WILLMAR - AEHM LLC, the developer of a new 24-unit apartment building at the Sunwood Apartment complex in Willmar, was granted a 10-year, 90 percent tax abatement for the new building.
The Willmar City Council approved the abatement 6 to 2, with Councilors Vicki Davis and Fernando Alvarado voting against the resolution. There was no public comment during the hearing prior to the vote at the May 6 council meeting.
"They (AEHM, LLC) state the project can not support itself without the tax abatement from the city," City Planner Sarah Swedburg said.
The abatement is for the new taxes only on the new building, not the two buildings which are already part of the complex near Ridgewater College in northwest Willmar. This abatement means the city will give back AEHM 90 percent of the property taxes it pays on the new apartment building for 10 years, totaling up to $87,000 over the decade.
The council decided to pass the resolution without a contingency that Kandiyohi County must approve it as well. Unlike a tax increment financing district that requires approval of all taxing authorities, tax abatement approval is granted individually by the city, county and school district. The city can decide to approve its abatement, while the county and school can decide against abating taxes.
"We can approve and the other two can choose not to. By statute that is perfectly allowed," Swedburg said.
A tax abatement for a residential project is rare, but not unheard of or unallowed. The city's tax abatement policy allows for such projects and the city has approved at least one other - the mobile home park near MinnWest Technology Campus.
In the AEHM case, an abatement made more sense than a tax increment financing district because the parcel of land in question is landlocked and already significantly developed. Much of TIF money has to be used for development costs.
"Tax abatement has less of those restrictions. This development could fully take advantage of the tax abatement," Swedburg said.
AEHM is also known as Suite Livin' and has purchased many apartment buildings in and around Willmar.
"They own several hundred units across town," Swedburg said.
The company purchased the Sunwood complex and has made improvements to the two current buildings over the last several months. The Sunwood Apartment complex was originally planned to have three buildings, but the third was never constructed. AEHM decided to not only build the third, but double the size of it from 12 units to a 24 unit building. The Willmar Planning Commission gave its permission for the increase.
Twenty-three of the 24 units will be three-bedroom apartments.
"This building is really geared toward families," Swedburg said.
A housing study showed a need in Willmar for larger apartments in the city, a need AEHM is trying to fill.
"It is a need in our community. It is a need Mr. (Gabe) Olson and his company are bringing to the table for a partial solution to the issue," Willmar Mayor Marv Calvin said.