Jasper Common Council discuss Northridge Estates concerns; adds sunset clause to new TIF district

As Jasper moves to create the city’s first residential tax increment finance (TIF) district, council members at Wednesday’s meeting raised concerns about the district’s longevity and its impact on property taxes.

The council was set to consider and potentially approve an ordinance agreeing to use the TIF funds captured by the Northridge Estates development to offset the investment into the infrastructure supporting new neighborhood. However, council members Vince Helming, Chad Lueken and Nancy Eckerle all raised various concerns slowing the approval process.

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Helming opened the conversation after the ordinance was introduced stating several objections and concerns about the TIF that Lueken and Eckerle echoed.

“I didn’t (sic) believe that the TIF should be directly used to lower somebody’s home price, especially when their average household income is about 30 percent more than the average in the city,” Helming said.

He also stated he was concerned about the burden the TIF could put on other taxpayers in the community. “Beyond those years, after the infrastructure is paid, that TIF kind of become a hidden tax on constituents because their tax rates would have gone down if the increased assessed value of these properties had been included in the tax pool,” Helming said.

Lueken also stated he was concerned about the impact on taxpayers and had wanted to see those prospective numbers before approving the ordinance.

According to Matt Eckerle with Baker Tilley, the city’s financial advisory firm, it is difficult to give the council a hard number regarding the impact on the Jasper taxpayers if the development and TIF moved forward.

Eckerle said that based on current assumptions if the development was completed without the TIF, it would save a property owner about $0.45 cents annually based on the median (according to the Census Bureau) home value of $185,500.

“That’s presupposing Ruger (Kerstiens) would be able to construct this new development without the use of the TIF and all of the asset value were to flow into the tax base of the overlapping taxing districts,” Eckerle said.

He also added that the referendum on the Thyen-Clark Cultural Center is immune to the TIF. If the development was built using the TIF, that would lower the tax rate for taxpayers by about $0.0005 per $100 of assessed value.

Helming also objected to the assertion that the project would not move forward without the TIF. Helming felt the land was desirable, and the developer didn’t need the TIF to add the new housing.

Ruger Kerstiens, representing Kerstiens Development, LLC, told Helming that the project had been under consideration for some time and that if it would work without the TIF, they would already have started on it.

Helming also pointed out that he disagreed with the ordinance’s declaration that the property was undesirable for normal development except through the creation of the TIF.

During the discussion on the ordinance, City Attorney Renee Kabrick pointed out this was statutory language required by the state in the declaration. “It’s included every time that we go through this process for TIF,” Kabrick said, pointing out that the language includes the term “other reasons” as part of the reasoning for the TIF. “There are a number of reasons why developing this area is so difficult; most of them relate to utilities and storm water.”

Kerstiens estimates that installing utilities, sidewalks, storm sewers, curbs and streets to the new development will cost $5,127,893 (barring any material price increases). If the TIF passes, the developer will recoup about $1.1 million of that, bringing the lot prices down about $6,500 each.

Kerstiens is also seeking a READi 2.0 grant to lower those lot costs further. If they are awarded the funding, the cost of the lots could be lowered to $13,000 in total with the TIF. Kerstiens told the council they would not be eligible for the READi 2.0 grant if the TIF is not approved.

Helming and Eckerle asked Kerstiens what the developer would do if the TIF was not approved.

“We would just sit on it and farm it,” Kerstiens responded flatly.

Councilman Kevin Manley stated that the development would have a net positive impact on the tax base of all taxing units if the assessed values continue to increase.

Councilman Phil Mundy spoke to the price of the new homes not being considered a starter-home rate. He explained that these homes would relieve the pressure on the market by creating a step-up home for residents ready to move from a starter home into a larger, newer home.

He pointed to his employer’s difficulty filling positions because of the lack of housing in the area. In speaking to employees at the company, Mundy said he had heard from many that if they had an opportunity to move up into a newer home in a new neighborhood with the savings created by the TIF, they would do so.

“That then would free up existing housing,” he added.

After the meeting, Mundy said the company also has employees driving from nearby counties to work. This upward movement would create space in the lower-cost homes for those employees to move to the area.

Mayor Dean Vonderheide said during the meeting that this increase in population would also help increase the Local Option Income Taxes–an important issue for taxing units as the state legislature continues to examine lowering property taxes.

Councilwoman Eckerle also expressed concern about the TIF continuing beyond the proposed payout to Kerstiens. TIF districts are statutorily set to exist for 20 years.

Eckerle advocated for a sunset clause of at least ten years to be added to the Northridge Estates ordinance.

In discussing whether this would be enough time for Kerstiens to recoup the $1.1 million of the infrastructure investment, Clerk-Treasurer Kiersten Knies explained that the projected payback would take three to four years after the city began collecting the new tax increment, which should begin in about three years. All told the payback is expected to take about six to seven years. She estimated a ten-year sunset clause in the ordinance would be adequate to ensure Kerstiens Development met its goal.

After hearing that they could update the ordinance to include the sunset clause, the council agreed to add the language. The new ordinance will be up for final consideration and adoption at the November 20, 2024, Jasper Common Council meeting, which will be held in the council chambers at 5:30 p.m.

The council also took the following actions at Wednesday’s meeting:

–Passed ordinances 2024-14 and 2024-15 for the 2025 budget and tax rate. The council approved the 2025 budget of $28,083,171 and the preliminary tax rate at $0.9987 per $100 of assessed value. That tax rate is advertised and will likely be lowered after the state certifies it. For example, the 2024 tax rate advertised was $1.0568 per $100 of assessed value, and the certified tax rate was $0.7968 per $100 of assessed value.

–Passed ordinances 2024-19 and 2024-20 granting utility employees, city employees and elected officials a 3 percent salary increase.

–Held a public hearing for a resolution confirming the Park Place Estates as a designated economic revitalization area. This is for the construction of the third phase of the Premier Property Management apartment complex located on 32nd Street.

–Approved a resolution allowing the mayor to work with Krempp Construction and designers on the Regional Wellness Center on behalf of the city and council as they develop plans for its design and construction to determine the scope of the project. During a discussion on the proposed $45 million project, the council and mayor reiterate their resolve not to impact property taxes to create the center. The council raised concerns about the long-term impact on other projects’ funding if they take on the wellness center.