Posted 1/19/16 (Tue)
By Kevin Killough
A request to fund infrastructure supporting development of affordable housing was met with mixed opinions by the Ray Commission.
The commission voted last week to approve the request, but Mayor Ken Munson was against it, citing a concern over spending city money at a time of financial uncertainty.
Diane Weick, president of SW Design Build, requested the Ray Commission approve $500,000 in funding towards the water, sewer, curb and street improvements to the housing development.
The development is being funded in part through the state’s Housing Incentive Fund, which allows individuals and companies to direct income taxes into a fund for affordable housing.
The same company has done similar developments in Crosby and Minot, among other places.
The rents at the development would be lower than the rental market, and leases would be dependent on certain income limits set by the Housing Finance Agency. A portion of the units would be designated for essential service workers, such as police and teachers.
“We believe it would be a good addition to the City of Ray,” Weick told the commission at the last regular meeting.
The project is the remainder of what started as a much larger vision for the development company. At the start, it included over 90 apartments, a restaurant, and a hotel.
For a variety of reasons, including the recent downturn in the oil industry, the project was scaled back last summer to just 48 apartments and most recently, to just two 12-plexes.
The project recently ended up with a $500,000 funding shortfall, and the North Dakota Housing Finance Agency required the company to demonstrate it could fill that gap before it would provide an extension for its financing commitments.
According to Jolene Kline, executive director of the HFA, the organization didn’t require that Ray put up the money, but it did require the company demonstrate the money would be in place before an extension could be granted.
She added it’s unlikely in the timeframe SW Design Build was given that the money would have come through from any other source.
“Is it possible? Yes. But probable? No,” Kline said.
The original request for the money came up a couple months ago, and the commission formed a committee to discuss whether or not Ray wanted to make the investment.
Commissioner Troy Kupper and Richard Liesener sat on the committee and came to the conclusion the project had a number of benefits.
“We see it would be a great asset to the city,” Kupper said at the meeting.
He also said, as a committee, they thought the infrastructure would support city expansion to the west.
The project is proposed for a space one block west of Co. Road 17, between Second Avenue and Fourth Avenue. The avenues would be connected together by a road project designers call Opportunity Road.
Even with the current slowdown in the economy, the committee was betting growth would eventually happen.
Kupper said he and Liesener decided the apartments would bring in people whose tax dollars would ultimately reimburse the city for its investment.
“They’re going to have NCC service and buy gas,” Kupper said.
The discussion on the issue was friendly, but there was no consensus on the request.
Kupper and Commissioner Travis Rettig voted in favor of the motion to grant SW Design Build the money it requested. Liesener was unable to attend the meeting. Munson voted against the motion.
Speaking after the meeting, Munson explained he fully supported growth and housing in Ray, but he had some concerns about this project.
In its original form, Munson said, the project’s location made sense. It was a large-scale commercial development.
Now, scaled down to two 12-plexes, he is concerned about the city building infrastructure to support such a small residential development. The city will have to pay to maintain any infrastructure it builds for decades to come.
“I want to see more housing but at what cost to the city are we going to have it?” Munson asked.
Munson pointed to falling revenues from a variety of industry-related sources and said this is not the time to support such a project.
“I’m not saying that future growth isn’t going to come,” but it will be further down the road than was originally anticipated, Munson said.
The commission’s approval of the funding request is contingent on the signing of a developer’s agreement with the city.
Nothing in the motion limits what the commission could put in the agreement, and if no agreement is signed, the city keeps the $500,000.
The issue comes on the heels of lessons learned dealing with the yet-to-be-built SkyWatch Inn. The project ran into financing problems after work began. The city now has a large hole along U.S. 2. A developer’s agreement, now expired, didn’t grant the commission a lot of leverage to deal with the problem. Now a new agreement is under discussion.
“Learning from the past is huge,” said Rettig.
One of the stipulations the commission discussed at the meeting is no vertical building until all the infrastructure is in place to support the apartments.
“That’s not a point I’d wiggle on,” Ray Engineer Lonni Fleck advised the commission.
Weick said the stipulation is unnecessary since the company wouldn’t invest in apartments with no infrastructure, but Fleck said she has seen it happen before.
Weick asked the commission to focus on the funding request since the project can’t move forward without that funding in place.
If the project is dead, it would mean any negotiations on the developer’s agreement would be moot.
“We’re here to ask for a policy decision, not to decide every detail of a developer’s agreement,” Weick said.
Weick told the commission the project will begin in the spring and be completed in a single building season.