WILLMAR - To help move the construction of new 24-unit apartment building at the Sunwood Apartment Complex near Ridgewater College forward, developer AEHM LLC has requested the Willmar City Council consider approval of a 10-year tax abatement for the project.
Gabe Olson, of AEHM, explained that with rising construction costs, the project would probably not be possible without assistance from the city.
"Construction costs are pretty high," Olson said. "Without the abatement, it would be pretty hard."
A tax abatement reduces the amount of taxes a property owner has to pay for a specific amount of time, to assist with economic development or housing projects.
The Community Development Committee heard the request at its Feb. 25 meeting, one of the first steps in the process. The committee approved a motion to continue exploring the requested abatement.
Information still needs to be gathered, including the amount and duration of the abatement, before it would reach the full City Council for an up or down vote. A public hearing is also mandatory and held before any final vote.
"The application that was submitted does have some holes in it. There are things we will need to request" from AEHM before the public hearing will be held, said Sarah Swedburg, interim Planning and Development Services director.
The matter is on the Willmar City Council agenda for consideration during tonight's meeting.
Kandiyohi County and the Willmar School District would also have to approve the abatement.
The abatement, if approved, would be only on the taxes generated by the new construction, not the current structures on the site, Swedburg said.
AEHM, which owns the Suite Livn' apartment buildings in Willmar, purchased Sunwood last year. The Planning Commission gave AEHM permission to construct the 24-unit building, an amendment to the original 1976 plan which called for three 12-unit buildings. The third building was never constructed.
As part of the Feb. 25 discussion, the committee reviewed the city's tax abatement policy, which was approved in 2013. The policy lays out the criteria for an abatement. The city has approved housing tax abatements in the past, the most recent for the Willmar Regency mobile home park near MinnWest Technology Campus.
"Our guidelines are stricter than the state," Swedburg said.
The construction of a new building at Sunwood seems to meet several of the housing project conditions in the policy, according to testimony from Olson, including to provide a diversity of housing, promote affordable housing and promote neighborhood stabilization and revitalization by upgrading the existing housing stock.
"There is a huge demand for housing in Willmar. We have stacks and stacks of waiting lists," Olson said.
AEHM has already put tens of thousands of dollars into the renovation of the two current 12-unit buildings, built in the late 1970s, Olson said.
"We are putting a lot of money into them," Olson said.
Suite Livn' rents its apartments at market rate.
"Our mission is workforce housing," Olson said. "People can afford us, families can afford us."
Olson said he wants to work with the city on the project, and coming to the city for financial assistance was his first choice.
"When they see the need, they are going to do something about it. They are more willing to move at a relative speed," Olson said. "When you have a city and council that see a need and take action on that, those are people I want to work with on that."