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By LeAnn R. Ralph
COLFAX — The Colfax Village Board has approved rezoning 107 Dunn Street from agriculture to Residential-5 for a proposed affordable housing apartment complex.
The Colfax Plan Commission recommended the rezone at a meeting last week for the 32-unit apartment complex that would be operational in 2023 if all goes according to plan, said Scott Gunnufson, village president, at the Colfax Village Board’s November 9 meeting.
Representatives for Woda Cooper Companies, the developer seeking state tax credits to help in the construction of the apartment complex, have asked the village for Tax Increment Financing help as well.
Sean Lentz, the village’s financial consultant from Ehlers, Inc., also attended the November 9 village board meeting.
Municipalities are limited to borrowing 5 percent of their equalized value, and Colfax has a borrowing capacity of $2.75 million with $1.2 million in outstanding debt.
The village has $1.5 million remaining on borrowing capacity and will have the general obligation debt paid off by 2028, Lentz said.
Colfax has a solid general fund balance with $441,000 assigned and $600,000 that is unassigned, he said.
Assigned fund balances can only be used for the purposes to which they are assigned, such as village hall improvements, the Colfax public library or parks.
The unassigned fund balance can be used for any purpose approved the village board.
From a “big picture” standpoint, $600,000 is not very much money, but Colfax is doing quite well for a small community, Lentz said.
Gunnufson asked if the village is in a position to take on any new projects.
Lentz said he always recommends looking at what else is coming along, such as the major utility project for Colfax currently in the works.
The major utility project is the bank stabilization project so the Red Cedar River does not wash out Colfax’s wastewater treatment lagoons.
The entire project will cost $1.6 million, but the village will only be paying about $40,000, with Community Development Block Grant funds (CDBG) and funds from the United States Army Corps of Engineers covering the remainder of the cost, said Lynn Niggemann, village administrator-clerk-treasurer.
Colfax’s two TIF districts also are in good shape, Lentz said.
One of the TIF districts is getting close to being closed out, but Colfax has the option of keeping it open for another year and putting the tax increment of approximately $86,000 toward affordable housing rather than to the TIF fund, Lentz said.
In a TIF district, the property taxes generated by new construction that would be paid to the village, the school district, the county and the technical college district go into a special fund for the village to use on expenses associated with the TIF.
When the TIF district is closed out, the village, county, school district and technical college district receive their share of the property taxes in the TIF district fund.
Colfax has an agreement with Timber Technologies to refund, through the TIF district, some of the property taxes for the company’s new addition, Lentz noted.
If Colfax wants to use a TIF district to help the affordable housing project, Lentz said he would recommend forming a new mixed-use district that allows residential, commercial and industrial development.
In a mixed-use TIF, residential is limited to 35 percent of the district, Lentz said.
According to the “12 percent” test, which is the percentage of the value in the TIF district in relation to the value of the entire village, Colfax is in a position to form another TIF because the value for Colfax is 9.45 percent, he said.
Lentz said he liked the model of pay-as-you-go to refund property taxes through the TIF district rather than upfront incentives because then it is the company’s risk and not the village’s risk.
If there are other expenses for the village, such as utility costs or street costs, then the village should pay those expenses with TIF funds before refunding property tax money to Woda Cooper, Lentz said.
If the new TIF district, TIF 5, is an overlay on TIF 4, then the value in TIF 4 is frozen, he noted.
Since construction on the affordable housing complex would start in 2022, then Colfax may want to create a new TIF district in 2021, Lentz said.
A mixed use TIF would help the village to leverage the success of residential to help commercial and industrial development, he said.
Right now, Woda Cooper is at step number one to see if the company can obtain tax credits and will know if they have been successful in being awarded the tax credits next spring, Niggemann said.
The rezone is necessary for the company to apply for tax credits, and Woda Cooper needs a purchase agreement with the landowner for the tax credit application, she said.
Woda Cooper will score better on the tax credit application with village assistance, Lentz said.
The Colfax Village Board unanimously approved rezoning 107 Dunn Street from agriculture to R5.