HomeMy WebLinkAbout4.1 Newport Midwest Project LLC Project Support
TO: Economic Development Authority
FROM: Christine Costello, Economic Development Director
DATE: June 23, 2020
RE: Newport Midwest LLC Project TIF Support
Background
At the May 15, 2019 City Council meeting a workshop was held before the meeting in which
Newport Midwest LLC, provided a presentation on their proposed development at 7601 79th
Street South. Newport Midwest is looking to develop a 54-unit multi-family development on the
site that would provide units that are at 30 percent and 50 percent of the area median income
(AMI). Housing provided at these income levels provides an opportunity for workforce housing,
which currently is very limited in Cottage Grove. Workforce housing is typically defined as
households earning 60 to 100 percent of the area median income. For example, the area median
income for a family of four in the Twin Cities is approximately $95,000.
Site Location
As part of the Newport Midwest’s proposed project financing, they are applying to the Minnesota
Housing Financing Agency (MHFA) for Housing Tax Credit. Housing Tax Credit is a financing
program for residential rental properties that offers investors a reduction in tax liability in exchange
for capital to build eligible affordable rental housing. There are two programs for housing tax credit
and Newport Midwest has applied for the 9 percent program. This program is more competitive,
and often developers must apply multiple times to receive their full funding over multiple award
Economic Development Authority
Newport Midwest Project TIF Support
June 23, 2020
Page 2 of 2
periods. Newport Midwest wanted to begin the funding application process in 2019 with the hope
that they receive partial funding that could be carried over for potential full award funding for the
development in 2020. With the competitive application process, Newport Midwest requested a
resolution of support from the City of Cottage Grove to consider assisting in the funding of the
project with the use of tax increment financing (TIF). The City’s support of the application process
and willingness to consider TIF to fund workforce housing is often seen as a positive in the
awarding process by MFHA. The City Council voted 5 to 0 to authorize support of the providing
tax increment financing in the amount of $420,000 for their proposed development.
Illustrative Elevation
Discussion
In 2019 Newport Midwest did apply for MHFA’s 9% Housing Tax Credit program and received
partial funding for their project. As they had stated last year, they received partial funding and
would be applying to the program again this year (2020) for the remaining funding. Newport
Midwest is requesting the continued support of the project and providing tax increment financing
in the same amount as 2019 of $420,000.
Recommendation
Adopt the resolution authorizing support of tax increment financing (TIF) for the proposed 54-unit
multi-family development at 7601 79th Street South by Newport Midwest LLC.
Attachments:
Resolution 2020-092
Resolution 2019-062
Proposed Development Images
CITY OF COTTAGE GROVE
CITY COUNCIL
RESOLUTION NO. 2020-092
A RESOLUTION AUTHORIZING SUPPORT OF PROVIDING
TAX INCREMENT FINANING IN THE AMOUNT OF $420,000 TO BE USED BY
NEWPORT MIDWEST LLC TOWARDS THE DEVELOPMENT OF
54 MULTI-FAMILY UNITS AT 7601 79THSTREET SOUTH
WHEREAS, the City of Cottage Grove has received a request to provide tax
increment financing (TIF) assistance for Newport Midwest LLC (“Developer”) for a 54-unit
multi-family development be constructed in the City, and
WHEREAS, the Council supports using $420,000 of pay-as-you-go TIF funds for
a term of 20 years from the TIF District to reimburse certain costs incurred in connection
with the construction of a Development consisting of approximately 54 units of multi-family
affordable rental housing.
NOW THEREFORE BE IT RESOLVED, that the City Council of the City of Cottage
Grove, Washington County, supports providing tax increment financing (TIF) in the
amount of $420,000 to be used for multi-family affordable rental housing.
Passed this 30th day of June 2020.
Myron Bailey, Mayor
Attest:
Joe Fischbach, City Clerk
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