On a split vote, the Alexandria City Council rejected a developer’s request for a tax break that would have built a $15.5 million, 103-unit apartment complex in southeast Alexandria.

Acting as the city’s Economic Development Authority, the five council members and Mayor Sara Carlson voted 3-3 Monday on whether to give tax increment financing to the developers of the Kinkead Apartments – a four-story building that would be located on 5.6 acres of land north of 50th Avenue, south of the Knute Nelson Grand Arbor campus.

The project was promoted as a way to provide more affordable workforce housing in the area.

Council member Bobbie Osterberg’s motion to modify the terms of the TIF agreement, limiting it to eight years instead of the 13 years the developer requested, failed to get the majority of the vote. She, Carlson and Bill Franzen voted for it while Todd Jensen, Roger Thalman and Dave Benson opposed it.

With TIF, property taxes are kept at the existing amount for a certain period of time and the higher taxes the developer would have had to pay are used to help cover the cost of the development. State law allows TIF to be used for up to 26 years.

Cities offer TIF as an incentive in order to develop property, add to the city’s tax base and increase job and wage opportunities.

The current annual property taxes on the land are $1,920. Once the project was completed, taxes were projected to increase to $172,000.

Jensen said that when the project’s developers first presented the plan to the Alexandria Planning Commission months ago, they “almost bragged” about how they would not need any public dollars, but were now requesting it.

Jensen was also concerned about the building’s proposed “top-of-the-line” amenities, such as marble countertops, a dog park and indoor pool. He said it failed to meet the state’s “but for” test granting TIF – that the project wouldn’t happen without it.

Jensen also didn’t like the fact the developers at one time submitted a building permit but then withdrew it.

“I just have a hard time swallowing all of that,” Jensen said. “I don’t see the need for it (TIF).”

Thalman expressed similar concerns about the project’s need for tax help.

“To me, it just looks like a way for the developer to save money,” Thalman said.

Matt Kuker, one of the developer’s partners along with James and Pamela Deal, told the council that the bids for the project came back 13 percent higher than expected, which drove the need for TIF. He said it was needed in order for the project to cash flow. “If we don’t get TIF, we’ll have to go with other projects,” he said.

Kuker said that Kinkead Apartments would be different than the other types of affordable housing in Alexandria. He added that the demand for this kind of housing was still strong. He said that there’s a waiting list of tenants who want to get in at the two other complexes the developers built in the area, Runestone and Granite Manor.

“This is a great town with a lot of industries and jobs,” he said. “People want to live in a nicer spot.”

Twenty percent of the Kinkead Apartments’ units, 21 of them, would have been available to those with low to moderate incomes that are no more than 50 percent of the median income in Douglas County. For a two-bedroom unit, this amounts to an income of $30,550 or less.

Monthly rental rates for low-income families would have varied from $668 for a studio apartment up to $992 for three-bedroom units.

Under the proposed TIF contract, the developer had agreed to cover the construction of a new public road, Arbor Crossing, which was estimated to cost $865,000.

Osterberg made the motion to limit the TIF to eight years because that is how many years it would take for the developer to recoup the cost of building the road.