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Apartment TIF gets support

Davison County planning and zoning commissioners voted 5-0 at the courthouse Tuesday evening to recommend approval of a tax increment financing district, but the commissioners had pointed questions about the use of county bonding capacity for city infrastructure.

"Does the county have a responsibility to build city streets?" asked Planning Commissioner Brenda Bode.

West Williams Avenue, which would run east to west from Edgerton to Ohlman streets, probably should have been built years ago, said Bode. Instead, the street, which would serve the proposed 130-unit Edgerton Place apartment complex, would be built using $802,188 from county TIF 3.

The entire TIF project lies within Mitchell city limits.

Bode's comments notwithstanding, the county Planning and Zoning Commission voted unanimously Tuesday to recommend TIF 3 for approval by the Davison County commissioners on July 9. Commissioners Kim Weitala and Charles Storm were absent.

TIF 3, noted Bode, came hard on the heels of county TIF 2, which will fund infrastructure for the Pheasant Ridge apartments west of the state Highway 37 bypass along Cemetery Road in Mitchell. Both developers, Bode said -- Chuck Mauszycki Sr. for TIF 2, and John Clarke for TIF 3 -- had to seek TIF financing through the county because Mitchell is near its legal limit on bonding capacity.

Bode and Commissioner Tom Greenway both said the county needs to set future limits on TIFs.

"I'm going to vote for this project, but some rules be must be set," Bode said. "A definite dollar amount needs to be set by the commissioners."

County Commissioner Denny Kiner, who is also a member of the planning board, said the commissioners will set limits at upcoming meetings.

Greenway complained that the county has not received enough information on how TIFs will affect the taxes of other county residents.

"I and all the other people in Davison County need bridges and a way to pay for them. I'd like a $900,000 TIF to take care of the roads," he said. "This whole (TIF) process has been secretive and it bothers me."

Bode said the county's support for TIFs is not permanent.

"When will the city be ready to step back in?" Bode asked. "We don't know that, and the day is going to come when we're going to say say 'No.'"

County TIF 3, if approved by the county commissioners, will use new and higher tax revenues captured from the $6.5 million Edgerton Place apartment complex to pay the cost of building West Willams Avenue.

The complex is south of Havens Avenue and the County Fair Food Store.

The proposed project will have two, 65-unit apartment buildings containing one- and two-bedroom units that will rent for $610 to $825 a month, said County Fair President John Clarke, an investor in the Edgerton Place project.

Attorney Don Petersen, who represents the developers, said the project must be built within the first five years of the TIF. If both 65-unit buildings are built, the TIF could be paid off within 10 years, he said. The maximum term for a TIF is 20 years.

Clarke said the project will be good for Mitchell. He said Stencil Homes, of Aberdeen and Sioux Falls, will build the apartments using a tested design that the company has used in other cities. Tuesday night, Clarke displayed a photo of a Stencil-built Aberdeen complex that would be duplicated in Mitchell.

The city has already approved a conditional use permit for Boehnen Enterprises, of Sioux Falls, owner of the project site.

The permit is required for multifamily housing in the highway-oriented business zone.

All city concerns were addressed at Monday's City Council meeting, said Mitchell Mayor Ken Tracy, adding, "The City Council unanimously endorses the application."

Commissioners asked Mitchell Superintendent of Schools Joe Graves about the potential effects growth on Mitchell schools.

"Can you handle 10 percent growth?" asked Commissioner Gary Stadlman.

"Absolutely," Graves said. He said the Mitchell district lives off its general fund, which is unaffected by taxes that would be captured by a TIF. The state aid formula is based on enrollment, Graves said.

"When we have enrollment increases our financial problems solve themselves," Graves said. "We need the housing and we need the students."

Graves said the new student apartments at Mitchell Technical Institute "won't even take the growth we're expecting this year. We expect the housing demand will get higher from MTI, and not lower."

Stadlman, who is also mayor of Ethan, said any such project would have "growing pains" that could be costly to the county in terms of law enforcement, jails, welfare, health and other services.

"The county is ultimately on the hook for costs if more people end up in jail," Stadlman said.

Kiner added the county paid $90,000 in the past year for medications for jail inmates. He was wary of potential costs, but favored the project.

Clarke said the future residents of his apartments are not likely to cause problems.

"We're not just taking people off the street," he said. Potential tenants will be screened, he said, and must have a job, credit score and rental history. He said the complex will not accept tenants with a felony conviction.

Growth and housing are needed if Mitchell is to survive, said Bryan Hisel, executive director of the Mitchell Area Development Corp., who endorsed the project.

"We have to stop treating growth as a problem, because decline is all around us," Hisel said. "Growth is a problem that is manageable. If you start going backwards in population, you have bigger problems."

Kiner agreed. "If you don't have any growth our total annual budget is not going to grow," Kiner said. "If you don't give anything, you're not going to get anything."

Greenway had a tough time believing applicants' assertions that the entire apartment project would fold without TIF funds, but Petersen said that would be the case. Clarke said his company recently invested millions for an expanded supermarket to serve Mitchell.

"Not one dollar came from taxpayers," he said. He didn't see it as unreasonable to ask for public support to build a road that will benefit the community. Without the TIF, said Petersen, "the project just doesn't work."