FARGO — Cass County commissioners unanimously approved a 15-year tax break for a low-income housing project in downtown Fargo on Monday night, Sept. 16, but not before criticizing a Fargo city commissioner for voicemails he had sent them.
County Commissioner Chad Peterson said the tone of City Commissioner Dave Piepkorn's messages urging the board to pass the property tax break and others for projects planned downtown was "unprofessional."
"This guy is crazy," he said about Piepkorn.
Peterson said they weren't going to "blindly support" tax breaks for any project without looking at it themselves.
Peterson and County Commissioner Rick Steen said the voicemails from Piepkorn were of a "threatening" tone as they said Piepkorn told them the tax break should be approved or "you can bear the consequences."
Peterson said the voice message to commissioners basically said the county "should keep their nose out of the city business."
When asked for his response, Piepkorn said late Monday night that he thought it was "very important" that the county board OK the tax break or the low-income project wouldn't be built.
If the board had rejected the request, he said he most certainly would have let other county residents know what they did.
In previous years, if a City Commission in the state approved property tax breaks through the Payment in Lieu Of Taxes (PILOT) program or tax increment financing districts, it was final.
However, the North Dakota Legislature approved legislation that now requires county boards and school boards to also sign off on the tax breaks.
The property tax breaks, which often range from five to 15 years, help developers as they try to line up financing for major building projects. In many instances, the developers and financial analysis reports find projects aren't doable without the breaks that take away immediate property tax dollars from the city, county and school district.
However, most of the property that is developed isn't providing much in tax dollars in its current condition as it is often parking lots, open lots or dilapidated homes or businesses, and after the tax breaks expire the tax benefits can be huge.
The low-income project the county board was considering is a $5.7 million, 42-unit apartment building called City Flats that would be built next to a similar facility called The Edge Artist Flats at 1321 5th Ave. N on the northwest side of downtown Fargo just off University Drive.
The Artist Flats' 41-unit building opened July 1.
City Flats would fall under a federal program called Low-Income Housing Tax Credit, which grants investors income-tax credits if they invest in apartments where at least 40 percent of the units are affordable to households earning 60 percent of the median area income, for at least 15 years. The federal government gives each state a certain number of credits to allocate. The percentages can vary.
The North Dakota Housing Finance Agency will be making the final decision on whether City Flats receives the federal program's approval.
The taxes when built would be about $82,000 a year without the break from the county, city and school, however, under the federal program the company must still pay a portion of property taxes, or about $18,000 a year. That amounts to about 5 percent of the rent collected.
Erin Anderson, a regional vice president for the developer, Commonwealth Development Corp. of Fond du Lac, Wis., appeared at the meeting and said the tax break from the county would show strong local support that is needed for the approval from the state housing agency, which only approves about half of the applications statewide each year.
She said at least nine units in the City Flats would be for homeless or disabled residents who would get their rent paid for by other agencies, at least to start with.
Peterson said everyone he talked with supported the low-income housing effort, but he said they didn't know the "magic number" for how many years.
He also told Anderson that her company should sharpen their pencils on any future projects, though, as after looking at the project plans he said local firms could do some of the proposed work for much less money, including the costs for architectural and management work.
County Commission Chairwoman Mary Scherling added that the county board would continue to look at all requests for the county's share of tax breaks and it wouldn't be a "rubber stamp."
She said the county board with a lawyer, architect, real estate broker and certified public accountant are very capable of examining requests.
Anderson said on this project at the end of the day it came down to whether the county board supported more low-income housing downtown or not.
Commissioner Vern Bennett, who is in hospice care at his home but participated by phone in the meeting, said the low-income housing can be the "lifeblood of a downtown and can help it flourish." He said it would be wrong not to support the project with the full tax break.