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Hallock housing committee to recommend tax abatement, TIF district to local authorities

By Anna Jauhola
The Hallock Housing Committee will recommend to the city and county the approval of a tax increment financing district and a tax abatement, both on the south side of town.
Robert Carr of Carr Construction, Hallock, began building a twin home in the southside addition in late 2019. He approached the city about a tax abatement to help with expenses for the property.
During the committee’s meeting on Wednesday, March 11, Jason Murray from David Drown Associates out of the Twin Cities phoned into the meeting. Murray said his numbers estimate the twin home will be valued at approximately $225,000.
“Say we locked that in for the city for 10 years of tax abatements and the max we’re going to pay out over 10 years is $33,000,” Murray said. “This projection gives you a guideline for that conversation.”
The twin home is classified as a multifamily housing unit and is taxed at 1.25 percent, Murray said. Currently, the building is only half-finished and the county has it valued at $115,000, he added, which is why Murray is working with a projected value. He said, using that $225,000 figure, the abatement would cost the city more than $33,000 over 10 years and the county just over $7,000 over 10 years.
“I have no issue with the projected value of $225,000, as long as in the first few years it didn’t jump up significantly,” Carr said. “Now we’re kind of banking on it helping for 10 years, but then the value may go lower and it only helps for five or six years. That’s where my concern comes in.”
Murray said as market values change annually and if the twin homes are valued higher, the city would pay off the abatement more quickly. If it goes lower, it’ll stretch out over the 10 years.
Carr was going to approach the city, county and school district, but Murray suggested – and Carr agreed – that the lower amount from the school district wasn’t worth pursuing.
“I think the committee needs to be comfortable with the length of the agreement and the potential amount of assistance,” Murray said.
The committee voted to recommend to the city council and the county commission to approve the abatement for up to $41,000 over 10 years. This will be done at the next city and county meetings. Should either entity not agree with it, one or the other can kill the abatement, Murray said.
The housing committee also discussed and chose to recommend to the city council to create a TIF district for the residential portion of the development on the south edge of town. There are 107 lots in the residential portion and the other lots, which line the first block along South Atlantic Avenue, are designated light commercial.
TIFs carry more rigid requirements, including public notification and public meetings, as well as providing the plan to the county and school district to review. By law they have 30 days to look at the plan, provide comments and ask questions, but ultimately the final decision in creating the TIF lies with the city.
These districts carry housing income limitations. Anyone can build within a district, but only qualify for assistance through the TIF if they make under $88,600 as a family of two or fewer and under $101,890 with a family of three or more.
Murray said if the city approves a TIF for the max of 26 years, and 52 homes are built there over that time, the city could capture as much as $13 million.
“We want to see these numbers high because if we miss and set them low and get activity, then we’re at capacity, at our TIF projection numbers,” Murray said. “Then we’d have to end up doing all this all over again.”
All money captured through a TIF district is put into a designated fund to improve infrastructure within the district – streets, curb, gutter, sewer, and so on.
The committee will recommend the city approve moving forward with the TIF at its next meeting on Monday, April 6.

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