Tax-increment financing for phase II of the Willows housing project received conceptual approval Monday.
The Brainerd City Council, by a 5-1 vote, gave conceptual approval to a TIF request from CDS Development for $156,000 at 8 percent interest.
Council member Bob Olson voted no, saying he was in favor of low- to moderate-income housing in Brainerd but not the use of TIF for the housing.
Olson said while TIF if being generated for the new development, "the cost of police, fire (protection) and fixing roads falls back on the taxpayers and I have a problem with that."
"I was kind of hoping the developer would build the 26 homes without TIF this time," Olson said.
Council member Frank Asplund agreed with Olson on the possible tax burden on residents, but was in favor of the TIF request, saying he couldn't see any other way the housing needs in the city could be met.
CDS Development is proposing to build 26 single-family homes on about 11.3 acres of land on 28th Street in Brainerd.
In Phase I of the project, 29 of 30 houses have been built. Twenty of those houses have been sold, with four more in the process of being sold.
CDS Development plans to apply to gap housing finance programs to help fund the $3,113,474 project. Some of the programs require a 5 percent -- or $156,000 -- contribution from the city, thus the TIF request.
The Willows project targets working families within the income range of $35,000 to $58,000 per year. The homes will be two-bedroom, split level with attached, two-stall garages, one bath and laundry hookups.
"It's a nice way to bring in new homes a lot of people wouldn't be able to buy if left to their own means," said Steve Kuepers, who along with Clint Nelson and Doug Kuepers own CDS Development and are developing Phase II of the Willows project. Nelson also was a developer for phase I of the project.
Phase I of the Willows project is expected to be completed in September, and the second phase is expected to begin in late 2001 and early 2002.
The TIF request was for 12-14 years, but with recent changes in property tax laws at the Legislature, the number of years could change to meet the $156,000 request.
Brainerd's financial and bond consultants will conduct a review of the project to determine the appropriate TIF term and the interest rate.
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