agreed to allow tax increment financing for "Central Lakes Apartments II," a partnership between the Alexandria Housing and Redevelopment Authority and D.W. Jones to provide affordable housing.

The site is on vacant land west of Lake Geneva owned by the HRA at 98 Runestone Place, west of Birch Avenue and south of Lake Park Avenue. It will include a mix of one, two and three bedroom units.

Thirty-three of the project's 34 units will be reserved for households with incomes at or below 60 percent of the area median income. This amounts to $38,700 or less for a family of three.

Four units will be set aside for homeless people. The developers are working with West Central Communities Action on providing that kind of housing.

Rents will not increase for tenants even if their incomes rise over time. The goal, according to the developers, is for low-income families to improve their financial footing so they can eventually purchase a home.

The only unit that's not for low-income people will be for a caretaker.

With TIF, property taxes remain at the existing level for a certain period of time, in this case 26 years, and the tax savings are used to pay for development costs. Because it's owned by the HRA, the property is tax-exempt right now and will increase to $30,627 annually after it's developed.

The city's typical TIF districts are for a maximum of 13 years but council members decided to approve the developer's request for 26 years because of the project's heavy focus on low-income housing.

Monthly rents are expected to be $630 for one bedroom, between $700 and $715 for two bedrooms and between $730 and $750 for three bedrooms.

The council gave a similar version of the project only "soft support" for TIF last May. The developers hoped the action would help the project secure housing tax credits from the Minnesota Housing Finance Agency but the application was denied.

The developers noted that the housing credit program, based on a point system, is extremely competitive. Only 12 projects outside the metro area were approved last year.

The developers are submitting another tax credit application this June. They hope the council's TIF approval and other changes will make the project stand out from other applications.

They'll be notified in October if the application is approved. Without the tax credits and TIF, the project won't be feasible, according to the developers.

The project is the first part of a three-phase development. The second phase calls for a Minnesota housing workforce multifamily building and phase three consists of single-family homes. When complete, all three phases, along with adjacent neighborhoods, would have direct access to the Central Lakes Trail.

New food market/cafe

The council agreed to provide $200,000 from the city's Revolving Loan Fund to help Shannon Berns open Venn Hagen, a seasonal local food market with a deli/cafe in the former Mustard Seed building at 607 Broadway.

The building will be renovated and restored. It will also include meeting and instructional space with new coworking space on the upper level of the building.

The total cost of the project is estimated at $425,000.

The interest rate on the loan is 5.4 percent, which matches private terms, and will be paid back over 15 years. The legal name of the borrower is B Way Holdings, LLC.

The fund has a projected balance of just over $800,000.

The borrowers are fully responsible for any legal or recording fees, along with any registration tax, according to City Planner Mike Weber.

TIF extended for Alexandria Extrusion

A tax increment financing agreement with Alexandria Extrusion Company has been extended four years, to Feb. 1, 2026, to accommodate the company's plans for a 19,000 square-foot addition.

This is the second major expansion since the original TIF note was issued in 2000, according to Nicole Fernholz, director of the Alexandria Area Economic Development Commission.

Alexandria Industries, which owns Alexandria Extrusion, is planning a $17.8 million expansion - $13 million of it in new equipment. The 19,000 square-foot addition at Alexandria Extrusion will increase the size of the current 172,000-square-foot building by about 11 percent.

It will include a warehouse, manufacturing space, office space and new equipment.

The expansion is expected to add nine new positions within two years, according to the company.

Alexandria Industries employs 602 employees companywide and 487 work at the Alexandria facility.

Final plat for Stonemanor

A final plat for the Stonemanor First Addition, east of Alexandria Area High School, was approved.

The preliminary plat received approval as part of a planned unit development in July, 2012, and included the right of way for all of Arbor Crossing between 48th and 50th Avenue, as well as the lots for the first two buildings and their associated improvements.

The final plat subdivides the existing outlots, A and B, from Stonemanor. It includes two lots for the Phase II apartment buildings and the space for required parking and stormwater management. The rest of the property, on the west side of Arbor Crossing, is replatted into three outlots suitable for future subdivision.

The final plat includes three conditions - connection to public utilities, proper evidence of title and payment of a park dedication fee of $29,570 for 12 acres in the plat.

More power lines go underground

The council authorized ALP Utilities to issue $3,115,000 in electric utility revenue bonds to pay for a project that will convert more overhead electric lines to underground locations.

The work began in 2012 and has helped increase power reliability each year, according to Scott Deitz, operations manager.

The bonds have to be paid solely from revenues generated from the rates paid by electric customers of ALP Utilities.

The bond payments will be made over a 15-year period and the city can't he held liable if ALP Utilities fail to make payments, according to ALP.

ALP previously issued bonds to complete similar work in 2015.

The debt from the bonds counts against the annual $10 million limit of bonds that can be issued by the city, but it is not expecting to issue any other bonds this year.

Areas included in this year's part of the project are Casa Marina Lake, the mid-Nokomis or Little Germany area, the city of Nelson and Westwood Drive.

In a related action, the council accepted a low bid of $734,482 from Arvig for the construction portion of this year's underground work.

The bid came in below the estimate of $800,000.

The project is in ALP's 2019 capital budget.