Abatement approved

WORTHINGTON — A proposed tax abatement for the company working on a 72-unit residential development off of CSAH 35 and 5 was approved Monday night during the Worthington City Council meeting.

The company, Gilt Edge, LLC, requested the city abate 80 percent of its share of the real estate taxes for 15 years or $250,000, whichever occurs first, to improve the viability of the proposed project. Based on an estimated market value of approximately $2.9 million, the project would generate more than $52,000 in real estate taxes, of which $14,821 would be the city’s share.

Using the 2009 tax rate, the 80 percent request would yield an approximate $11,857 annually. If the abatement reached $250,000, the financial assistance per unit would be approximately $3,472.

An open meeting to discuss the abatement brought enough curious people to city hall to fill the chambers, but the only one to speak was Jeff Schoenwetter, from JBS Swift Company, who said he was there on behalf of the applicant.

“There is a severe housing shortage here in Worthington, and that is what attracted our company to your community,” Schoenwetter stated. “…I’m quite confident the project will not become a reality without your support.”

Schoenwetter said he thought the project would generate about $5.5 million in economic action, but admitted it had suffered some set backs due to the economy.

One thing that keeps the project alive is JBS’ commitment for 75 percent occupancy.

“We were heavily encouraged by your largest local employer,” Schoenwetter said. “If the vacancy is over 25 percent, Swift would pay the rent on the vacant units.”

A housing study nearing completion showed that Worthington has a zero percent vacancy rate for rental property.

Council member Lyle Ten Haken asked Schoenwetter if the other two entities — the school district and the county — had been approached with the same request.

“Well, this could bring 72 more families to the table, which puts an additional burden on the school district, so it probably isn’t something they would want to subsidize,” Schoenwetter replied.

“Did you talk to the school at all?” asked Mayor Al Oberloh.

“We’ve been told the county and the school are not going to be excited about a TIF project,” Schoenwetter stated. “Maybe they would look at abatement differently.”

If he heard about an invitation to address the county or school board, he added, he would be willing to speak with them.

Just before the vote to approve the abatement, Ten Haken said he planned to vote against it so the other entities’ participation could be looked into. He was the only opposing vote.

Robert Ramirez, who is an honorary councilman for the next three months, asked if JBS would be allowed to choose who received the proposed rental units, which Schoenwetter said would not be the case.

His company, Schoenwetter said, would make JBS aware if a 30 day notice of an upcoming vacancy was received so it could be posted at the plant, but after those 30 days, the company could rent to anyone in town.

Schoenwetter also informed the council that the proposed units would be managed by a third party company, but there would be an on-site manager as well.

Right now, the average rental fees expected for the project would be approximately $695 for a two-bedroom unit and approximately $845 for a three-bedroom unit, which Schoenwetter said reflects market value in the area.

For now, Schoenwetter added, he didn’t expect the development to be a profitable project.

Council member Mike Kuhle said he was not wild about the idea of abatement, but to achieve economic growth, Worthington needed more housing.

The motion was approved with the stipulation that if the company decided to sell the development, the council would have the right to review and approve new terms.

“Even if this is approved,” Schoenwetter stated before the vote, “I can’t sit here and tell you this would absolutely make the project happen.”

In other business, the city council:

• Listened to a review of a storm water prevention plan during a public meeting which would allow comment on the plan. There was no comment from the public.

• Approved a $15,000 loan advance to the Friends of the Auditorium for advertising, employee salary and advance fees for booking shows. The loan will be unsecured, at no interest, and dependant on ticket sales, but is expected to be repaid by Nov. 1.

• Approved a settlement agreement which gives the city the authority to demolish a nuisance building located at 516 Humiston Ave. if the owner or an acceptable buyer are unable to abate the nuisance to the city’s satisfaction within 30 days.