Council approves TIF for Sybesma Addition housing project

Luverne City Council members approved a Tax Increment Financing (TIF) district for the proposed multi-family housing project at their regular meeting June 27. 
The project in the Sybesma Addition would have 30 mixed income, two-story townhomes built along Highway 4 west of the current Rock Creek Townhomes on Oak Drive. 
The four-structure development would provide
two-, three- and four-bedroom townhomes, each with an attached garage and an in-unit laundry. 
The Southwest Minnesota Housing Partnership (SMHP) is proposing to develop, own and asset manage the development, just as it does the existing Rock Creek Townhomes.
The SMHP is applying for funding through the multi-family consolidated request for proposal and for housing tax credit programs. 
According to Luverne City Administrator Jill Wolf, in order to apply for the funding mechanisms, the project is required to adhere to income limits of 50 to 60 percent of area median income. 
In addition to the funding options, the housing partnership asked the city to sell the land for $1 and to create a TIF district in order to make the project financially feasible. 
The way tax increment financing works, the new owners of the bare lot will pay full taxes on the improved property, but the difference between the current tax amount and the new tax amount will pay down the TIF debt.
After the TIF expires, in this case 25 years, local governments will benefit from taxes paid on the full value of the developed property.
Wolf said the TIF housing district would help pay for the infrastructure and is expected to generate around $99,000 in tax increment financing over 26 years. 
“What a great project for the city of Luverne,” said Luverne Mayor Pat Baustian. “There's always a waitlist out at the Rock Creek Townhomes, so this is needed.”
Wolf told the council the city’s recent housing study identifies a need for the proposed housing project. 
“The housing study did show a need for 33 units at that 50 to 60 percent of area median income level,” Wolf said. “This (project) would be 30 units so it would just about meet that need.”
The SMHP has indicated it plans to apply for the funding in July and will find out this fall if the Luverne project is accepted. 
If the application is denied this year, the partnership intends to apply again for funding next year.
If approved this year, construction on the housing project could begin in 2024.