MOORHEAD - John Stenerson considers himself a good neighbor.
His family's business, Stenerson Bros. Lumber, has been on First Avenue North here since 1946, and he said his company is proud to be a "corporate citizen" of the city.
However, a recently proposed $4 million low-income housing project down the road from his office has him and other business owners in the area questioning the city's commitment to commercial development along First Avenue North.
"We would be good neighbors to anybody who moves in there," Stenerson said. "From our perspective, I guess we're a little worried that there's a residential housing that goes in there rather than a commercial business. First Avenue North, in my mind, is a commercial corridor and should be reserved for commercial businesses."
The project, which is awaiting affordable housing tax-credit approval from the state before moving forward, would include two 24-unit apartment complexes for low-income tenants. The apartments are for tenants who meet income requirements. For instance, a four-person family could not make more than $35,200 annually.
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It's been proposed by Summit Housing Group, an affordable-housing developer from western Montana, and already has official support from the City Council and the Economic Development Authority.
But the area isn't an ideal place to live, Stenerson said. He warned that his lumber yard has multiple trucks driving down that street every day - an unsafe environment for a residential property.
"In my mind, it's not a good place for a residential apartment building, whether it's low-income or a regular apartment building," Stenerson said. "It's not a very good place for it."
Scott Hutchins, Moorhead's community services director, said the location chosen for construction is zoned for both residential and commercial properties.
"We went through a very sensitive zoning process where the zoning was changed to accommodate housing. It's a mixed-use zone," he said.
Hutchins also argued that residential projects such as this would still support commercial development, in part by bringing in potential customers and employees.
It's not the first residential project in the area. In 2010, Gateway Gardens, another low-income apartment project, opened its doors to 24 residents on the 1800 block of First Avenue North. Churches United, a homeless shelter, is located on the same strip. For Stenerson, adding another residential unit would begin to set a trend.
"It seems like they're encouraging that type of thing to go in there when they should be working on some sort of commercial enterprises," he said.
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Pat Kovash, owner of Kovash Marine just across First Avenue from the proposed project, said he's also concerned that by supporting the new project, the city is not encouraging business growth along that corridor.
"The city council had no choice in this vote because it meets the zoning criteria, and they had to do this," he said. "And it becomes a slippery slope because maybe (we get) one housing project, but if we have two more, we may lose First Avenue."
Chuck Chadwick, executive director of the Moorhead Business Association said questions had arisen in the business community about the city's commitment to commercial development in that area.
"The project is useful. We certainly endorse the concept and the project. We would question the location," Chadwick said. "Being in the business community, we prefer the commercial development. We would like to see some retail establishments along that corridor and other types of businesses."
Overall, the project is still in its "beginning stages," Hutchins said.
"This project has advanced to the state where it will compete with other projects, and it may or may not receive a tax credit allocation in the amount it's requested," he said.
The project is looking to receive tax credits from the Housing Tax Credit Program, a state program which was created by the Federal Tax Reform Act of 1986. According to the Minnesota Housing website, the tax credit offers a ten-year reduction in tax liability to owners and investors in eligible low-income housing units. Hutchins said competition for these tax credits in Minnesota is very high.
The Moorhead City Council unanimously passed a resolution of support for the project at the end of May. By doing so, the council voted to support the project and consider it for tax-increment financing.
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Tax-increment financing allows a property owner to pay a base-line tax for a set number of years even while the value of the property climbs with the construction of a new development. The extra tax money that would be due because of the new development is given back to the property owner for this set number of years to be used for "extraordinary costs of the site," Hutchins said.
For this First Avenue housing project, Hutchins said the costs include cleaning up some contamination and building an underground parking facility. Hutchins said oil in the ground would need to be cleaned up and that state and federal regulations would be followed to remove any contamination. During the construction of Gateway Gardens, $1 million was spent in chemical contamination cleanup.
Stenerson said he wishes city officials would rethink their support.
"My hope would be that the city of Moorhead would reconsider the placement of it," he said, "and place it somewhere else other than on the second-busiest street in Moorhead."
Readers can reach Forum reporter Erik Burgess at (701) 241-5518
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