A Twin Cities developer with a project planned for Albert Lea’s northwest corner asked the city council to consider extending the term of Tax Increment Financing from the customary 10-year period to 15 or 20 years.

Tuesday, April 24, 2001

A Twin Cities developer with a project planned for Albert Lea’s northwest corner asked the city council to consider extending the term of Tax Increment Financing from the customary 10-year period to 15 or 20 years.

TIF is a tool used by municipal governments to capture property taxes to offset development costs. A longer term of TIF assistance would allow for less money up front from the developer, said City Manager Paul Sparks. The difference between a 10-year term and a 15-year term is almost $90,000, he said.

But Sparks said a 10-year term, though not a written policy, is the conventional term of assistance for projects that aren’t more heavily subsidized or that don’t offer a higher percentage of lower-income units.

Sparks said the city does have a shortage of housing in the city, county and entire region, especially for affordable rental housing. A recent market study confirmed the local shortage, Sparks said.

Without the longer term of assistance, said developer Michael Swenson, the project is not economically viable.

&uot;We have to put in $600,000 cash, and our return is just not there,&uot; Swenson said.

Ed Tschida, the city’s TIF consultant, told the council that the cost of developing apartments in Albert Lea is almost as expensive as similar projects in the Metro suburbs.

&uot;There’s a considerable shortage of apartment complexes throughout the state and especially in rural area,&uot; Tschida said. &uot;The problem is that the cost of building here is not much different than in the suburban areas. At the same time, the rents are very different.&uot;

Swenson’s company, Michael Development of St. Louis Park, is planning to build a 50-unit apartment complex just west of Highway 13 with 10 units reserved for lower-income residents. Rents in the lower-income units would be approximately $525 for one-bedroom apartments and $600 for two-bedroom units plus electricity. This compares to $720 and $775 for market-rate housing, Swenson said.

Swenson is also building several for-sale homes, plus plans are in the works for two more 24-unit assisted living facilities creating a campus-like senior housing area.

The council opted to table the issue until its next meeting in May, giving the planning commission an opportunity to make a recommendation on the Swenson development at its Thursday meeting.

In other council news:

n Councilor George Marin proposed additional money for the Freeborn County Museum and Historical Village. The museum is trying to raise funds to pay for a new fire alarm and security system.

Marin said he has received several calls from constituents urging him to support the museum’s efforts to upgrade the fire and security systems. The project will cost more than $30,000.

The city appropriated $2,000 last month when approached by museum executive director Bev Jackson. Freeborn County also gave $10,000 toward the upgrades.

Marin moved to release an additional $3,000 to the museum, but his motion died for lack of a second.

n The council approved a construction bid of $98, 118. 50 for the reconstruction of Maplehill Drive, due to begin this summer. The Ulland Brothers bid was more that $40,000 less than the engineers original estimate.