Incentive for Austin

When Rachelle Burch moved to Austin to work as a brand manager and segment specialist at Hormel Foods Corp., she ended up living with a coworker for three months before she was able to find the right housing.

But not everyone is waiting for the right housing.

“We are losing a lot of individuals to surrounding areas as well as Rochester because of the updated housing and the current housing that’s available to everyone,” she said on Tuesday.

Burch was one of several community leaders who spoke to the Mower County board on Tuesday and the Austin Public Schools Board on Monday about a lack of available and updated housing and a tax abatement aiming to spur home and apartment building projects.

“We need to grow our businesses and create jobs and welcome newcomers with a reasonable array of housing options so they choose Austin to raise their families here and shop here and become longterm residents,” City Administrator Craig Clark said.

If supported by the city, school district and county, the tax abatement would last for three years and would give residents and developers of new residential property developed during that time a break from residential property taxes for five years.

The school board unanimously voted to support the abatement, while the county board referred it to its Finance committee. The Austin City Council previously approved the abatement as part of a housing package during a work session, but the council still needs to approve it in a full meeting.

A positive impression

Austin officials have long sought ways to address a shortage of workforce housing, and Mayor Tom Stiehm formed a committee to address the issue.

Clark told the school board that in four years, Austin will need another 300 rental units and 118 single family or townhouse units. But 2015 only saw six new homes built in Austin with an average of 10 new homes each year over the last six years.

“Our supply is not keep pace with the housing demand,” he said.

Eric Shoars of Townsquare media told the school board that workforce housing isn’t an Austin issue; it’s an issue across Minnesota and the U.S. that spans all classes and demographics.

“We have the opportunity here to address this now or kick the can down a few years, because this is not an issue that is going away,” he said.

To Burch, it’s important for Austin to make a positive first impression, which she argued will then spread through word of mouth and encourage people to move to town. She spoke to the county board Tuesday to represent young professionals moving to and living in Austin.

With a lack of updated and existing housing in Austin, Burch said that can make for a waiting list for young professionals moving to town.

Like many early in their career at Hormel, Burch said she could start in Austin, be transferred and then moved back to Austin. Her initial experience in Austin could affect if she and others like her live in Austin or a nearby community when they come back.

A competitive market

Austin City Council member Dave Hagen called the tax abatement plan a proactive approach to addressing a community need.

“I believe this will give Austin and the surrounding communities a competitive edge for that housing dollar,” he said.

But that competition is widespread, as Austin Area Chamber of Commerce Executive Director Sandy Forstner noted there’s much competition for workers and businesses, especially with the Destination Medical Center project in Rochester.

“We’re in a very competitive situation with for workforce,” Forstner told the county board Tuesday. “We’re in a competitive situation for housing, students, particularly in Greater Minnesota, and so I just think we need some tools in the box.”

Forstner said Austin needs a mix of homes and apartments. But he noted noted fewer homes are on the market than have been for several years, and he said it’s been about 10 years since an apartment complex was built in town.

But there are some good signs, as he said about 78 percent of the roughly 200 families Community Concierge Kristen Olson works with each year end up moving to Austin.

Commissioner Jerry Reinartz said the need is in town and asked if anyone had indicated they’d be interested in building, and Clark noted that they’ve heard from potential developers but just want them to get “off the sidelines.”

Forstner noted the abatement is just one step of the process and one stop in the plan. While leaders think the abatement will help, Shoars noted this isn’t a magic bullet, it’s just a first step to look to entice families to put down roots in Austin.

The abatement would apply to all homes and apartments built in the three-year trial period, regardless of the project price. While Clark noted it may seem like someone capable of building a multi-million dollar home may not need the abatement, Clark noted the committee would love several multimillion homes built as it boon for the tax rolls once the abatement expires after the five years.

With the average home being on the tax roll at least 40 to 50 years, Clark said the committee felt a five-year abatement was well worth the longterm benefit of adding incentives to build in Austin.

The rebate would not affect taxes for existing properties as the tax burden would remain unchanged until its shifted once the potential properties enter the tax roll after the rebate period.

Looking ahead

If all three boards support the abatement, developers and families won’t automatically get the abatement. They’ll have to go before the school board, council and county board in order to get approval from each before building, which is required by state statute.

The tax abatement would transfer to new property owners over the five year period.

But the plan doesn’t have complete support. At Tuesday’s county board meeting, Austin resident James Williams said the plan would put his home at a disadvantage to new properties, event after he put money into his house in an attempt to make it more valuable on the market.

County Coordinator Craig Oscarson also voiced concern about the end of the five-year abatement. He asked if the city, county and school district could consider adding wording to potentially keep owners, especially developers, out of tax court. In past tax abatements, Oscarson said the county has seen people challenge the assessed value of their properties immediately after an abatement expired, and such challenges often lead to costly tax court challenges.