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Cass County commissioners deny 20-year Fargo pilot tax incentive for downtown housing project
Summary
The board voted to disapprove a county participation request in a downtown Fargo housing pilot after debate over a proposed 152020to2020-year tax pilot, fiscal impact and financing assumptions. Developers and a financial adviser said the public assistance was needed to reach a viable debt-service coverage ratio.
The Cass County Board of Commissioners on Monday voted to disapprove the county's participation in a proposed downtown Fargo pilot tax incentive intended to support a low- and moderate-income housing project.
The developer's team described a complex financing stack that includes 4% low-income housing tax credits and a $3,000,000 housing incentive grant the state has approved. A county-contracted financial reviewer, Matt Schneckberg of Financial Advisors, told commissioners the project's debt-service coverage ratio (DSCR) is roughly 0.94 without public assistance and rises to about 1.3 with assistance, a level the consultant said would be acceptable to lenders. "With public assistance, we're looking at in, you know, maybe 10, 1.3 times," Schneckberg said during his presentation.
Supporters argued the project fits the county's policy on supporting low- and moderate-income housing. "I think this project, you know, does fit your new policy, in terms of being supportive of low and moderate income housing projects," a project representative told the board, noting the project also expects to accept housing authority vouchers.
Opponents focused on the proposed length of the county's tax pilot and long-term fiscal trade-offs. Commissioner Capitan said a 20-year pilot would reduce county revenue by about $114,000 annually and amount to roughly $2.3 million over 20 years. "I can't see myself voting for a 20 year pilot program," he said, and moved to disapprove the county's participation. The motion carried on roll call.
Key numbers and conditions discussed at the meeting included a one-bedroom rent example cited at $1,170, sponsor costs the developer listed at $14,500,000, a total uses line near $93.7 million and projected construction/permanent financing rates discussed in the 6% range. The developer and consultant also noted the state housing finance agency's review and the role of tax-credit equity in the project's capital stack.
The board did not adopt any alternative pilot term at the meeting; commissioners said staff and the developer could revisit the proposal. The county commission noted the city commission will review the project in the coming weeks and that school-district participation remained unresolved.
The commission moved on to the next agenda item after the vote; staff did not set a follow-up date for the developer to return with a revised request.
