|
Downtown housing project lands $900K in tax credits
by Gregory R. Norfleet · News · September 29, 2022
The developers behind Heritage Hill, the housing development planned for downtown West Branch, on Sept. 21 received notice that it qualified for more than $908,000 in tax credits for the first 27 homes.
The announcement also further encourages West Branch City Administrator Adam Kofoed that developer BBCO LLC will follow through on its plan to build because not doing so would likely harm the company’s standing for future funding.
The Iowa Economic Development Authority issued a press release on Sept. 21 stating that it awarded $35 million in Workforce Housing Tax Credits to 57 projects amounting to 2,343 housing units, from apartments to single-family homes.
“Everybody is very excited,” BBCO LLC partner Blaine Thomas said. “This is a huge win for West Branch as well.”
Thomas said several people in West Branch helped bring about this development, including City Attorney Kevin Olson, who encouraged him to look at the property, and City Administrator Adam Kofoed, who wrote an endorsement letter to the IEDA.
“(Kofoed) wrote a letter that was easily the best documentation for a community’s need I’ve ever seen, and I’ve done a lot of them,” Thomas said.
Kofoed said the IEDA award shows “we have an experienced developer” with a plan to finish all three, or possibly four, phases of the project in about eight years.
“In general, it’s a success story as well since we’re going to clean up a site that is a brownfield and has soil issues,” he said. “To pull that off in six to eight years shows the effort put forth by people and councils before us and the current developers and staff we have now.”
West Branch Community Development Group Executive Director Jessi Simon called this “great news” for the developers.
“I am always happy to see IEDA incentives and resources put to work in our community,” Simon wrote in an email to the Times. “Heritage Hill will help fill a gap in current housing and provide units that are more affordable than other new construction in West Branch.”
Kofoed said Heritage Hill will build housing units for $216,000 or less, “which is nearly impossible for brand-new” homes.
Should the developers meet this goal, Kofoed said they would provide rental homes for “the type of people we’re trying to recruit”: single parents and young professionals.
“This is really helpful for the market we’re hitting,” the city administrator said.
Simon said that this will also bring more potential employees to town.
“(This) should positively improve the workforce available to our local businesses and is undoubtedly expected to help our community thrive by attracting new families and residents into West Branch where they will find homes within walking distance of a vibrant downtown district where they can eat, shop and explore!” she wrote.
“Housing is a critical part of Iowa’s efforts to attract and keep a skilled workforce, strengthen the quality of life in our communities and grow the economy,” said Debi Durham, executive director of IEDA and the Iowa Finance Authority. “The awards announced today will help more communities thrive and more families move where opportunities await them.”
Groundbreaking possibly by fall
Heritage Hill’s final preliminary plat goes in front of the Planning & Zoning Committee on Sept. 27. If approved, it will appear before the City Council on Oct. 3, Kofoed said.
Thomas said he hopes to break ground “as soon as the city will let me have the permits” — hopefully, this fall — with the first 27 units substantially complete within a year.
BBCO — short for Blaine & Barry Co. — is a partnership of Thomas and Barry Frantz; Frantz owns Barry Frantz Construction. Thomas said the two have worked together before and he and Frantz are “total opposites.”
“But opposites attract,” he said, chuckling. “That guy is just brilliant (at his profession).”
Frantz will oversee construction.
“He’s the bulldog,” Thomas, who also owns Blue Sky Developers of Iowa City, said. “He’s very smart in the process. It takes a village to do things like this and you have to have leaders in certain places. It’s going to be Barry. His family has been in construction for decades.”
Frantz, who is in his 60s, started working for his father’s business very young, more than 50 years ago, Thomas said.
Kofoed likes that Thomas is originally from Solon and that he appears to have an eye for investing in small towns.
The first 27 units make up the first phase of an $18 million, three-phase project that will clear out the lots and adjacent properties between Green and Main streets and along Fourth Street. Heritage Hills may include a fourth phase should it acquire land on the northwest corner of Fourth and Main.
Much of the four acres of the property once belonged to Croell Redi-Mix. BBCO spent about $800,000 to purchase three adjacent lots and $1 to purchase the Croell site.
Under the IEDA guidelines, BBCO will get up to $90,000 on income tax returns per year, Kofoed said. And under an agreement with the city, the city will use Tax Increment Financing to return some of BBCO’s property taxes to the company.
City benefit
BBCO agreed to give the city the equivalent of half of the tax credits — about $450,000. Instead of rebating BBCO $4.5 million in TIF funding over 13 or 14 years, the city will reduce that roughly in half, the city administrator said.
The exact figure depends on how much BBCO pays in property taxes. If Heritage Hill’s property values do not come in high enough, then that reduces the rebate.
And by reducing the rebate, the city keeps more money in its budget for city services, Kofoed noted.
The city agreement also commits BBCO to finish the first phase in three years.
Thomas said he began working with state and local governments in 2015 and that the IEDA prefers to work with reputable companies that finish what they start.
“If we do not meet the guidelines, we forego the credit,” and may not get awarded another in the future, he said. “Failure is not an option.”
Part of the challenge remains in finding contractors and suppliers that can help BBCO come in at or below that $216,000 maximum, Thomas said.
“We cannot absorb price increases,” he said. “Now that (the credits) are in place the work will be very competitive. … We continue to be stewards of taxes and local money. I am responsible for what I complete and I will do it at all costs. This is not my last project.”
Thomas said that if BBCO did not receive the tax credits, “I would have footed the bill.”
Simon said she hopes the project will eventually include a mixed-use building — businesses on the ground floor and housing above — on Main Street.
“(That would) expand our economic opportunities and welcome more local businesses into commercial spaces within our Main Street district, but that piece is still under negotiation,” she wrote.
Seventeen of the projects awarded Workforce Housing Tax Credits received the $1 million maximum. The $908,415 in credits awarded to Heritage Hill made for the 23rd-largest award of the 57 projects. The smallest amount, $27,271, went to a project rehabilitating four houses in Mount Ayr.
The IEDA press release stated that it received 133 applications asking for nearly $79 million in tax credits for the 2023 fiscal year. The IEDA set aside $17.5 million for projects in Iowa’s 88 least-populated counties. The agency scored projects based on “readiness, documented financing, need, local support and participation,” read the announcement.
|
|
|
|
|
|
|
|
