The council delved into the details of the $13.5 million multifamily residential housing project. Rental rates for the units are expected to range from $1,025 to $1,500 per month, depending on size. The developer presented financial forecasts indicating that without some form of municipal assistance, they would not reach necessary financial thresholds such as debt coverage and cash-on-cash return. They argued that the project would not move forward without the requested assistance, which is also being sought from Rice County.

The council noted that the tax abatement being requested is less extensive and shorter in duration than typical requests, which often involve tax increment financing (TIF) over approximately 15 years. TIF requires developers to capture city, county, and some school taxes, necessitating income restrictions on a portion of the units. In contrast, the tax abatement sought for this project would not impose such restrictions, granting the developer greater flexibility in tenant selection.

The council considered three specific reasons for granting the tax abatement: increasing the city’s tax base while reducing reliance on single-family residential property taxes; enhancing business and industrial prospects by providing housing for new employees; and expediting the development process, which might otherwise stall. Although tax abatement statutes do not require a “but for” test to prove necessity, local policy mandates the developer demonstrate that assistance is needed for the project to proceed.

Concerns were raised about whether the tax abatement would place additional burdens on existing taxpayers. It was suggested that the project, designed to fit within existing neighborhoods and infrastructure, would not increase costs for services like fire or snow removal. Without the project, the tax base would not materialize, potentially offsetting any taxpayer burden. Questions also arose about the project’s impact on the city’s median income, which stands at $91,000, given the competitive rental rates.

Further scrutiny was directed at the potential future status of the housing, particularly whether it might transition to subsidized or Section 8 housing if it fails as a market-rate venture. While future developers might apply for subsidies, the current developer is pursuing tax abatement to avoid income restrictions.

Following this discussion, the council entertained a motion to approve Resolution 202501 concerning the tax abatement. The motion was made and seconded without further discussion. A public hearing on the tax abatement is scheduled for December 22nd, preceding any final decisions or agreements.

In addition to the tax abatement discussion, the meeting covered updates on city social media services. The current contract with Bre West Marketing is set to expire at the end of the year. A request for proposals (RFP) has been drafted and approved, with submissions due by December 5th. Staff will review the proposals and present recommendations to the council on December 11th, with possible interviews for selected firms scheduled for the week of December 15th. The council clarified that the city is not obliged to accept the lowest bid as this is a professional service.

The council also received updates on various development projects. Ongoing discussions are taking place regarding a daycare project west of Garfield, although no definitive information on financial assistance requests was available. The potential sale of property east of Garfield was examined, with hopes of continuing development in that area. The Bixby property project was noted, with wetland evaluations underway as part of the process.