Andover elected officials May 1 approved a plan to financially assist a senior housing developer.
Three companies and private investors formed Arbour Oaks, LLC with the plan of building a three-story, 70-unit senior housing unit in Andover’s Grey Oaks neighborhood on the southwest corner of Hanson Boulevard and 155th Lane N.W.
The developer consortium was able to secure a bank loan and private investment to cover most of the project costs, but Andover will be creating a tax increment financing (TIF) district in this area to capture the increased tax capacity to help close the funding gap.
The new TIF district will commit $540,000 to the project, according to City Administrator Jim Dickinson. The city’s tax increment payments would only come when development occurs, so the TIF dollars would not be made available if the project stalls.
When the idea of TIF was first brought up at a Feb. 6 Andover Economic Development Authority (EDA) meeting, Mayor Mike Gamache said, “I think TIF is perfect for this type of structure.”
“What we’re basically doing is taking the increase in taxes from the improvements being done and utilizing those back to the project to pay the developer for the qualified improvements,” Community Development Director David Carlberg said.
The senior housing facility would include 42 one-bedroom assisted living units, seven two-bedroom assisted living care units, 14 studio memory care units, six one-bedroom independent care units and two two-bedroom independent care units.
Trident Development, LLC and Lyon Contracting and Development, Inc., which are both based out of St. Cloud, and Tealwood Management, LLC of Bloomington are the three groups that formed Arbour Oaks, LLC.
Besides approving the TIF assistance at the May 1 meeting, both the Andover City Council and the EDA approved a development agreement, which requires at least 20 percent of the 70 units to be occupied by people whose incomes do not exceed 50 percent of the median county income at that time.
The development agreement calls for the project to start no later than Sept. 30 and to be substantially completed by Dec. 31, 2013. The increased tax increment would be used to pay for the city’s commitment starting in 2014.
Dickinson said the TIF District could decertify at the end of 2029 if the city’s obligation has been paid off by then. Otherwise, the district could possibly be in place until the end of 2039.
The agreement includes an out for the city should the development fail to pay taxes or special assessments, for example. The city would have an option to suspend or terminate the TIF district under those circumstances.
Eric Hagen is at [email protected]