Tax-Exempt Review Committee - August 25, 2020 Minutes
TAX EXEMPT REVIEW COMMITTEE
Fargo, North Dakota
Regular Meeting Tuesday, August 25, 2020
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 25, 2020.
The committee members present or absent are:
Present: Dave Piepkorn, Bruce Grubb, Kent Costin, Jessica Ebeling, Jackie Gapp, Jim Gilmour, Mike Splonskowski, Joseph Raso
Absent: Mayor Tim Mahoney, Jim Buus, John Cosgriff, Levi Bachmeier, Erik Johnson,
Commissioner Piepkorn called the meeting to order at 1:00 p.m.
Minutes Approved
A motion was made by Bruce Grubb to approve the minutes from the July meeting held on July 28, 2020. Jessica Ebeling seconded. Motion carried.
New Industry Application by AdShark Ventures, LLC
The site they had secured, fell through.
Rick Berg, CEO and co-founder of AdShark described the business as an e-commerce and league generation marketing agency that helps businesses grow through the use of digital platforms. They have been around for 7 years and currently have 17 employees. The business began in Fargo. They are looking for a lot that would be in the $800,000 range with a building to be approximately 10,000 square feet, preliminary estimates would be around the $2.8 million range. The new building would be built to their needs and allow them to recruit more employees.
Jim Gilmour said they are looking at going from 15 employees up to 46, but would probably add five employees in the first year. The property tax exemption would be approximately $27,000 a year.
Dave pointed out the starting wage is in the $20-28 an hour range and that is a positive.
Application for PILOT for Beyond Shelter, Inc. (Milton Earl)
Jim Gilmour stated the Milton Earl will be a low-income housing project that will be built on the corner of 7th Street and 4th Avenue North in downtown Fargo with 42 housing units. The city has strong support for this project, providing most of the land the project will be built on. Because it is low-income housing the rents are capped, if the full taxes had to be paid on this project there is no way they could pay the debt that is required for that.
Dan Madler, Chief Executive Officer of Beyond Shelter explained that this is a downtown affordable housing project that will serve Fargo’s flourishing community. In the past twenty years, Beyond Shelter has developed seven quality senior projects and will be closing on the eighth project this week. The average age of residents is 72 and average income is $17,500 a year which amounts to $8.41 an hour. The residents on average contribute 29% of their income for rent and average rent is $423 a month which includes everything but electricity. The vacancy rent is 2% in their properties. The tax credit program is used to bring private equity investment to the community of approximately $7 million.
Lisa Rotvold, Development Director of Beyond Shelter described the project as a 42 unit apartment building with 36 one-bedroom units and 6 two-bedroom units, the ground level will be a parking garage with access to 7th Street, along with a community room that will allow for programs such as Heart-N- Soul Community Café to come in. Beyond Shelter has a target community of households that are 60% of AMI or less. For the Milton Earl a single household income would make $37,560 a year or less and two-person household would make $42,960 a year or less. 70% of residents that currently live in Beyond Shelter communities earn 30% AMI or less. 15 units in the Milton Earl have been secured for rental assistance. One-bedrooms will run around $668 two-bedrooms will range from $475-827 depending on income targets.
Jim explained the longest the city can grant the PILOT is for 20 years. Dan said that they anticipate to convert over to the state PILOT after the first 20 years.
Jessica Ebeling moved to approve, the motion was seconded by Bruce Grubb. The motion carried.
Tax Exempt/PILOT Scoring System Discussion
Jim Gilmour has communicated with the Economic Development Corporation (EDC) about updating the scoring system. They talked about two things: Do we start to add some additional points for things that are important and are not really captured in the current system? Or do we go to a system that has a dozen goals and for example, eight of them would need to be met?
The first system would be more numerical and Jim suggested the following additional points:
• Jobs created in years 2-5
• Employee benefits in addition to salary
• EDC targeted industry or growth industry
• Business will make purchases from local sources
Joe Raso of the EDC stated that it is good to stay on top of the changing issues that communities face when making investments. There are two main points to start from: What do you want to put in to get the principle and the interest back. The second is looking at the competitive nature of the project. Looking at the numeric system and tweaking it is one option, there could be one like the TIF that is goal setting, or there is also the option of a hybrid with a numeric system and goals. Joe does caution against black and white decisions because there are always additional factors that mix into these decisions.
Jim will continue to work with Joe on scoring options and bring the options back to the next meeting.
Dave Piepkorn adjourned the meeting at 1:58 pm.