Victoria council calls public hearing on TIF for 62‑unit Marsh Hollow apartments with 33 affordable units

The City of Victoria on Monday voted to call a public hearing and begin the statutory process to consider a tax increment financing plan for a proposed 62‑unit apartment project by Inland Development Partners in the Marsh Hollow area.

The developer’s proposal would include 29 market‑rate units and 33 units for households earning up to 50% of the area median income, council members were told. The council approved a resolution calling the development program for Municipal Development District Number 1 and a tax increment financing plan for Tax Increment Financing District 1‑10, sending the matter into the required public‑notice and hearing stages.

Why it matters: City staff and the developer said the TIF tool is intended to make the affordable portion of the project feasible. If the council later approves a TIF plan, property tax increments generated by the project — not the city’s general fund — would be used on a pay‑as‑you‑go basis to reimburse eligible project costs.

Community and Economic Development Director Jen Brewington introduced the application and turned the financial explanation over to Tammy Amdahl of Northland Public Finance. Amdahl described TIF as “the main public finance tool” for capturing increases in local property taxes to assist development and noted limits under state law, including that school referendum taxes are not captured by TIF.

Amdahl said preliminary terms show the district might be limited to a 15‑year maximum and that revenue from a housing district “must be used solely to finance the cost of the housing project.” She described the proposed reimbursement structure as pay‑go: the developer would finance construction and be reimbursed from tax increment as it is collected. On that point she told the council the city “would not be providing any front funds upfront; the pledge would be the increment that is available.”

City staff supplied preliminary financial assumptions: an estimated average annual increment of about $380,000, with the developer proposed to receive 90% of the increment for reimbursement of up to $3,000,000 of eligible housing development costs on a maximum 15‑year term. Staff presented a 15‑year example showing roughly $5.7 million of increment over the district’s life, with land acquisition estimated at about $2.2 million and site improvements about $1.2 million. The city may use up to 10% of collected increment to reimburse actual administrative costs, Amdahl said.

Tom Shafer, managing partner at Inland Development Partners, told the council the project team had completed market analysis and was working closely with staff. On unit mix he said of the 33 affordable units “4 will be alcove units…14 units are gonna be 1 bedroom…and 15 units are 2 bedroom.” Shafer also said Low‑Income Housing Tax Credits (LIHTC) and other state or federal sources exist but are highly competitive and would not, by themselves, enable the mixed market/affordable structure proposed.

Council members asked about the statutory minimums for housing TIF and how the city could require more than state law sets. Amdahl explained state requirements for rental housing TIF: either 40% of units at 60% AMI or 20% of units at 50% AMI; the developer’s application proposes the latter. Amdahl said the city could require more than the statute’s minimum in a development agreement but not less.

Several council members raised risk questions about feasibility and project performance; Shafer said the developer had done a market feasibility study and was relying on equity and financing structures to mitigate downside risk.

What the council did: Councilmember (mover not specified) moved to approve a resolution calling the development program and TIF plan; a second was recorded and the council approved the motion by voice vote. The motion calls the statutory public‑notice steps that must precede any final TIF approval.

Next steps and timeline presented by staff include notifying Carver County commissioners of the hearing on March 18, mailing the draft plan to county and school district on March 28, Planning Commission review and findings on April 1, a public notice publication on April 17, and a public hearing and possible resolution to establish the TIF district and approve a development assistance agreement on April 28.

The council’s action Monday starts the state‑prescribed process; it did not adopt final TIF terms or a development agreement. Those specific terms — including the final term length, reimbursement schedule, and precise dollar amounts — will return to the council at later public hearings.