Council calls public hearing on proposed tax abatement for 54‑unit apartment project; MHFA grant decision pending

The City Council voted to call a public hearing to consider participating in a tax abatement for a proposed 54‑unit apartment project. Staff described four abatement scenarios and said the developer reports a $1.2 million financing gap that the abatement (and possible county and school participation) would help close. Staff noted a pending Workforce Housing Development Program (MHFA) grant application of approximately $1,498,000; the city expected notice of that award by Sept. 26 and said the abatement scenario would be adjusted if MHFA funds are awarded.

Staff described the “worst case” scenario presented in the packet (Scenario 4) in which a full abatement spread over 15 years could be needed if no MHFA funding is obtained; staff also explained ways the abatement agreement could be structured to cap annual amounts or shorten the term if valuation growth reduces the total pledge sooner.

Council members called for the public hearing (to be set for Oct. 21) so the city could finalize terms at the hearing once MHFA timing is clarified. Staff emphasized that tax abatement payments are returned from taxes collected and noted the city would not pay out more than it receives under a pledge structure.

Why it matters: The abatement could affect city tax revenues and how future property valuation growth is captured; it is also tied to external grant timing (MHFA) and to the developer’s financing assumptions.

Next step: Public hearing to be held Oct. 21; staff will present proposed abatement terms after MHFA funding outcomes are known.