Commission approves IRB for 827 Morrow workforce housing; abatement tied to performance

The Manhattan City Commission on Monday approved a performance-based industrial revenue bond (IRB) arrangement and authorized an economic development agreement to support a workforce-housing infill project at 827 Morrow Street. Both measures passed 4-1.

Stephanie Peterson, director of community development, told the commission the request is structured as a pilot-style property-tax abatement that would apply only to incremental value created by the new housing and would be paid only if the project meets investment and lease-rate conditions spelled out in the development agreement. The motions carried with one commissioner voting no on each item; the no vote was recorded by Commissioner Adamczyk.

Developer Zachary (Zack) Burton, who with his wife is the applicant, said the planned project is an infill workforce-housing development with a total investment of roughly $900,000. Burton said the city's independent cost-benefit consultant (Municipal Consulting LLC, engaged per bond counsel) produced a fiscal analysis showing substantial returns to taxing jurisdictions: he cited a city return rating of 2.46 on the consultant's scale (above the 1.3 threshold the consultant used as a baseline) and called the projected local return a strong outcome.

Under the agreement in the packet, the property’s current assessed value is about $140,000 and the site currently generates roughly $2,300 in property taxes annually. The proposed IRB abatement is performance-based: developers are placed into a bracket determined by total eligible investment, and then each year the abatement percentage depends on the number of units leased that meet the adopted workforce rent definitions. Staff told commissioners the agreement includes a prohibition on operating the units as short-term rentals; the pilot payments to taxing jurisdictions were shown as roughly $2,500 in year one and increasing by 4% annually in the packet examples.

Commissioners asked about administrative burden for annual certification and staff said the city would review leases and supporting documentation to confirm lease levels and compliance with workforce rent ranges. Staff also noted that, unlike some grant or abatement programs requiring county participation, the IRB decision is made by the commission under local policy; the county is not required to approve the IRB.

Votes at a glance: - Resolution determining advisability of issuing IRBs for 827 Morrow Street (Zachary & Michelle Burton): approved 4-1. - Authorization for the mayor and city clerk to execute the economic development agreement for the project: approved 4-1.

The developer, the city and bond counsel will finalize the development agreement language and metrics before any abatement is applied; staff said taxes are not reduced until the developer meets the initial investment threshold and annual lease performance metrics in the agreement.

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