The Monticello City Council passed a resolution July 23 granting permission for Presbyterian Homes to seek a lower tax rate, to be considered by the Minnesota Housing Finance Agency, on the Mississippi Shores senior property at 1213 Hart Blvd.
The city created a tax increment financing (TIF) district in 1995 and agreed to subsidize work on the 49-unit apartment complex in exchange for Presbyterian Homes offering some of the units at affordable-rate rents, rather than at market-rate. The agreement made by Monticello’s Economic Development Authority included $332,129 in a city obligation to Presbyterian Homes, to be paid in annual installments of approximately $27,000 until the subsidy was covered or the TIF district’s expiration date in February 2012.
At the time of expiration, Presbyterian Homes had received about $30,000 less than the subsidy, due partly to varying tax values through the years, according to city staff. The developer advised the city that with the halt to subsidy payments, Presbyterian Homes wished to seek MHFA approval for a tax adjustment on 20 percent of the units (or 10 apartments) with a guarantee that at least that many will remain at affordable rents. If its request is approved, Presbyterian Homes would owe the city an estimated $4,000 less in annual taxes for a 10-year term, but that would be offset by $45,000 in new yearly tax revenues Monticello will be getting from the property after the TIF decertification. Wright County, the Monticello School District and the Monticello-Big Lake Community Hospital District will start receiving tax revenues from the property next year as well.
Currently, about 40 percent of Mississippi Shores tenants are paying affordable rates from incomes that are no more than 60 percent of the county’s median gross income (which is roughly $66,000). Mississippi Shores housing director Julie Spiers told the City Council that rents for one-bedroom units (or a majority of the units) are ranging from $814 to $866 while two-bedroom apartments are going for $1,190 to $1,250.
Council member Lloyd Hilgart asked if an agreement to keep just 20 percent of the units at affordable rates meant Presbyterian Homes would transition some affordable units up to market rates.
“We will stay where we’re at, especially for our current residents,” Spiers said.
She said that rents have risen 1 to 2 percent for all units in each of the past four years, and added that units are also subsidized through the Presbyterian Homes Foundation. “We’re asking for more from our foundation, and we’re asking for some tax help, too,” she said.
By Paul Rignell