Morris council approves TIF district to back 60‑unit apartment project

The Morris City Council on Aug. 12 voted to create a tax‑increment financing district to help finance a proposed 60‑unit apartment building that developers say would set aside 20% of its units for lower‑income renters.

City financial adviser Nick Anut told the hearing the housing TIF tool freezes a property’s base taxable value and directs taxes generated by increased value into a city TIF fund. Under the city’s proposed pay‑as‑you‑go arrangement, the city would remit 95% of the annual increment generated by the new property toward a TIF note that could reimburse the developer for up to $900,000 of qualifying project costs, Anut said. The project’s current pro forma estimates a total development cost of about $10.3 million and a post‑development assessed value near $5.5 million.

The developer’s representative, Samuel of Unique Opportunities, described the plan as market‑rate housing with amenities — in‑unit washers and dryers, an elevator that allows accessible units on every floor, underground heated parking, a fitness room and community space — and said local demand remains high. He said the TIF support is necessary to reduce the developer’s upfront equity requirement and to make the project feasible in the current financing environment.

Opponents raised transparency and accountability concerns. James Stoker questioned discrepancies between the plan document’s long‑term increment projection and the developer’s pro forma, and said the plan lacked sufficient numerical support. “This document is defective,” Stoker said in public comment, arguing that the plan does not explain what public dollars would be spent on. Resident Annette Watson said she opposed the redistribution of tax revenue that TIF can produce and said she did not view the area as blighted.

Anut acknowledged the different figures: the plan forecasts a higher long‑term increment because it applies a 2% annual inflation assumption over the district life, which can raise the long‑run capture estimate; the short‑term assessor estimate used in the financial analysis produces a lower annual increment figure. He also noted that HUD income limits and Minnesota statute govern eligibility for housing TIFs and that the proposal requires 20% of units to be affordable to households at or below HUD‑defined income thresholds (Anut cited approximately $36,000 for an individual and $51,500 for a family of four under current guidance).

Council members asked detailed questions about unit density, the project’s three‑story design choice, the 26‑year statutory maximum term for the TIF district and how early paydown would lead to descertification. Anut said that, depending on valuation and project performance, the obligation could pay off well before the 26‑year maximum; absent sufficient tax increment the city’s obligation remains limited to available increment and does not require up‑front general‑fund spending.

A council member moved to adopt a modification to the development program, establish TIF District No. 17 for the Morris Economic Development Project, adopt the TIF plan, concur in a development agreement and approve the elimination of two parcels from an earlier TIF district. The motion was seconded and approved by roll call vote with all recorded votes in favor.

What happens next: the adopted plan and development agreement set the framework for a pay‑as‑you‑go TIF note of up to $900,000 that the city would make available only after the developer completes the project, documents eligible costs and demonstrates compliance with affordability requirements. If the project is built and the increment is generated, the city would remit TIF revenues annually; if it does not generate the expected revenues, there is no obligation for the city to provide general‑fund support.

Speakers quoted or paraphrased in this story are included on the council’s public speaker list and spoke at the Aug. 12 public hearing.