Posted 7/21/15 (Tue)
By Kevin Killough
A 47-unit affordable housing project on Ray’s East side could break ground this year if the project can piece together the funding it needs for the project and the infrastructure to support it.
The project consists of two three-story buildings with a total of 47 units between them. The units have one to three bedrooms. Of those, 24 will be set aside for essential service workers at reduced rents. This includes firefighters, police, nurses, and teachers.
The project is located on the southeast corner of Fourth Avenue and Opportunity Street.
The $8.2 million project has about $2.5 million in support from the North Dakota Housing Finance Agency through its Housing Incentive Fund.
“That’s a grant to keep the apartment rents affordable,” said Tom Serie, who spoke at a Ray City Commission meeting earlier this month. Serie is a consultant with SW Design Build, Inc., the developer for the project.
The award is in place, but to secure the monies, Serie must match the award with commitments to contribute state income tax allocations from individuals and businesses.
“If you pay $1,000 on your income tax, fill it out and put $1,000 down,” Serie said.
The program basically directs tax dollars going to the state treasury directly into the HIF.
Another hurdle is the curb, gutter, water and sewer infrastructure costs, which are not part of the $8.2 million. These costs amount to about $500,000.
Serie asked the Ray Commission for a tax exemption to cover these costs. The developer would pay the money up front for these costs. That money would then get paid back through the tax exemptions over five years.
The exemption comes through the county, but none of the commissioners were sure such a thing would be legal.
“We’re waiting to see what the county says about it,” said Mayor Ken Munson, speaking after the meeting.
Munson said that since the infrastructure and the project it supports would provide development and growth for the town, it would have overall benefits for the town. So the city would have an interest in the agreement, if it’s legal.
At the meeting, Commissioner Troy Kupper also raised concerns that if the exemption is legally eligible for this project others may begin asking for the same thing.
“We need to set some ground rules of the commission together to uniformly address requests in the future so they’re all treated equal,” Kupper said.
In addition to the HIF monies, the project will also have financing from the Bank of North Dakota and investor equity.
Serie said he is utilizing the Flex PACE program through the bank, which allows him to buy down the rate of interest on that loan.
Serie has completed other projects with similar financial structure in the past several years, including one in Crosby. Serie was also the contractor on teacher housing units constructed three years ago in Ray.
Earlier, Serie pursued a hotel project in Ray, but put those plans on the backburner when the Skywatch Inn project began to take form.
Should the tax exemption to reimburse costs of the infrastructure fall through, Serie said there are other options. Much of it would be speculation at this point, so he declined to discuss any specifics.
“I feel confident that something will get done,” Serie said.