by ZACH KAYSER
One of the first new affordable housing projects in Winona for many years received approval from the Port Authority on Thursday.
MWF Properties of Minneapolis, Minn., proposes to build a four-story $15.8-million housing development at 51 Riverview Drive consisting of 60 “workforce” apartments, ranging from efficiencies to three-bedroom units and intended for lower-income residents.
The company is constructing a similar building in Eden Prairie, Minn., according to Finance and Commerce.
Other than a portion of the units — which would be set aside for disabled residents or those facing homelessness — the balance of the apartments at 51 Riverview would have an income cap of 60 percent or less of area median income (AMI). Port Authority staff noted that 60 percent of Winona’s AMI would be $46,920 annually for a family of four. “Occupations such as teachers, nurses, frontline professionals, and blue collar employees will be served by the development,” Port Authority staff noted in the agenda.
Port Authority Chair Mike Cichanowski succinctly stated the magnitude of the occasion.
“This is a big deal,” he said.
Realtor and Port member Michelle Alexander said the project was great in that it helped alleviate the severe lack of housing in the area. “I get calls every day from people moving here for work … and they just don’t have anywhere to live,” she said.
Larson said the groundbreaking could happen in the summer of 2022, and construction would be completed within a year.
In order to sweeten MWF’s application to the state for tax credits and thus surmount a financing gap of $300,000, the company is seeking a type of tax break from Winona called Housing Tax Increment Financing (TIF). The Port Authority voted unanimously to recommend that the City Council approve a TIF plan for the MWF housing project, in an amount not to exceed $300,000 over 15 years.
“Developments that have rent and income limits, as this development would, often must secure financing using tools such as tax increment financing because the income generated is lower than on market rate developments, leaving a financial gap,” city staff wrote.
The TIF proposal now goes to the City Council for a public hearing and final approval at a to-be-determined future meeting.
Winona Community Development Specialist Nick Larson said that, similar to an economic development TIF, city staff examine a housing TIF application using the “but-for” test; that is, the project would not happen without city aid, and it provides a benefit to the community as a whole. “Without this TIF, would the project move forward, and does it meet a community need?” he explained.
Specific TIF terms vary by city and by development project, but generally TIF involves the city giving a project a tax rebate based on the increased value of the property after construction.
Larson and Winona Economic Development Director Lucy McMartin said that based on financial projections, MWF would be able to get all of its TIF relatively early — about 11 or 12 years, after which the city could charge full price in terms of taxes.
“We take a look at those estimated market values and carry them out to see when we’d meet that amount,” she said. “Our TIFs are typically set up as a pay-as-you-go. What that means is, we don’t front the money, we just rebate a portion of the taxes [which covers] their eligible expenses.”
Annual tax paid by the property would be around $4.6 million per year, with a $43,000 annual rebate from the city, Larson said.