Developers of the White Oak Estates housing project are getting a financial boost after the Baxter City Council voted Tuesday, May 7, to grant the property incremental tax relief status.
In keeping with its formal process, the council convened a public hearing on the matter. While a handful of people attended and observed, none spoke. In addition, the council voted to authorize an interfund loan for some costs, mostly administrative or retroactive building costs, that need to be accounted for once the building is in operation and its tax increment financing district status takes effect.
Supported by the St. Cloud nonprofit Central Minnesota Housing Partnership, White Oak Estates is an $6.8 million affordable housing project with a 20-unit apartment building and 20 townhome units on 6.6 acres on Grand Oaks Drive. The development is across the street from Sprucewood Townhomes.
"The building portion of the project is being funded through a number of sources," Finance Jeremy Vacinek said. "The primary one is tax credits through Minnesota Housing, the TIF component through the city is being utilized to show local support for the project."
Tax increment financing, or TIF, is an economic development tool used to help businesses offset the costs of redeveloping a site. Instead of paying higher taxes immediately upon completion of a new building, a business instead will use those tax savings to cover the costs of demolition and new construction. Often, these agreements come tied with stipulations, such as a requirement to offer affordable housing.
The White Oak Estates housing development is dedicated to individuals and families who make less than 60 percent of the area median income. Families at or below the 60 percent area median income earn between $9.62 and $21.87 per hour.
In terms of tax impact, documents pertaining to the TIF application state: "The percentage of the captured tax capacity upon completion to the county, city, and school district is approximately 0.05%, 0.43%, and 0.09%, respectively. The potential taxes are $16,923, $27,412, and $15,525, respectively."
Although, how the city and White Oak Estates definitively structure its tax relief rates for the TIF agreement over the life of the deal will be negotiated and finalized at a later time.
From its inception, White Oak has been intended to be safe and dependable housing specialized for people with mental illnesses. Representatives of the partnerships have proposed contracting with Nystrom and Associates LLC in Baxter to provide onsite support services.
On June 5, 2018, the council voted to approve the project's housing tax credit application with Minnesota Housing, the state's housing finance agency, on a pay-as-you-go basis with tax increment financing status. Tuesday's decision marks another step in the project's journey to be fully realized.
Reprinted from Brainerd Dispatch http://tiny.cc/blsg6y