Tax-Exempt Review Committee

Boards, Commissions & Committees

Tax-Exempt Review Committee - August 28, 2018 Minutes

Regular Meeting Tuesday, August 28, 2018

The August meeting of the Tax Exempt Review Committee of the City of Fargo, North Dakota, was held in the City Commission Room at City Hall at 1:00 p.m., Tuesday, August 28, 2018.

The committee members present or absent are:
Present: Dave Piepkorn, Mayor Tim Mahoney, Bruce Grubb, Kent Costin, Jim Gilmour, Robert Wilson, Erik Johnson, Jackie Gapp, Mark Lemer
Absent: Chuck Hoge, Jessica Ebeling, Jim Buus
Others Present: Kati Wilcox, Mike Redlinger, Dan Madler

Commissioner Piepkorn called the meeting to order at 1:00 p.m.

Commissioner Piepkorn began by thanking those who attended a special meeting with the Cass County Commissioners. He would like to see these meetings continue, with the school board in attendance as well, to increase the efficiency of the application process. Mark Lemer suggested a standing meeting at the county with the option of cancelling if necessary. Robert Wilson stated he would move forward with the idea.

Commissioner Piepkorn asked for clarification as to whether this meeting was formal, and if those minutes require approval. Ben Hushka said this was an informal meeting; however, minutes are attached to today’s agenda packet.

Kent Costin made a motion to approve the minutes from the meeting held July 24, 2018. Bruce Grubb seconded the motion, which carried.

PILOT application by James Pladson & Austin Morris, representing Dakota Beach Capital LLC, for a University mixed Use zoned apartment project
Jim Gilmour introduced the PILOT application submitted by Dakota Beach Capital LLC for a 16-unit apartment building that would replace two homes at 914 and 918 15th Street North. It is consistent with university mixed-use zoning. The requested tax exemption would be 100% for the first five years, and 50% for the following five years. The conditions of the “but-for” test were met. Mr. Gilmour invited James Pladson and Austin Morris forward for comments and questions.

Mr. Morris explained he agrees with the findings of the “but-for” test, however he does not believe this project would produce over a 10% return without a PILOT, while the “but-for” test showed 11.5% without it. Mr. Morris believes this exemption is necessary for completion of the project, which will produce affordable housing near NDSU.

At Commissioner Piepkorn’s request, Austin Morris explained that rents would vary between $850 for an efficiency apartment and $1125 for a two bedroom, two-bathroom unit. This fits the guidelines for non-cost burdened housing. Without the PILOT, higher rents would be required.

Mark Lemer asked if there was an agreement between the city and developers that would ensure developers are upholding to standards of low-income or affordable housing after approval for an exemption. Jim Gilmour stated this is an issue handled by the market itself. The area in which this project is located will not allow for any higher rents.

Kent Costin inquired about the length of financing on the project. Austin Morris explained a 20-year mortgage is standard; however, a 25-year mortgage is necessary to make this project work. This is becoming more and more common.

Mayor Tim Mahoney asked about the assumed vacancy rate, which is about 6%. The average for the area is 9%.

After feedback from Austin Morris regarding his work with PFM on the “but-for” test, Mayor Tim Mahoney made a motion to approve the application, which Bruce Grubb seconded. The motion carried.

Update on recommended revisions to TIF policy
Jim Gilmour stated he completed some of the recommended changes to the policy, providing language clarifications as suggested by developers regarding downtown and lower income apartments. The application process and recommendations are now more streamlined with increased focus on the Tax Exempt Review Committee only, versus multiple meetings with various boards. Kent Costin agreed this was a positive change due to the reliance on “but-for” testing and the Tax Exempt Review Committee being more visible to the community than other boards. Mr. Gilmour also updated the policy to state application deposits are now calculated on a schedule, versus a flat $5,000 fee.

Commission Piepkorn also thanked Jim Gilmour for presenting the Tax Exemptions Summary to the Cass County Commissioners, stating the information Ben Hushka provided him was beneficial and would like to see that utilized again. Mr. Gilmour offered to walk through those slides when bringing the full policy to the City Commission, as well as the school districts if there is an interest.

Mr. Gilmour would like to have the new TIF and PILOT policies turned over for a 30-day public comment period, following up at the next meeting in September, then bringing the changes to all City Commissioners for approval in October.

Bruce Grubb made a motion to publicize the proposed policy changes for comment, as well as presenting the Tax Exemptions Summary to the school boards. Kent Costin seconded the motion, which then carried.

The meeting adjourned at 1:50p.m., Tuesday, August 28, 2018.