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Westwinds project has city officials wondering what's up?

WILLMAR -- What's happening with the Westwind affordable housing project in southwest Willmar? City Council members and city officials want to know.

Council members and officials thought construction was to have started already on the 28 rental twin-homes and 6 single family units for sale.

But only streets, curb and gutter, underground water and sewer utilities, and storm water detention ponds have been built.

The council's Community Development Committee received a report on the project from Bruce Peterson, director of city planning and development services.

Peterson said he had been asked by council member Ron Christianson to update the committee. The project is located in the Second Ward, which Christianson represents. He's a committee member but was absent and fellow Second Ward council member Jim Johnson attended instead.

Peterson said landowner and project developer, Southwest Minnesota Housing Partnership of Slayton, has completed the infrastructure, but has moved no dirt for homes.

In correspondence, said Peterson, the partnership said it's exploring new financing sources. He said there were "some issues'' with the partnership's tax credits.

"As near as I know, there's no financing package put together than would allow for construction to begin at this time,'' said Peterson.

The tax credits to which Peterson referred were created by federal law in 1986 and provide incentives to use private money in the development of affordable housing. The partnership had planned to use tax credits to finance the $6 million project, according to partnership officials.

Johnson asked Peterson about the status of the $350,000 grant the city was to pass through to the partnership from the Minnesota Department of Employment and Economic Development for the project.

In June 2008, the city signed an agreement with DEED to pass the grant through, but the partnership was not to receive the money until home construction begins, according to City Administrator Michael Schmit.

The partnership paid $873,000 in cash for the infrastructure work last fall.

Peterson said the partnership has not responded to the question of how lack of movement affects the DEED grant.

"As I understand your remarks, there's no primary financing in place and no target dates we know of? It's just in limbo?'' asked Johnson.

"That's exactly correct. That's the message I've had delivered to me,'' Peterson said.

The last he had heard was the partnership was working through the Minnesota Housing Finance Agency to tap stimulus package dollars, but Peterson wasn't familiar with those programs for financing.

Peterson said the deadline date for starting home construction was part of the tax credit program that fell through. "That's probably why that source of financing disappeared,'' he said.

Committee Chairman Bruce DeBlieck said the partnership was to have the project substantially completed "as far as I understand'' by a certain date to get the tax credits. "It sounds like that financing has fallen through,'' said DeBlieck.

Peterson guessed the company that needed the tax credits probably had a deadline for when it could take advantage of the credits or the company may have just walked away from it and said it didn't want to wait and deal with it.

Johnson asked if there's been any talk of another developer buying the property.

Peterson said he has not heard any, but said it's certainly an option.

"Internally, we've speculated that may be an outcome as well,'' he said. "But as far as I'm concerned, you've got a platted piece of property that's got infrastructure to it that's wide open ... You could go in and put single- family homes on that property right now.''

The project had generated opposition last year from neighbors and others in town who felt the low-income project was not compatible right next to existing single-family homes.

In an interview after the meeting, Johnson said the partnership has been invited to answer some questions, but has not appeared before the council.

"It seems to be dead in the water right now. I think we should know (if it's temporary or not). I'd like to find out where this thing is going.''

David Little
David Little covers the Willmar City Council, Willmar Municipal Utilities and other city news.
(320) 235-1150