NEW ULM — Brown County Commissioners unanimously approved a property tax abatement for a proposed 39-unit independent living senior housing project at Oak Hills Living Center Tuesday.

Oak Hills is partnering with Garden Terrace 2, LLC on the facility adjacent to Garden Terrace Apartments.

The New Ulm Economic Development Authority (EDA) sold the ownership rights of Garden Terrace Apartments and a vacant lot on the 1000 block of Garden Street North to Rebound Partners for $7.3 million.

The sale produced income for the EDA to start and maintain projects that support home improvements, on benefit those looking to sell their homes, or first-time home buyers. Small business grants can also be approved with EDA income.

David Drown Associates, Inc. Public Finance Advisors Associate Shannon Sweeney said during his review of the proposed request that he concurred with their assessment that the tax abatement request is essential to the financial feasibility of the project.

Sweeney said ultimately, the project will be owned by an investor group organized by Rebound Partners and leased to Oak Hills for the purpose of operating a senior living facility for folks age 55 and over.

“It’s expected that the new facility will help support the operation of the (Oak Hills) nursing home and related facilities by creating additional revenue sources,” said Sweeney. “The County identifies how much of Oak Hills property tax is attributed to the project and reimburses that amount to Oak Hills as the operator. In the event Oak Hills doesn’t make it’s property tax payment and the ownership group is required to step in and make the payment, the development agreement includes the stipulation that the tax abatement would be reimbursed to the property owner. The entity that pays the property tax would receive the abatement, whether its the owner or operator.”

Sweeney said Oak Hills will have a triple net lease for the facility meaning they are responsible for property tax payments, maintenance and insurance under the lease agreement.

“Ultimately, they (Oak Hills) will feel a lot like an owner even though they don’t originally own the facility. Since they are responsible for tax payments, ultimately it was seen as a benefit for that to go to them,” he said. “It’s a little bit unique, but it’s logical and makes sense because Oak Hills is responsible to make the tax payments.”

Oak Hills requested 10 years of tax abatement assistance (reimbursement of the new local property tax) from the City of New Ulm and submitted a similar request to Brown County. The City of New Ulm adopted a resolution approving their property tax abatement.

Oak Hills requested up to $276,916 in County property tax be abated and not more than $585,176 in City property tax for a total abatement not to exceed $862,092.

All tax abatement proceeds will be paid directly to Oak Hills to support their operations. Oak Hills will operate the senior housing facility and contains the right to purchase the property and facility in the future.

The Brown County Assessor’s Office estimated the market value of the project at $6,534,900. Based on that value and 2025 city and county tax rates, the increase in city and county property tax was estimated at $58,386. The estimated county property tax increase is $27,629.

New Ulm Community Development Director Dave Schnobrich said Brown County will continue to receive property taxes for the current property value.

“I certainly support this. It affects all of us. We’ll all likely need these types of services,” said Commissioner Dave Borchert. “I believe this is a very reasonable measure. It’s very complex, but I strongly support this.”

Commissioner Scott Windschitl asked what would happen if the operator defaults.

Sweeney said in the event of a default, Brown County would have to notify the owner of the default. The owner would have up to 90 days to cure the default.

“If they didn’t cure the default, the county board could cancel the agreement and stop making abatement payments,” he said.

“We’re feeling very positive and confident that Oak Hills will pay the property taxes and that this (project) will continue,” said Oak Hills Operating Board President Barb Dietz.

“You have no guarantee you can live in your home all your life. You don’t take care of a patient with Alzheimer’s at home unless the caretakers get knocked off before the patient does. It’s not risk-free, but I’m very happy we’re moving forward.” said Oak Hills Operating Board member Dr. Ann Vogel.

Retired Certified Public Accountant Andy Biebl said the project is about lower-cost assisted-living to help people with light housekeeping and a meal.

“This is a level of care we don’t have now. It’s more common in the Twin Cities,” said Biebl.

Action came on a motion by Commissioner Dave Borchert, seconded by Commissioner Tony Berg.