ALEXANDRIA – A 54-unit apartment complex for residents 55 and older will receive tax breaks from the city, but only for 13 years, not the 26 years requested by the developer.

At its meeting Monday, the Alexandria City Council approved a tax increment financing plan that will provide developer Sampson Properties, LLC of Lincoln, Nebraska, $1,071,954 over the 13-year TIF term – less than half the $2,420,069 it had requested.

There was no discussion as to whether Sampson Properties would proceed with development.

When the council met as the Alexandria Economic Development Authority (EDA), Roger Thalman said the developer had failed to prove the project would not be viable without TIF. He made a motion to reject the 26-year TIF plan, but his motion failed in a 3-3 tie. (The EDA’s voting members include all five council members and the mayor. At council meetings, the mayor votes only in the event of a tie.)

EDA member Andrew Wiener made a motion to support a 13-year TIF period and it passed by a vote of 4 to 2. When the council reconvened a few minutes later, it voted 4 to 1 to accept the 13-year agreement.

The property is located at 716 Darling Ave., east of Lake Agnes. The project’s two buildings encompass 68,232 square feet and include a fitness facility, community room, pet areas, recreation areas and at least 74 parking spaces.

The $14.1 million Trailside Apartments project will include two buildings and a mix of studio, one- and two-bedroom apartments. It will also include a common room, a shared kitchen, outdoor recreation areas, pet areas and a guest apartment.

In its TIF application, Sampson Properties requested to receive TIF over a 26-year period to pay for construction costs, financing costs, land acquisition, site work, utility hookups and other expenses. The property previously contained buildings that were removed by the developer. The property is currently undeveloped.

All units would be intended for seniors aged 55 and over.

At least 20%, or 11 units, would be occupied by renters whose income is 50% or less than the area median income, and 40%, or 22 units, would be for renters whose income is 60% or less than the area median income, representing annual household incomes ranging from $34,000 for one person to $58,260 for a family of four.

In the TIF application, the developer stated that Alexandria’s 2023 housing study showed a shortage of housing, particularly affordable rental housing for those 55 and older.

“This project will help achieve this public goal of affordable housing,” the developer said. “The site is highly accessible and visible not only to Alexandria residents, but also to people in the surrounding areas. Overall, the site would be very attractive to renters, particularly seniors, currently living in Alexandria and the surrounding area who are looking for housing that is within walking or driving distance to shopping, services and healthcare.”

The council held a public hearing on the TIF request on Monday. Byron Peterson, who has lived in Alexandria since 1950, urged the council to reject the TIF request. He asked where the tax money from the TIF goes and said increased property values ​​do not appear to have an impact. He said developers are getting “free money” from the TIF.

Peterson said rental housing costs are out of control.

The project was originally presented to the city in February 2020. The original plan called for the construction of 75 residential units, but was changed to 54 residential units.

The city is not issuing bonds to finance the project, so there is no impact on the city’s credit rating, according to City Manager Marty Schultz.

The current market value of the property is $212,800 and the property tax is $2,700 per year.

According to Nicole Fernholz, director of the Alexandria Area Economic Development Commission, TIF is a flexible economic development tool that uses the increased property taxes generated by a new real estate project to finance the costs of that development.

In Minnesota, TIF is used for two basic purposes:

• Bring about or cause a development or redevelopment that would not otherwise take place.
• To finance the public infrastructure related to the development (roads, sewerage, water, etc.).

Minnesota allows several types of TIF districts, the most common being economic, redevelopment and housing districts.

Before establishing a district, the council must submit the proposed plan and the estimated financial impact of the district to the county auditor and the superintendent of schools. Their panels then provide a description of any impacts the district could have on public services (police, fire, public infrastructure) and the school district. After a mandatory public hearing, the proposed district must be approved by the council.

Taxes paid at that time will continue to be distributed to the city, county and school district as was the case before the TIF district was created. The city collects a portion of the newly increased taxes generated by the development – the increment – and uses it to pay for certain development costs.

In this case, the developer applied for TIF due to rising costs, including rising interest rates and building materials.

In the last 10 years, the city has approved 10 residential TIF districts (length of TIF district is in parentheses): Deer Ridge – 24 units (26 years), Unique Opportunities – 36 units (13 years), Lakewood Terrace – 18 units (13 years), McKay Project – 94 units (18 years), Rosewood Project – 48 units (13 years), Central Lakes Workforce – 36 units (26 years), Broadway Garden Estates – 120 units for those 55 and older (13 years), Habitat for Humanity’s Summer Meadows – 42 single-family homes (26 years), Twenty08 Housing – 64 units (26 years), and Herzog Redevelopment for 374 housing units (18 years).

The TIF application states that the Trailside Apartments would add approximately $10.8 million to market value and create one full-time and one part-time job. Construction must begin by December 31, 2024, and be substantially complete by December 31, 2025, according to the TIF agreement.