Marshall City Council approves TIF for apartment complexes

Photo by Deb Gau Marshall City Council member Glenn Bayerkohler, right, makes a point during Tuesday’s meeting.

MARSHALL — Two arguments took shape as Marshall residents and businesspeople spoke out about a proposed Tax Increment Finance district near Legion Field Road.

Rental property owners said it was hard to make money in their business. The proposed TIF, which would help reimburse up to about $2 million in costs to build apartment buildings, was an unfair advantage to a single developer, they said. But spokespeople for local employers said having a bigger variety of housing in Marshall was vital for recruiting employees.

Even some Marshall City Council members said it wasn’t an easy call.

Council member Steven Meister said based on what he heard, “We’re between a rock and a hard place.”

After a public hearing that drew an overflow crowd, and lasted over an hour and a half, council members did vote 4-2 in favor of the TIF district and a TIF plan for it.

It wasn’t the final approval for the apartment development, but it was a crucial step in making the apartments possible, said developer Samuel Herzog.

Later at the council’s Tuesday night meeting, council members approved a Planned Unit Development Agreement between the city of Marshall and the apartment project developers. The PUD agreement will make zoning provisions to build the apartments.

The TIF District would reimburse up to about $2 million in costs to build a total of 107 apartment units on land near Legion Field Road. A percentage of the units would be income-based. The TIF would be in a pay-as-you-go note, meaning that the apartment developers wouldn’t receive the funds unless they complete the planned development. Overall, the development would invest around $11 million in the Marshall area, said Economic Development Authority Director Tara Onken.

Herzog’s business is based out of Fergus Falls.

“We’re continuing to develop affordable housing in greater Minnesota,” he said. For the Marshall development, he said, “We’re looking to subcontract with a lot more local contractors in this area.”

Herzog Property Management already manages 123 units of rental housing in Marshall, he said.

“It gives me a fairly good idea for what the rental market is like” in Marshall, he said. One need in the Marshall area is for higher-quality rental housing.

Herzog and Onken said the development would have amenities like a community room, stainless steel appliances, and washers and dryers in each apartment. Rental rates for a one-bedroom apartment would be around $750, $875 for a two-bedroom apartment, and $1,075 for a three-bedroom apartment.

“A lot of young and working families are looking for something like this,” Onken said. “This is a real opportunity on the table for our community.”

And according to a 2015 housing study conducted in Marshall, it might take private/public partnerships to fill local housing needs over the next several years, Onken said.

Some local property owners spoke out questioning the accuracy of the housing study. Several raised their hands to say they were not contacted or interviewed about their rental units.

Other Marshall property owners said their problem was with the use of TIF, and not the proposed apartments.

“We hare for having new apartments,” said Al Greig. “However, we are not in favor of using TIF to give an unfair advantage to someone.”

Property managers said it was difficult to make any money from rentals, especially with current tax rates. Giving public support to a new housing development wasn’t likely to help the local market.

“We need economic development in the form of business coming to Marshall,” said Greg Taylor.

“We need real decent jobs,” that would need market-rate housing instead of affordable housing, he said.

However, some large local employers voiced support for the apartment development.

Doug Olsem, representing Schwan’s Company, said they are currently down 50 employees in the Marshall area, and have been trying to recruit for both entry-level and professional positions.

“One of the challenges we continue to face is, how do we attract these people?” Olsem said. Having more available housing was one way to do that, he said.

Mary Maertens, regional director and CEO of Avera Marshall Regional Medical Center, said their employees are also looking for different housing options. Some kinds of housing, like transitional housing, is limited in the area, she said.

Residents in the neighborhood near Legion Field Road, on the other hand, said they were concerned about the additional traffic the apartments would bring, and about safety at the railroad crossing on Legion Field Road. It’s already a busy road, with lots of children in the area, they said.

Herzog said the developers would work to consider crosswalks, fences and other safety measures in their design.

“We’re trying to make this (development) as self-contained of a site as possible,” he said. “We’ll do what we need to do.”

Some city council members echoed concerns about safety on Legion Field Road. Meister said that was the question he would struggle with in a vote. Council member Glenn Bayerkohler said he was against “government handouts,” and said approving the TIF district would be picking winners and losers in local business.

Meister asked if the EDA had offered any similar incentives to local developers.

If a local developer brought forward a similar plan that would meet the criteria for TIF and offer good benefits for the community, Onken said, “Absolutely, yes” the EDA would work with them. She noted that there are a handful of developers who didn’t want to use TIF, because of the extra work involved.

Council members voted 4-2 to establish a TIF District on the Legion Field Road land. Bayerkohler and Meister cast the votes against. Council member James Lozinski abstained from voting and did not speak in council discussion on the TIF proposal, to avoid a conflict of interest.

Herzog said the council’s action Tuesday night was exciting. However, the proposed apartment project still needs to have a development agreement approved, he said.