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Morris City Council approves new taxing districts for old school demolition

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Morris City Council approves new taxing districts for old school demolition
Morris Minnesota 607 Pacific Avenue 56267

The Morris City Council voted Tuesday to create a new taxing district and modify two existing taxing districts in order to finance future demolition and development on the old elementary school property.


During a public hearing on the resolutions, city council members learned more about Tax Increment Financing from the city's financial consultant and heard from citizens who have been involved in efforts to improve the property since the city acquired it from the Morris Area School District nine years ago.

Mark Ruff, senior financial advisor at Ehlers, explained to the city council that TIF is a tool designed to "level the playing field" - TIF will allow the City of Morris to use future taxes to pay for demolition and public improvement costs associated with the old elementary school site to turn it into a clean site for development.

"When homes or apartments are built on that site, the increased taxes that will result from them, most of those taxes will not go to the city, county, and school district - they'll go back to help pay for the cost of the demolition and public improvements," explained Ruff. Any taxes collected on the land itself will not be part of the TIF district.

In many cases, said Ruff, TIF districts are created on privately-owned land and put in place with an agreement with a developer. In this case, the city owns the property, so the TIF district will be set up in a way that will allow the city to decide whether and how to work with a developer.

"This step is really just giving you the legal authority to take the next steps after this," Ruff told the council. "It's not locking you into anything, it's just giving you those options that you'll make decisions on later."

Financing for work on the old elementary school property will come from three TIF districts - two that already exist but have met or are close to meeting their financial obligations, and a new district on the property.

Right now, two of the city's existing TIF districts - District 4 and District 8 - generate about $110,000 in revenue each year, which can soon be used for costs associated with the old elementary school property. Both TIF districts have 11 years left until they expire.

The new TIF District 15 is a redevelopment district, which requires that a building on the property is substandard - "There aren't many buildings as structurally substandard as [the old elementary school]," said Ruff.

Ruff estimated that District 15 could generate between $100,000 and $200,000 in taxes if the property is fully built to hold 80 housing units. However, Ruff emphasized that number is just a guess at this point and will depend on what happens with the property.

The only "catch" in using money from any of the districts, explained Ruff, is that District 8 is a housing district. There are some requirements about developing property with affordable housing, if money from that district is used.

If the city moves forward to demolish the old elementary school building and work with a developer to improve the property, the city can negotiate a contract that includes a development schedule, minimum values for the houses that are built, specifications about who pays infrastructure assessments, and a sale price for the land, Ruff said.

Council member Matt Carrington asked whether the TIF district would affect property tax payments for owners in the TIF district.

Ruff said that taxes are always based on value, so while some homes may have a minimum value, they would not pay more or less in taxes just for being in the TIF district.

During the public hearing, Sue Granger and Sue Dieter, representatives from a committee that spent nine years looking at redevelopment options for the property, gave the council an overview of their work and urged council members to take citizen input on the future of the property seriously.

Granger told the council that a group of citizens began meeting in 2001 to look at reusing the old school building and property.

Over their tenure, the committee hosted six public meetings associated with major grants to look at designs and plans for the property, Granger said. The committee also worked to develop multiple master plans for the property, looking at options for reusing the old building or demolishing the building.

"There was a lot of public interest in this property, and I know people are concerned about its future," said Granger. "I just want to urge you to not forget about the community and take a thoughtful approach to this. This is a beautiful piece of property, and with the TIF financing, I think you have a powerful tool there."

Other business

• The council approved final assessments of $2,082 per unit for this summer's improvement project on Pacific Avenue. Most of the cost of the project was covered by state and federal funding, so the nine affected lots were each only assessed for costs related to the sanitary sewer, said Hill.

• The council authorized the engineering firm Bolton and Menk to prepare a report on the city's water and wastewater operations for no more than $15,750.

• The council voted to reimburse the Morris Area Chamber of Commerce $15,377 for work on the city's tourism initiative.

Kim Ukura
Kim Ukura has served as the editor of the Morris Sun Tribune since August 2011. She graduated from the University of Minnesota, Morris in 2008 with degrees in English and journalism. She earned a master's degree in journalism from the University of Wisconsin, Madison in 2010. Prior to returning to Morris to work at the Sun Tribune, she worked in trade publishing. She has been recognized by the Minnesota Newspaper Association for both business and public affairs reporting.