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Council votes down tax exemption request

By Staff | Aug 4, 2009

Construction on a 14-unit one-level housing complex tailored for senior citizens was planned to begin later this year, but as of last week the project was in limbo.

Harley Johnson, of Killarney, Manitoba, filed a five-year property tax exemption for the estimated $1 million housing complex on the east edge of Rugby, but it failed to receive the support of the Rugby City Council at its Aug. 3 meeting, leaving Johnson to question whether to build the units, which reportedly had enough tenants lined up to fill.

The 4-3 vote was for a five-year exemption, which included 100 percent exemption in year one; 80 percent in year two; 60 percent in year three; 40 percent in year four; and 20 percent in year five.

Voting down the exemption were councilmen Bill Hartl, Terry Wentz, Steve Brossart, and Gerry Jacobson. Voting for it were Jim Hoffert, Bruce Rheault and Dave Bednarz. Councilman Monte Schneibel was not in attendance.

The Rugby Area Job Development Authority (JDA), at one of its July meetings, approved a five-year, 100 percent tax exemption requested by Johnson and forwarded it to the council for approval.

However, after over 30 minutes of debate, it was evident some council members had reservations about granting a 100 percent tax abatement for a housing development project.

“I don’t understand how housing falls under jobs development,’ said Dave Bednarz, Ward Two councilman, questioning what significant job creation will come from this facility.

Bednarz made it clear he’s happy to see the planned project, but he doesn’t believe it warrants a 100 percent tax exemption for five years. Rather, to be consistent with other tax exemption requests the council has approved, it should continue to be on the descending scale.

Bill Hartl, Ward Three councilman, who joined the meeting via telephone, questioned whether it’s fair to grant the abatement when there are existing apartment complexes that fall under senior-style living quarters, and those builders haven’t received any tax exemptions.

Ward Two councilman Gerry Jacobson, who initially made a motion to approve a five-year, 100 percent property tax exemption filed by Johnson, but which died for a lack of a second, had a different outlook and was by far the most outspoken council member about the need for more tax incentives for business and housing development.

Jacobson believes this project does very much tie into Rugby’s economic picture. It’s evident there is a need for additional senior-style homes, as indicated by the interest shown in the proposed complex. In the past, many retired residents have left the community to find those types of dwellings in larger towns. Construction of a complex in Rugby will help to retain that population, keeping them doing business in our community and using services such as the medical facility.

Jacobson added other communities are making strides to provide incentives, not only to bring new businesses and jobs, but also to encourage new housing projects or major remodeling of existing ones. He believes Rugby could and should do more.

He acknowledged in years past there were ambitious people who built homes and complexes or started a business without tax exemption support. However, times have changed. There isn’t the feeder population to draw from. The city and county population are shrinking, and Rugby is competing with much larger towns to attract and retain people and businesses.

And if steps are not taken to do that, the town is going to face hard times, he believes. While Jacobson wants to see the exemption approved, he would not support an exemption that wasn’t 100 percent for the full five years.

Brenda Foster, executive director of the JDA, also spoke in support of the JDA board’s recommendation. She said it’s clear there is a need for more senior housing opportunities. They help diversify the housing market in the community, and that is important when individuals are looking to move or relocate to another community. While the housing unit doesn’t bring jobs, it does offer an opportunity for existing businesses to pick up additional work, including lawn care and snow removal service.

Johnson attended the meeting, noting it was a local woman who contacted him about possibly building a senior-style complex in Rugby similar to the one he constructed in Bottineau.

After careful consideration, he moved forward with the plans, contacting the job authority and working with local land owner Gary Laughridge in securing lots and developing the selected area.

Johnson planned to purchase building supplies, appliances, floor coverings and other items locally.

He received a five-year, 100 percent tax exemption from the city of Bottineau and told the council any exemption would help, noting he expects it takes about 20 years before reaching a break-even point. In addition to Bottineau, Johnson also built a senior housing complex in Killarney.

Foster was disappointed by the council’s action and hopes Johnson will consider moving forward with the project, despite not getting the property tax exemption.

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