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City council discusses TIF district application for L2C LLC

MARSHALL — A Tax Increment Financing (TIF) district application was tabled by the Marshall City Council until a maintenance plan could be developed.

Several of the council members was concerned about the developer’s ability to maintain the property.

Gabe Olson, owner of L2C LLC (Suite Liv’n) applied for Tax Increment Financing (TIF) to develop two, 24-unit workforce apartment buildings at 406 Village Drive and 501 Village Drive.

L2C LLC first purchased the property in Marshall in 2018 and now owns approximately 350 units within the city.

Estimated projects costs for developing the two sites are $6.2 million with construction anticipated to begin in spring 2022. The project would include 32 one-bedroom units and 16 two-bedroom units.

The development would include 40% of dwelling units affordable to a household earning 60% or less of the area median income. The city is working on a housing study. It is estimated 124 new market-rate rental apartments would be needed through 2030. This would help meet the goal.

City staff requested a 12-year TIF plan, but allow the district to stay open 15 to allow flexibility to change the development agreement. The first payout would be in 2024 and would come out to $460,000 over 12 years.

During a public hearing to consider the TIF district approval, James Carr raised concerns regarding the stewardship of the company and the property they manage. Carr was uncertain that throwing more money at the development would help.

Mayor Bob Byrnes asked if a future development agreement addresses property maintenance.

Staff said the development agreement would include a maintenance clause. This clause would allow the city to withhold TIF payments until maintenance issues were corrected.

Council member James Lozinski agreed with Carr’s concerns. He said the Sunset Court buildings managed by L2C LLC were in horrible conditions. He said it only took one year for the building to deteriorate under the company’s management, and tenants go without water regularly.

“I do worry about throwing tax dollars at these buildings and then in five years they are not in good shape,” Lozinski said.

He believed the maintenance issue needed to be addressed before a TIF district was approved. The agreement should include the maintenance requirements.

Council member Russ Labat agreed property maintenance was an issue with L2C LLC’s track record. After driving by the existing property, Labat said he noticed garbage and weeds that had not been cleaned up.

“There is no reason for that,” he said. “I can’t go forward to approve with the way it looks.”

Olson attended the meeting and spoke on behalf of his company. Olson agreed, weeds on the property were too high on the property and maintenance would be outsourced in the future. Olson blamed the COVID pandemic for the delays in maintenance. He said housing was essential and his staff needed to respond to other immediate repairs during the pandemic and staff was limited due to quarantines.

“The last year was very hard and to be honest, we’re playing catch up,” Olson said.

Olson acknowledged the Sunset Court building was a problem, describing it as a “can of worms.” Olson said he was sold a building with plumbing problems that cost him $500,000 to fix.

Olson said he understood the council’s concerns but said if they took a bigger picture look at Marshall and its housing needs, he is a willing developer who had a track record of working with them.

Council member John DeCramer made a motion to approve the TIF district. He said this would work toward meeting the city’s housing needs, but also provide leverage to ensure the developer conducted necessary maintenance. The motion was seconded by council member Don Edblom. The motion failed.

Lozinski said he could not support it because there was not maintenance agreement yet. He acknowledged COVID was tough but said it was not that tough.

“You need to keep these places livable,” he said, reminding the council the water shortage issue at Sunrise Court was happening as recently as a few weeks ago.

Lozinski made a motion to table the approval until the council saw a maintenance agreement. Council member Steven Meister seconded the motion and it was approved by the council.

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