EDA approves alternate assistance plan for new housing development

By : 
GRETCHEN MENSINK LOVEJOY
CHATFIELD NEWS

Chatfield’s Economic Development Authority (EDA) convened last Monday, Aug. 27, with a busy agenda.

Local contractor Geoff Griffin came before the EDA with a proposal to extend Amco Drive and Vindmoll Drive as a means of creating 13 new residential lots.

Griffin proposed to plat the first seven but to build all the necessary public infrastructure for all 13 lots if the city could provide financial assistance.

EDA Director Chris Giesen outlined that because of the specific bonds used to finance Enterprise Drive, the city could not use tax increment financing (TIF) or tax abatement as would normally be considered for a development project. Therefore, an assistance plan has been created to function in the same capacity as would TIF or tax abatement, generating approximately $10,000 per lot for the developer.

However, that assistance plan would have to be provided for only seven of the 13 lots because Giesen was able to identify only $70,000 in city funds available from the water and sewer access fees associated with the project.

He pointed out that the city would provide the assistance to Griffin for only the lots that were sold to income-qualified buyers, or families of three or more who had an income of less than an estimated $96,000 per year, or individuals or families of one or two with an income of less than approximately $84,000 per year. The numbers Giesen quoted are the guidelines the state and federal government set.

Griffin volunteered to reduce the price of each lot from $68,000 to $55,000 for any income-qualified buyer, but that non-qualified buyers would have to pay the full $68,000.

Lengthy discussion ensued as EDA members reviewed project cost estimates Griffin presented. EDA member Paul Novotny registered his opinion that the City Council should consider finding more funds to raise the amount of assistance to include all lots if it makes way for more home construction and qualifies more families to afford new homes in Chatfield. He felt the new homes constructed would create new water and sewer customers and bring more residents to town to patronize other community services and businesses.

EDA member Mike Urban expressed that he felt if the assistance were to be increased, the city should require that all the lots be platted immediately.

EDA member Randy Paulson made a motion to request the council accept a resolution to provide assistance to Griffin, but to amend the number of lots to allow all 13 to be included if they are sold to income-qualified buyers. Novotny seconded Paulson’s motion, and the motion passed unanimously.

Loan request

Giesen brought forward a request from MT Properties, or WIT Boyz, related to their EDA loan. The owners, Chris Musty and Luke Thieke, would like to re-roof their shop’s building and have obtained local financing to do so. However, that would mean the EDA’s revolving loan mortgage would have to be subordinated from a second mortgage to a third mortgage.

EDA members discussed that the entity’s purpose is to help develop business in Chatfield and that it works toward helping business owners through sensible flexibility in its lending. They acknowledged that WIT Boyz has contributed to the community and the company is approximately halfway through making payments on its revolving loan.

Urban commented that he felt he could support the request, but he reminded the board there is risk inherent to making loans and allowing them to be subordinated.

Board member Sue Keefe registered that she would be willing to agree but it would serve the EDA well to ascertain that original borrowing parameters are being met.

A unanimous motion passed to recommend to the City Council the subordination request, contingent on the new parameters being compared to the original revolving loan and that the EDA chair felt the EDA would not be taking on additional risk.

Other business

Giesen updated the EDA on progress of the proposed Dollar General store project that is meant to be constructed on the city’s Twiford redevelopment property just south of the grocery store. He shared that he’d recently received a preliminary development agreement from the developers and it is his hope to bring a final agreement to the board to review after working out some further details with the developer.

Additionally, the EDA granted a request from the Minnesota Department of Transportation (MnDOT) for a temporary easement for the 2019 Highway 52 improvement project that will disrupt Main Street in downtown Chatfield. The easement will have an impact on the Twiford Street property, and in exchange, MnDOT is offering $5,400.

Lastly, better signage along Enterprise Drive – formerly Industrial Drive – is soon to be posted, as the EDA approved printing of new advertising for the lots that are for sale on the industrial-zoned street on Chatfield’s southeast end.