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Council approves 9-year TIF for Riverchase 2 project to enable housing development
Summary
The council approved Resolution 2026-099, authorizing a 9-year tax-increment financing arrangement to support the Riverchase 2 residential project. Staff and the developer said the TIF is needed to meet financing and market constraints.
City staff and a developer representative told the council the Riverchase 2 project requires financial assistance to be feasible. Staff said the local rental market vacancy is roughly 2.5% with affordability vacancy around 0.5%, and that the developer requested a 9-year TIF capture to make the project financeable under current interest-rate conditions. The city explained that TIF redirects new value created by the development to repay the developer within a prescribed period; if taxes increase and the increment pays off earlier than nine years, the arrangement would end sooner.
Ryan Nollater of Hamilton Real Estate said the company had completed prior projects in Faribault and that higher interest rates had increased debt-coverage requirements; without the TIF the developer did not expect to proceed. Council approved Resolution 2026-099 following the public hearing; staff noted two supporting letters had been received from local employers with more than 50 employees.
Councilmembers asked staff to list the businesses that provided letters and raised standard questions about access and traffic for the new complex (one entrance on Riverchase Court, potential center-turn lane on Willow suggested). The resolution was approved by voice vote.
