Deadwood approves TIF #12
DEADWOOD — An affordable housing apartment project at Deadwood Stage Run was greenlighted May 6 by the Deadwood City Commission when it approved TIF #12.
The amount of the TIF is $300,000 and the TIF project plan calls for 38 two-bedroom, two-bath apartments that will rent for around $900-$1,000 a month.
“We did the first 20 units on top of Stage Run and they’ve been full ever since we built them,” said developer LeRoy Stuen of Stuen Construction. “There’s a big demand for housing, so we figured another 38 units those should become occupied pretty quick.
In order to qualify as affordable housing, rent can be up to $1,284 a month.
The units will be available in around one year.
“We’re hoping to have half of them done by June 2020 and the other half finished the following year, if not sooner,” Stuen said. “It’s going to be a two-phase development.”
Blaise Emerson of BKE Consulting was on hand to address the commission regarding the TIF.
A TIF is used as an economic development tool and can be explained like this: It is a public financing system that uses future increases in property tax to reimburse the costs of public improvements built within a designated TIF boundary. The value of all the properties inside the district is assessed or calculated and the total amount of property tax generated by all those properties is noted — the base amount of property tax revenues. All property revenue above this base amount, for the life of the TIF, is captured by the TIF to refund the costs of the public improvements or project. This amount — the amount over the base — is called the “tax increment.” Over time, property values are presumed to increase in part due to infrastructure improvements brought about by the TIF project itself. When the TIF is retired, the total taxation values revert to the original taxing entities.
“This is property up in the Stage Run subdivision and one property adjacent to it,” Emerson said. “This will facilitate the creation of some multifamily housing that will meet the affordable housing definition.”
Emerson then pointed out certain parts of the project plan.
“What we’re looking at, here, is construction of 38 apartments. These are going to be a combination of either duplexes or fourplexes. The developer has built similar style fourplexes up in the Stage Run development, here over the last couple of years. We are looking at a total maximum of $300,000 that’s going to be eligible for tax increment financing, of which they’re eligible for over $800,000, but only $300,000 will be eligible for tax increment financing. They’ll contribute the remaining portion of that.”
A number of them will have a garage, so we will have a garage with those. What we’re looking at, based on the estimated cost of construction up there and what the assessed value will be, we’re looking at a payout of nine years … we are allowing it to go out full length, 20 years, Emerson said.”
Commissioner Sharon Martinisko pointed out that the city will be carrying the TIF beyond the five years, from seven to nine years, and asked if the affordable housing rents are required to remain within those standards beyond the five years.
Emerson said state law states they must be in place five years.
“I’m excited to see forward movement on additional affordable housing in our area,” Martinisko said. “This is a huge step and we have waited a long time and I really appreciate this organization stepping forward.”
TIF #12 is a TIF within TIF #6 Deadwood Stage Run.
“Both developers will have financial responsibility financially for the cost of the infrastructure,” said Planning and Zoning Administrator Bob Nelson, Jr. “There has to be an agreement between the two developers and the bank that both loans are being taken care of with property taxes. So, they’re going to make sure that the original TIF #6 will be generating enough revenue by the other properties to make the payment on their loan. The portion in the TIF #12 will have to generate enough taxes to make the payment on its own.”
Deadwood Lead Economic Development Executive Director Kevin Wagner is enthusiastic about the new housing.
“The lack of availability for affordable workforce housing is something that’s plaguing the entire state of South Dakota, both urban and especially rural areas,” said Wagner. “Deadwood is the number one community in the state for workers living outside of the community who commute in for work each day, at 95.4%, a figure taken from our 2016 community housing needs assessment study. So we see this project as a great opportunity to recruit some of that labor force back into the community and to continue our growth trend.”
Nelson said the next step in the process is for the developer to submit engineered plans of the infrastructure and roadway and site plans for the buildings.
“Then, the various departments within the city have to issue approvals so they can get a building permit,” Nelson said, adding that on the developer side, financing has been secured for total project.
“I’ve seen an estimate of $890,000 for infrastructure and road and then there’s the build-out cost of each building. It’s a substantial investment, for sure,” Nelson said. “The $300,000 is being applied to the water main and the sewer main. I mean, $300,000 doesn’t get you very far in projects like these. It’s mainly an incentive for developers to take that leap. This is one more step in increasing our housing stock in Deadwood and I think it’s a positive step. I think there’s a need for much more. It’s just very expensive to develop in our area.”
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