County addresses housing
WORTHINGTON — A program to encourage new housing development locally passed its first hurdle Tuesday with unanimous approval from the Nobles County Board of Commissioners to offer a five-year tax abatement on all new single family and multi-unit housing projects within the county.
With nearly two dozen people in attendance — representing the Worthington Regional Economic Development Corporation, city of Worthington, Chamber of Commerce, and construction, banking, real estate and investor trades — WREDC Manager Abraham Algadi quickly got to the point.
“We are talking about housing, and I hope to God this will be the last time we talk about housing,” Algadi said as a few stifled laughs came from the audience.
After saying the area has an “anemic housing market,” Algadi proposed a Nobles County initiative that would encourage contractors and private investors to build single-family, condo-style and multi-family units. What is being offered is a 100 percent tax abatement on all new residential construction for a period of five years, starting on the date a certificate of occupancy is issued. The abatement applies to new residential development of any value, with owner-occupied and rental markets eligible.
Nobles County Administrator Tom Johnson said despite the abatement, entities would continue to collect tax on the undeveloped value of the land during the five-year period.
Considerable discussion on the need for housing preceded the commissioners’ action Tuesday, starting with Algadi recapping the needs identified in a recent city of Worthington housing study. That study revealed a need for 500 new housing units in Worthington alone by 2020.
“A healthy housing market is really going to help us and help other sectors of the economy,” Algadi said, adding that investment in housing construction provides a trickle-down injection into construction trades, hardware stores and — perhaps — even the drive-thrud at local fast food restaurants.
Algadi said existing housing finance programs haven’t worked, and communities across southwest Minnesota are fighting for the same small droplets of funding offered through state and federal agencies.
“The tax abatement is the most important and only mechanism available to you that doesn’t come with state and federal strings,” he told commissioners. “This is you doing something for yourself.”
During a WREDC-organized meeting with builders in mid-December, Algadi said the majority of contractors in attendance expressed concern over the holding cost of properties. Offering a tax abatement would address that issue and attract new builders.
Kevin Donovan, an ex-officio member of the WREDC, said Tuesday that a “big developer” in Sioux Falls, S.D., is already committed to coming to Worthington and kick-starting a $2.5 million construction project, if a five-year, 100 percent tax abatement is offered.
Local contractor Michael Edwards also expressed interest in the tax abatement. He said he’s considering a multi-family housing project, and the tax abatement would be “beneficial.”
Algadi said builders are waiting in the wings and ready to make the investment in housing starting this spring. He outlined a plan for the first year of the initiative, which would include the construction of 40 multi-family housing projects, three to six condo-style homes and four single-family homes, for an estimated value of $5.5 million.
“Doing nothing will flat-line you forever,” Algadi cautioned the board. “Fundamentally, I think the rules of the game have to change. What do you have to lose? What could go wrong? Nothing.”
The demand for housing is so critical in Worthington, Algadi said, that there are people living in garages with space heaters. They are living with third world-standards in the United States — in southwest Minnesota.
“The reason they are living there is they have no other options,” he said. “We’ve engaged builders. They want to jump on this and be able to build.”
“If we continue to do the same thing we’ve always done and expect different results, I think we’re fooling ourselves,” said WREDC past chairman Jason Turner.
Realtors, as well as representatives of the Chamber of Commerce and Southwest Minnesota Private Industry Council, spoke of the constant requests they receive for available housing.
“There isn’t a day when we don’t have people coming in looking for rental property,” said Lori Grafing, with Real Estate Retrievers. “We give tours to doctors and other professionals, but there’s just no housing stock. We’re losing those people. They’re not coming to the community because of a lack of housing.”
Brad Chapulis, Worthington Director of Community and Economic Development, said a housing study conducted in 2007 showed the city was 179 units short.
“We have a 500-unit shortage now — that’s because we’ve done nothing,” he said. “We’re getting to the point where our community is going to reach a ceiling — housing isn’t keeping up with projections.”
Chapulis said employers in Nobles County are holding steady or adding jobs, but if there’s no housing for future employees, they may look at taking their growth out of town.
“If we don’t provide the opportunities, we’re going to have local companies make investments elsewhere,” Chapulis said.
Donovan said the 18-member board has “done the homework.”
“We’re passionate about making this work. We entrust, when we voted for you, that you would listen to us and approve what we’ve done,” Donovan said. “Ladies and gentlemen, this is simple — let’s just approve it to move us on to the next hurdle, which is the city council, and the next hurdle, which is the school district.”
The request for abatement will go before the Worthington City Council on Monday, and Algadi said he has a meeting with a school board committee Tuesday.
Plans are that Algadi will work with Johnson on the details of the housing program. It will be evaluated after two or three years and, at that point, a sunset date for the tax abatement initiative can be discussed.
In other action, the board:
* Appointed Pamela Friesen to Nobles County Assessor. Friesen most recently worked as deputy assessor in Pipestone County.
* Approved a resolution designating Bridge 53513 on Nobles County State Aid Highway 1 as a priority for funding and replacement. The sufficiency rating on the bridge is low enough to qualify for state funding, and the hope is that bonding money will be received to help cover the costs.
* Approved change order No. 4 on the Nobles County Government Center improvement project. The change will include an additional $21,262.10 in construction costs to address code issues and replace broken fixtures.
* Approved utilizing county time and equipment to dispose of old railroad ties along the Southern Minnesota Railroad. The ties had been stacked up in the railroad right-of-way after being replaced, and the Minnesota Pollution Control Agency has now ordered they be cleared out. Rock County will be responsible for hauling ties away from the portion of the line there. The ties will be hauled to the Nobles County Landfill.
* Approved the reappointment of Ron Wood to the Joint Planning Commission and Darlene Macklin to Travel Southwest Minnesota Inc.
* Recognized Ed Busch, from the county’s public works department, as the February Excellence in Performance Award recipient.
* Presented a certificate of appreciation to Teresa VanderPlaats for her 18-plus years of service to Nobles County. Vander Plaats is retiring from her position at Prairie Justice Center.
* Approved a license request from Dakota Golf Management Inc., operator of Prairie View Golf Links, to sell 3.2 beer and set-ups.
* Approved a $2,500 appropriation to Manna Food Pantry. March is Food Share Month, which allows for the pantry to access matching funds from Minnesota Food Share and the Feinstein Foundation.
* Amended the Nobles County employee wellness and recognition program by adding that Nobles County Health Educator to the committee, seeking funding sources to help fund wellness programs, and by extending the length of time excellence in performance award nominations will be kept on file.
Daily Globe Reporter Julie Buntjer may be reached at 376-7330.