And, moving to our, EDA meeting. I will call the meeting to order. We have no organizational business on our consent agenda. We have the minutes from, the August 11 meeting. Is there a motion to adopt the consent agenda? I'll move approval. Second. Moved, by council member Keane, seconded by council member Palmer. All in favor all in favor, say aye. Aye. Any opposed, say nay. Moving on to our public hearings. We have one public hearing, which is establishing Development District Number 86 and tax increment Financing District Number 86 Dash
1 and entering into a development assistant agreement with Rochester Lowertown Apartments LLC. Mister Senby. Good evening. Again, I guess, I get to bookmark the public hearings this evening. So, what we have before you this evening is the establishment of a tax increment financing district and ask asking for the EDA council approval to enter into a development assistance agreement for the lower town project. So here's the slide before you kinda shows some pictures of the the block.
I'm digging. Oh, it doesn't bend up. There we go. And the slide before you shows the bottom is a rendering of the potential project to be located, on the site with the pictures above showing what the block used to look like before the homes were removed in 2024. The project details, the developer is Rochester Lower Town Apartments LLC located between Eighth And Ninth Street Northeast, West Of First Avenue Northeast. The development is a five story 133 unit apartment building, with 66 of units restricted to individuals at or below the income area median income
of a 120%. Amenities include below grade and surface grade parking, fitness room, club rooms, and a roof deck, roof top deck. The building on the east side along First Avenue does have some walk up units as you can see in the rendering in the upper right hand corner. The timeline for the project would be, would then begin construction by June 2026 and completed by 12/30/2027. This is, this is a redevelopment TIF district, so it's not a housing TIF District. The city uses three
house three TIF districts that the city typically uses. One is a redevelopment district, the other one is a housing TIF district, and the other one is the Economic Development District. This one is being done as a redevelopment district since the properties on the site were blighted. And last year, the EDA adopted a blight study for the for the site itself. The area shown on the slide, the area in red is the approximate location of the, TIF District boundary. That that's where the apartment building would fall. And then just to the north of that red line, the developer is proposing to build 10 units of townhouses on that area.
The current estimated property value within that TIF District is about $1,300,000. And, upon completion of the project, the county assessor's office has estimated that the project will have a market value of about 24 point $27,400,000. So it's important to note out that when the TIF District is created, the taxes that that property is generating today is still collected and distributed to the school, the county, and the school the city of the school in the county.
And then the increment that the project generates based off the project being be built there, that difference is collected and, generally, it goes back to the developer. In this case, the city would collect 5% to cover administration expenses, of the district. 90% would go to the developer and 5% would go into our up pool TIF bucket, that we would pool the increment over the life of the district and that the city could use those dollars for affordable housing measures within the community. The last time the city used pool of increment through this would be for the
Restoration Glen project, which is off of Monroe Road. This would be as a, be done as a TIF note, would be a pay as you go TIF note. Basically, the burdens is on the developer to pay the taxes. And, basically, those taxes gets rebated back to the developer minus the current valuation that's existing there now for taxes and then minus the 55% for admin and the 5% for the affordable housing. Based on the development assistance agreement for the project, staff is proposing that the the amount of assistance is just about $3,900,000
in principle. It's estimated that it would take about twenty years to pay back that TIF note. That is in principle. So include principle and interest over that twenty year life of the TIF district. Some of the projects of or benefits of the project, it would be a kind of a mixed income housing project where, 66 of units would be, restricted to individuals earning ads or below a 120 of the AMI. It advances multiple goals. It's redeveloping a blighted property. His council members correctly in those what the block used to look like,
a number of homes were were boarded up and with number of complaints about those properties. It's increasing density in the lower town neighborhood, especially along a primary transit network along, North Broadway. It's strengthening neighborhood safety, and then the tax base is growing, granted that the taxes will be captured during the life of the test district. But once that test district is decertified, the city is capturing all that, increase in tax base, not just for the city, but also for the county and the school district.
As previously mentioned, half the there's 66 of the units will be restricted to a 120% AMI. Let's do the slide in here to show you what that, is. So basically, I have one person that is about a $105,000. Would point out, like, a two person family is about a $120,000. So if you think about, you know, professionals, teachers, nurses, police officers, if you have a married couple, they're probably pretty close to that 120% AMI level for a two person family. So the action request to action this evening is the adoption of a resolution that
establishes the TIF district and then authorizing the execution of the development assistance agreement, for the project. The developer is in the audience, and I believe he will speak during the other comment period. Thank you, mister Spindy. Is the applicant or representative of the applicant here. Please step forward, state your name, and then and we will discuss your project. Awesome. Thank you. Good evening. My name is Dirk Erickson with Stack Development. We are excited to bring this project, our second project to Lowertown. We feel that it's gonna be a great asset for the community,
for the Lowertown neighborhood, be on the TOD Corridor, bring new housing, bring in different types of housing that were there, and add additional multifamily properties to the city. I have the architect here as well, if there are any additional questions for that. We may have questions after the public hearing unless you have a statement to make at this point. I'm concerned. Yeah. You may be seated. We'll call you back after the public hearing. Thank you, council member Fredericks, for turning my mic on. This is a public hearing. Anyone wishing to be heard on this item,
please step forward. Please state your name, and, you have five minutes. Hello. Thank you, council president Schubert. My name is Benjamin Zastrow. I'm president of the Lowertown Neighborhood Association, and I support, this ask tonight. This looks like a fantastic project for the neighborhood. As you know, it was a very troubled area before. It was was quite miserable, I would say. The developer stack has been fantastic so far, even, going so far as to leave the trees up on that that lot, giving us kind of a year, year and a half of some serenity, some peace to kind of recover from what was going on.
They've been fantastic, anchors in the neighborhood on the South End with Brick, their other project. So I just I really support this. I think it has a lot of positive externalities as well. We'll see probably a 100 plus workers that will shop at our businesses. They'll buy ice cream cones, Philly cheesesteaks, banh mi's, all the great things going on in the neighborhood, hopefully fill up at, the gas station there. And then a 133 households that will shop in the neighborhood and also, be within walking distance to the new Silver Lake pool facility.
So I just see a lot of positive upside here in this, the the potential deal to support this project. So thank you. Thank you, mister Zastrow. This is a public hearing. Anyone wishing to be heard on this item, please step forward. This is a public hearing. Anyone wishing to be heard on this item, please step forward. Seeing, no one, I will close the public hearing and invite our applicants back up, to, make any closing comments. No real closing comments, but I appreciate you guys taking the time to look at this and look forward to the outcome. Thank you.
I'll open up to council members for questions. Council member Keane. First question just for staff. I'm I'm a little surprised that maybe I don't have the numbers right, but it appears that there is a $40,000,000 project that's going to assess at at about 70% of that value when it's built. Does is that common? That's common. Yep. If you yep. It's pretty common that the it's the projects are being assessed about 70 to 75% of construction cost. Okay. Alright. Thank you. And then, again, I just wanted to go back to the,
you you brought your architect with is I just wanna give her a chance in case there's anything that is unique that we should take into an advisement on this project. And please state your name, before you speak. Yeah. Mary Barnett, with Urban Works Architecture. You know, we we've had a a great joy working on this project with Stack. It is our first project with them. We feel that they bring a really good light and a good refreshing feel to multifamily housing. They they truly care about what they're putting in here. That was one of the first things that we were we were that we talked
about when we met, was how can we bring a building to this neighborhood that really reflects a healthy living environment, giving back to our community. It's not something we hear from all the developers that we work with. So, yeah, we're we're very excited for the project as well. A 133 units varying from studios to one bedrooms to one bedroom plus dens, two bedrooms. I think it's giving the neighborhood a good variety. A 114 parking stalls. We don't always get that 85% rate of parking. Again, we work with a lot of people that are trying to minimize that as much
as possible and not give that back to their residents. And then a great, you know, a great amenity package for the people living here, and really, you know, giving them a healthy place to live, fitness centers, bike spaces. You know, a a winter garden has been discussed of, you know, how can we bring that the support our cold Minnesota winters, into a a place inside. So Okay. Those are kinda some of my main features. If there's anything else, I'm happy to, answer. Thank you. Yeah. Council member Wall. Thank you. My, question is for mister Svendi, and you were on the precipice,
I think, of, helping to dispel some kind of community notion about TIF, which is not an, easy concept, I think, for a lot of people. How would you, answer someone who says, why is the city giving $3,900,000 to a developer and raise my property taxes? First of all, it's it's not raising property taxes because this the taxes that the property is currently generating is still captured and still gets distributed to the three entities. It the taxes that the property will pay once the property is developed is being paid
by the developer, and those property taxes are are being rebated back to the developer. And then, eventually, once that TIF is or once the sales obligation is met and paid off, and then that full valuation comes on to the tax rules creating, additional taxes that is being captured by the three entities. And is it actually a benefit to the community? Benefit to the built community. It's providing housing, much needed housing, as shown by the, recent Maxwell study. So this is helping filling that need in the community. And something that's assessed at 27,000,000
in 2028 is not likely to be assessed at '20 at, 27,000,000 in 2048. No. It's it's projected to increase, one would think over time. The projection that I ran, I ran as a flat rate over 20, so more than likely that this dis or this district will be decertified before the twenty years Mhmm. Is up. So based That's why I suppose that the value increases every year. So The real risk is, you know,
if some, magic developer came in and put in, 9, half million dollar houses, with no ask of TIF, Of course, that would add to the tax base in in year probably two, but that's not likely to happen. Not likely to happen, and this is a much better use of the property by creating the density at that site to help support the businesses along North Broadway. Thank you. Very good answers. Okay. Council member Palmer. Yeah. Go ahead, council member. I'll make a motion adopting a resolution establishing a tax increment financing district through approval of Economic Development District Number 86 and the tax increment financing district plan number 86
dash one. Also, authorize the execution of a development assistance agreement with Rochester Lowertown Apartments LLC for tax increment financing district number 86 Dash 1. Second. Moved by council member Palmer, seconded by council member Keane, council member Palmer. Well, I'm I'm I'll just kinda go off what mister Wall was saying in in in the city of Rochester has used very little of their TIF, ability. It's a great wonderful program. Sometimes people don't understand it. If you had walked in that neighborhood, a year and a half ago, you would be dismayed at how bad it was. And,
the neighborhood, put up a lot of, grief that they shouldn't have had to do, but the buildings are down, and this developer has purchased this property and, has done a very good job of of of working with the neighborhood. So I'm I'm glad for that. Council member Fredericks. Just wanna thank the city. Council member Keane. Yeah. I'll I'll stay. I just spent a little bit of time on this one because this is one where we are giving a fairly, you know, near 10%, of the product development cost. And that idea of affordable housing, we're really getting workforce housing up to a 120% AMI,
which is a little different. So it took a little bit, but I think the key thing here is this idea of where, redevelopment of a blighted neighborhood. I I worry sometimes that this becomes a strategy to blight a neighborhood so that we can get the TIF. I know that that wasn't the case here, but, I think, again, I'm I'm willing after hearing the different sides of this to support this tonight with the idea that it is that redevelopment of an area that was troubled and that contribution towards getting the density along our that North Broadway corridor. Council member Doreen. This is gonna be a tricky question,
but I think it would be helpful for those in the community who might be watching at this point to understand, what a rent would be for someone who whose rent is limited with, having an income at a 120% AMI as opposed to being market rent, rate, for a rental unit. So is there any way that you could talk about the difference between those two just using general numbers? I know it's really hard even for this particular property. Right? So, say you're,
looking at a one bedroom apartment in this facility. What would the rent be at a 120% AMI as opposed to paying market rate for that same one bedroom apartment? Well, we would look at their income. So you would take, 30% of their income Yep. Divide that by 12, and that would be their maximum rent that they would pay for their unit. So I he's got my calculator so I can figure this out. I'm asking you to map so I don't have to. Alright. I suppose we could ask Derek Erickson.
He probably knows off the top of his head, but we'll just do it quick. Oh, $2,600 a month in rent k. For And so and then what would a typical market rate in that same unit be? That could be whatever Whatever it would. Could whatever the developer could charge, that would be rentable. I don't know what I mean, Dirk's rents are probably somewhere in that $2,600 a month rental range, maybe up to 2,800. I mean Okay. I saw a market study one time that had various projects listed on the various
rents for the units, and I think the the average was somewhere around $1,900 a month, I I believe. So The reason I ask is I I I like TIFF as well. I think it's an important tool to use. I I'm a fan of using TIFF, for deeply to for affordable housing. And and I think that there's a perception that even if, if someone is making above AMI, that, that housing is, again, not is is kind of a luxury. Right? And that AMI is it's still a reach to get into housing in this community.
So that's what I was trying to do in this little thought experiment, which I think I failed at, but that's okay. And and we'd be we'd be talking differently if if this was a housing TIF district. This is being done as a redevelopment district because it's moving the lights. So Yeah. Any other questions? There's a motion on the table. All in favor, say aye. Aye. Any opposed, say nay. Motion passes unanimously. Thank you. Moving on, there we have no reports and recommendations, no other business. Is there a motion to adjourn the EDA meeting to return to the city council meeting? So moved.
Moved by council member Walls, seconded by council member Doering. All in favor, say aye. Aye. Any opposed, say nay. Moving on to is there any other business for this evening? Seeing none, is there a, motion to, to accept the findings of the Rochester EDA? So moved. Second. Moved by council member Miller and seconded by council member Keane. All in favor, say aye. Aye. Any opposed, say nay.