FARGO — A plan for the vacant Kmart building and its huge parking lot took a step forward Monday, Sept. 20, when both the Fargo City Commission and the Cass County Commission approved tax breaks for the development of a 92-unit apartment building for low-income senior citizens.

There were also unanimous votes by both bodies for another affordable senior citizen housing building with 120 units in southwest Fargo at 3361 Westrac Drive S., which is a few blocks south of the Cass County Jail.

The need for more low-income housing for seniors has been apparent with vacancy rates in the 1% to 2% range in the past two years.

Beyond Shelter CEO Dan Madler, whose nonprofit development company works on affordable housing, said they have helped develop 325 units in Fargo and Cass County, and 39 of those just opened on Sept. 1.

In a "real-life example," he said, they are all full. He said 27 of 39 new units in the Homefield complex just south of the Red River Zoo are already leased, and the rest are expected to fill up by October.

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He said the average age of residents in their units is 72, with almost 70% of residents in the "extremely low income" bracket with annual income of about $17,500. He said the average rent at their units is $423 per month.

Dan Sterhan of Billings, Montana-based Mountain Plains Equity Group, which is helping with the other 120-unit structure along with CommunityWorks of Bismarck, added that they conducted a market study and found that in the next five years Fargo would need almost 600 more units for low-income seniors with almost half being renters.

The $11.6 million, four-story Beyond Shelter structure called "The Plaza Apartments" would be built in two phases, Madler said, and would cover four acres on the west side of the major Kmart redevelopment. Enclave, a West Fargo-based development company, is planning a commercial project with numerous standalone businesses, including the "real possibility" of a grocery store, on the eastern side closer to University Drive on the almost 12-acre site.

The 93,000-square-foot Kmart building, built in 1963, has been mostly empty since the big box retailer closed in late 2019.

"It's a highly desirable site," Madler site, pointing to the proximity to health care, banking, a bus stop and Interstate 94, along with the possible grocery store.

He said there would be 38 one-bedroom units and 8 two-bedroom apartments in the first phase, which would be replicated in the second building that would be connected.

Besides the Payment In Lieu of Taxes, or PILOT, provided by the two commissions, the affordable housing developments will also only be possible if they receive state and federal tax credit program aid.

The PILOT approvals, which basically eliminate market rate property taxes for the buildings as long as they operate, is a key to showing state officials the local support for the project, said City Strategic Planner Jim Gilmour.

"Without that local support, they would be at a distinct disadvantage," Gilmour, who has been working on the projects, said about the highly competitive tax credit programs.

If at market rates, the buildings would have property taxes in the millions over the 17 to 20 years of the PILOTs, but they still will pay thousands most years as a tax on land or to help finance emergency services for the property.

The other $15.7 million apartment building by Mountain Plains Equity Group and CommunityWorks in southwest Fargo would have 82 one-bedroom units and 38 two-bedroom units with rents ranging from $685 to $935 for lower-income senior citizens.

The building, he said, would be in a U-shaped configuration. A landscaped courtyard in the middle would aim to create a "community-type" of atmosphere where seniors could socialize in lounges, a library and a fitness center.

Sterhan said his company has helped build 54 affordable housing projects including 13 in North Dakota.

Both units would be for those age 55 and above.