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Council agains deny request for tax exemption on proposed senior housing unit

By Staff | Sep 9, 2009

Another Rugby City Council vote, but the same outcome.

No to a property tax exemption for a Killarney, Manitoba, man proposing a $1 million, 14-unit senior-style living complex on the east edge of the city.

As it did in August, the council voted 4-3 to deny the application filed by developer Harley Johnson. The application was brought before the council at its Sept. 8 meeting for reconsideration.

The motion was for a five-year tapered tax exemption -100 percent in year one; 80 percent in year two; 60 in year three; 40 in year four; and 20 in year five.

Those voting for it were councilmen Gerry Jacobson, Jim Hoffert and Bruce Rheault. Those voting to deny it were Bill Hartl, Dave Bednarz, Steve Brossart and Monte Schneibel. Councilman Terry Wentz abstained from voting.

Johnson was again disappointed with the lack of council support and said he’s going to have to re-evaluate whether he will go ahead with the project, which he planned to build in the 900 block of 4th and 5th Streets S.W. at Prairie View Estates.

“I had priced out local builders and plumbers for the project, but now I have to call them tomorrow and tell them I’m holding off,’ Johnson said following the council’s vote on Sept. 8.

Construction was going to start next month, but that won’t happen now.

Similar senior-style units were built by Johnson in Bottineau, and there he received a five-year, 100 percent tax exemption from that city council with no resistance. “I don’t understand why the resistance here,’ he said. “It’s disappointing.”

Reportedly, there were already enough tenants lined up to fill the proposed 14 units.

One of them, Peg Stadum, said she toured Johnson’s unit in Bottineau this spring, and after seeing all the amenities and spacious floor plans which were quite favorable to senior citizens, she became quite interested in being a tenant.

Stadum said most senior citizens don’t want to have to move out of their homes or apartments, but this type of housing offers them many attractive and unique things.

Prior to the council reconsidering the tax exemption, Stadum said she hoped the council would think positively toward this project. A few others in attendance at the meeting echoed similar support for the project.

As with the first vote, councilman Jacobson expressed his disappointment following the decision.

Many communities are taking an aggressive approach when it comes to development and building, offering tax exemptions to encourage new housing and business construction as well as building improvements. He said Rugby must take a similar step to remain competitive. If it were up to him, Jacobson said he would give everyone who was going to improve their property some exemption.

Hoffert added this project stimulates economic activity, not just with the initial building of the units, which will call on local tradesmen and use local supplies, but also potentially bring some retired people to the community to reside. And they will be doing business here, shopping in stores and using such services as the medical center.

“Common sense tells me we should do it (grant the tax exemption),’ said councilman Rheault. “There are so many positive spinoffs from this.”

However, some on the council had reservations. Bill Hartl, Ward Three councilman, said the concept behind the state allowing cities to grant tax exemptions was to spark economic activity and was tied more closely to light manufacturing and other business development which creates jobs. He’s wrestled with this notion of an exemption for a housing unit. Yes, it’s technically a business, but it’s not like other businesses.

Monte Schneibel, Ward Four councilman, said no doubt this is a nice facility, but he expressed concerns that this particular business is not like other businesses that have come before the council for exemption requests. He would be in favor of some exemption package but is not comfortable with a five-year exemption. Schneibel said perhaps a committee could be established to look more closely into the issue.

Jacobson said the finance committee already did that in July but did not make any specific recommendations for this particular tax abatement request involving a commercial housing unit. And the Rugby Area Job Development Authority is already tasked with reviewing exemptions for the council.

The JDA initially recommended to the council a five-year, 100 percent tax exemption. Brenda Foster, executive director of the JDA, stressed Johnson’s application is considered a new business and not a housing complex. The units will be leased to tenants. She added Johnson is willing to put a lot of investment in this community and is asking only for a few years of tax exemption.

“Bottineau’s council approved this exemption,’ she said. “They saw the importance of this (to their community).”

Mayor Dale Niewoehner and Mark Butz, city attorney, both chimed into the discussion, saying this is a worthwhile project.

Butz said right now the city has gained nothing from this project but in short time will receive a significant boost to the property tax roll when it is constructed. “I’m sorry, but for the four of you who didn’t support this, I don’t get it,’ Butz remarked.

Niewoehner asked the council if it wanted to consider any other incentives, but no motions were made.

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