by Eric Oslund
The Otsego City Council will hold a public hearing on July 17 to discuss the tax increment financing agreement it reached with Guardian Angels in late May.
At the end of the meeting May 22, the council and Guardian Angels agreed that the senior housing development will get roughly 90 percent of the new tax generated on the parcel it purchased in Otsego over the next 26 years.
This assistance will only be for Phase 1 of the construction because it will be on the specific parcel dedicated to it.
Guardian Angels will then deed over two, roughly 1-acre chunks of that parcel back to the city, and then the city can sell them for future commercial development.
There was some talk at the meeting about there being restrictions on what types of businesses could purchase those two lots, since Guardian Angels wants them to be businesses their seniors will be able to use, but it was not finalized at the meeting.
Along with deeding over the two parcels of land, Guardian Angels will be responsible for paying off the remaining special assessments that were on the property when it was purchased – such as those relating to roads, water and sewer that were put in when the area was developed.
These talks of financial assistance originally began after Guardian Angels leaders did their due diligence in what it would cost to build the facilities, realizing they had not budgeted enough.
“They came in last summer/fall and told us they had purchased the land and presented a concept-type layout and the council provided favorable comment to that,” Otsego City Administrator Adam Flaherty said. “They had a budget back then of, we’ll call it somewhere around $25 million to do the project. After they had concept approvals, they went through all of their due diligence and got quotes on construction and whatever else, figured out all their costs, and it came in roughly $31 million, so there was a project creep I suppose and some uncontrollable factors – mostly interest rates – that influenced the cost of doing the project from $25 (million) to $31 million and that’s where they came in and said, ‘OK, now we need some sort of assistance to get this project off the ground given the new budget for this project.’”
Neither side was giving ground early on in discussions, which began during a special meeting of the council before the regular City Council meeting and continued another hour afterward. Guardian Angels was only suggesting the 90 percent TIF over 26 years, and the City Council originally seemed to see that as too much.
Two things really swayed the council’s decision, which led to council members’ unanimous agreement to move forward: the two parcels of land being deeded over to the city and Flaherty’s case that there are some decisions that need to be made on factors other than taxes.
“I think what I was getting at was the council was very focused on the tax generation of this development,” he began. “You look at it from maybe some of the other community members or residents saying, ‘OK, we don’t currently have a senior living facility in town.’ There’s a need for it based on studies, so maybe helping out and getting something that the city needs and the council has identified senior living as a priority of theirs in some strategic planning sessions. So they have long wanted to get a senior living facility in town. So I guess my point was more of, this is a need for the community, it’s a need for the residents, you may want to step back and not focus solely on how much tax this particular lot is going to generate.”
In the end, senior housing has been something the City Council has been looking for and Guardian Angels insists this will be a flagship-type project that will bring in more businesses to the area. Also, with 121 people already on the waiting list before construction has even begun, it appears there is public interest in the project.