New Ulm council approves three tax‑abatement actions to support local housing projects
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Summary
The council approved establishment or amendment of tax‑abatement programs for three local housing projects — M & D Properties (2229 N. Highland), SLD Properties (318–326 N. Broadway) and an amendment for Garden Terrace/Oak Hills — to help offset development costs and support housing supply.
New Ulm — The City Council on Tuesday approved three separate tax‑abatement actions designed to ease development costs on local housing projects, council members said.
City staff presented a public hearing and report on a tax‑abatement program requested by M and D Properties LLC for townhouse units at 2229 North Highland Avenue. City staff reported an estimated increase in market value of $1,914,900 from the project and a total city tax abatement of $164,251 payable over 10 years (about $16,425 per year). City staff advised the council that the program would be structured as a pay‑as‑you‑go reimbursement and that the developer would be responsible for any shortfall if tax revenues are insufficient.
John Nisley, city planner, presented a separate request from SLD Properties LLC for property at 318 to 326 North Broadway. Nisley said the proposed building footprint is about 6,500 square feet with three commercial spaces and roughly 32 parking stalls; the Brown County assessor estimated the project value at $1,524,700 and staff estimated the city’s annual tax‑abatement portion at about $19,776. Nisley said the applicant requested a 13‑year term to cover soil remediation and replacement of unsuitable fill on the site. Staff said first abatement revenue would be collected from taxes payable in 2028, with first reimbursement in February 2029.
Council also approved an amendment to an existing tax‑abatement agreement for the Garden Terrace New Ulm II LLC project (1011 North Garden Street) that Oak Hills Living Center will use for a housing project. Staff noted Brown County voted earlier the same day to participate in that abatement and that county participation would provide approximately $250,000 toward the project. The Garden Terrace amendment carries a 10‑year term and follows the abatement schedule used for the other projects.
Each item was approved after a staff presentation and a council motion; councilors voted in favor of the actions during roll calls or voice votes.
Why it matters: The abatements are intended to reduce upfront development costs for housing and encourage projects on sites that have been vacant or require significant remediation. City staff said the abatements are limited to the increase in property tax value resulting from the projects and are structured so the city reimburses developers only as tax revenues are received.
What’s next: Staff will finalize development agreements and tax‑payment (pay‑as‑you‑go) documents; the first potential city reimbursements for these projects will occur after taxes are payable in 2028, with payments expected in February 2029 for projects that generate the projected tax increment.
