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New Ulm council OKs staff review of tax-abatement request for 2229 N. Highland Ave.
Summary
The City Council voted to ask staff to prepare a tax-abatement program analysis for an eight-unit townhouse project at 2229 North Highland Avenue, including retaining David Dron Associates for projections at a cost not to exceed $1,500.
The New Ulm City Council on Tuesday voted to receive a request from M and D Properties LLC and authorize city staff to prepare information on a proposed tax-abatement program for a planned eight-unit townhouse project at 2229 North Highland Avenue.
City staff described the site and the developer. "You received the communication from M and D Properties LLC and they've requested the establishment of a tax abatement program for a project at 2229 North Highland Avenue," (Mr. Schnoebrik, city staff). The owners of M and D Properties were identified in the staff report as Dale Buschert and Mike Kroll.
The council was told the parcel is in a high-density residential (R-4) zoning district, measures about 2.44 acres and that the building permit valuation for the project is $1,300,000. Staff said the building permit shows an eight-unit townhouse development, each unit two bedrooms, and that the units include a one-stall tuck-under garage. City staff said property to the north is city park property and that sizeable vacant land remains behind the project site.
Why it matters: staff said the applicant wants tax-abatement assistance "to help ease the excessive cost of building to allow rental rates to be affordable to the residents of New Ulm and individuals looking to become a resident of New Ulm." Tax abatement would rebate a portion of property taxes to the owner to offset development costs, staff said. City staff noted New Ulm has used tax abatements for industrial and commercial projects in the past but has not previously established a residential tax-abatement program.
Council discussion and next steps: staff requested authorization to retain David Dron Associates to prepare valuation projections and related information at a cost not to exceed $1,500; staff also noted the city charges a $4,000 fee to establish a tax-abatement program. "At this time staff is requesting authorization to retain the firm of David Dron Associates to prepare projections and other associated information on a tax abatement program for this project at a cost not to exceed $1,500," (Mr. Schnoebrik, city staff).
A councilor asked about likely abatement terms. "That's ultimately gonna be a decision of the city council. The maximum term for a tax abatement program is 15 years. What we have seen, in other communities is that for residential properties, generally, the number of years is lower," (Dave, consultant). Council discussion indicated terms could be in the five- to 10-year range and that the council would examine market-value estimates and related projections when staff returns with more information. One councilor said they were "leaning towards kind of a lesser term," citing construction and sales timelines.
The council approved a motion to receive the communication and authorize staff to prepare the tax-abatement information; the motion passed by voice vote. Staff will return with valuation data, a proposed program and a draft development agreement and a future public hearing would be scheduled once those materials are prepared.
Ending: The staff report said establishing the program and the development agreement will be brought back to the council for review; the report also noted that the city has six existing tax-abatement programs (industrial) and one pending commercial abatement but no prior residential abatements.
