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Aid approved for 3 potential tax credit housing projects in SL

Monday, December 10, 2012

(Photo)
An I&S Group rendering of Southwest Minnesota Housing Partnership's proposed 10th Street Townhomes shows a four-plex unit. The development has 42 planned units, with room for eight more units in the future. The non-profit developer is one of three developers pursuing tax credits to build workforce housing complexes in Storm Lake. Below, the 42-unit development near 10th Street. Special ADA considerations have been given for the four shaded units.
With tax credit housing funding applications due to Iowa Finance Authority Monday, the Storm Lake City Council held a special session early Thursday afternoon to approve assistance packages to three potential developers.

Aid packages are contingent upon receiving state tax credits, which will be awarded in early May.

In the highly competitive tax credit housing program, contributions from local government are crucial to winning dollars. Last year, IFA received 46 applications requesting $23.7 million.

Two of the 46 applications were from developers pursuing Storm Lake projects, but they fell short of receiving a portion of the $9.67 million in tax credit awards and neither complex was built.

"We believe we have a strong chance of getting one, mediocre to good chance in getting two, but impossible chance of getting all three," City Manager Jim Patrick said, but noted it would be "awesome" if the City could secure all the projects.

Development Director Mike Wilson outlined the benefits for the three potential developers.

"Admittedly, these are aggressive assistance packages," Wilson said. "But since tax credit-assisted projects appear to be the only way to get workforce-type housing built, and given the extreme need for additional housing in the community, we feel the assistance packages are justified."

Southwest Minnesota Housing Partnership, a Slayton, Minn. non-profit developer, has proposed a $7.7 million 42-unit townhouse development on 6.74 acres along West 10th Street, on the east side of the Field of Dreams.

Total assistance for SWMHP is valued at $692,100, and is equal to nine percent of the development's cost, the maximum allowed local government contribution.

Incentives include a $100,000 cash donation payable from the sale of the land, $63,000 in normal LMI incentives to offset infrastructure expense, a $68,050 water line, $22,500 in street lights, $13,000 for two rain gardens, $12,600 in waived water and sewer connection fees, a $2,250 temporary gravel hammerhead at the north end of the street and a rebate of 85.5 percent of Tax Increment Financing revenues over a 15-year period.

Assistance will be funded in the following manner: cash award from the proceeds of the sale of the land, infrastructure incentives from water and sewer reserves, water line installation from water reserves, street lights installed by Mid-American and leased to the City and rain gardens and hammerheads from the infrastructure budget.

Over the next 15 years, the City will receive $69,300 in TIF revenues, and all the TIF in years 16-20, estimated at $160,000. TIF revenues have been calculated on present value, and do not include future inflation.

Michael Heidkamp, SWMHP Real Estate Development Officer, and Alyssa Campbell, I&S Group Architect, presented designs and a short informational session for council members.

Intended occupants for SWMHP's project are moderate-income working families looking for long-term family-friendly housing at an affordable price point.

"We expect (the townhomes) to be rented quickly, they are a premium product that is close to home ownership," Heidkamp said. "Once we get this project built, we want to consider other projects to serve all income levels of the community."

SWMHP's "10th Street Townhomes" include a mix of four and six plexes, with one and two story units, ranging from two to four bedrooms. Rents are capped based on income levels, with units set aside for specific income requirements. For a family of four, 40 percent translates to an income of $23,720 and 60 percent $63,580.

The 42-unit community includes an on-site staffed management office and playground, as well as a meeting, computer and exercise room, and additional storage for each tenant.

A 31-foot curved street was used to slow down traffic and give the development a neighborhood feel, Campbell said, noting a 1.24 acre phase two with eight additional units is also in the works for the future.

Metro Plains/Storm Lake Limited Partnership, a Minneapolis, Minn.-based developer, has presented a separate plan in a nearby area for a $4.87 million 30-unit townhouse development on 6.5 acres next to Vestal Street, north of the Field of Dreams.

Total assistance for Storm Lake Limited Partnership is valued at $392,530, and is equal to eight percent of the development's cost, one percent shy of the maximum allowed local government contribution.

Incentives include a $200,000 zero percent interest 30-year loan which creates a $102,580 contribution value, $45,000 in LMI incentives to offset infrastructure expense, a $43,700 water line, $17,500 in street lights, $9,000 in waived sewer and water connection fees and a rebate of 73 percent of TIF revenue over a 15-year period, which has been estimated to be $174,750.

Assistance will be funded in the following manner: $200,000 created using land sale proceeds, infrastructure incentives from water and sewer reserves, water line installation from water reserves and street lights installed by Mid-American and leased to the City.

Over the next 15 years, the City will receive projected TIF revenue of $62,250, and all the TIF in years 16-20, estimated to be $80,000.

Overland Property Group of Topeka, Kan., has proposed a $5.4 million project with two 16-unit apartment buildings offering one to three bedrooms on the east side of Dollar General and Marketlink.

Total assistance for Overland is valued at $404,937, and is equal to seven percent of the development's cost, two percent shy of the maximum allowed local government contribution.

Incentives include $48,000 in LMI incentives to offset infrastructure expense, a $41,547 water line, $25,000 in street lights and a rebate of 90 percent of TIF over 15 years, which has been estimated to be $280,790.

Assistance will be funded in the following manner: infrastructure incentives from water and sewer reserves, water line installation from water reserves and street lights installed by Mid-American and leased to the City.

Over the next 15 years, the City will receive projected TIF revenue of $31,200 and all the TIF in years 16-20, estimated to be $86,250.

Since the land Metro Plains is considering is privately-owned, Wilson noted a larger percentage of TIF had to be rebated, in order to up local government contribution.



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