The three tax abatements discussed were for the M & D Properties program at 2229 N. Highland Avenue; the SLD Properties abatement at 318-326 N. Broadway and the Garden Terrace abatement agreement at 1011 N. Garden Street.

A tax abatement allows a city to rebate a portion of the property taxes and use those proceeds to offset

development or redevelopment cost.

The first abatement discussion was a pubic hearing on the program at 2229 N. Highland. In January, the city council authorized staff to prepare an abatement for the townhouse project under construction by M & D Properties. M & D is owned by Dale Bushard and Mike Kral.

A commercial building project at 318-326 N. Broadway was approved for a tax abatement. The property is owned by SLD Properties and will by the site of 6,500 square foot building with three commercial spaces.

This was the first tax abatement project approved in New Ulm for a residential development. The proposed development included eight rental townhouses. Each townhouse would be two stories and each would have two bedrooms.

The tax abatement program was halted after M & D announced the construction of second phase of the project which would include another townhouse building at the same location. In July, M & D Properties contacted the city requesting an expansion to the abatement to allow for the construction of six additional residential units. These six additional units would also be two-story and each would have two bedrooms with a stall tuck under garages. These additional units would be constructed to the west of the original eight townhouses.

The council agreed to expand the tax abatement as it was helping to further develop the community. The expansion of the tax abatement requires an additional development agreement and public hearing.

The Brown County Assessor projected a $1.9 million increase in the market value of the property once the construction is completed. The total tax abatement for this project is $164,251 and would be payable over a 10 year term.

No comments were received from the public during the public hearing. After closing the hearing, city councilor David Christian made a motion establishing the tax abatement program for the townhouse project at 2229 N. Highland Avenue, with a second councilor Eric Warmka. It was unanimously approved.

A public hearing was held by the New Ulm City Council Tuesday to consider a tax abatement for a townhouse project at 2229 Highland Avenue. No comments were received during the hearing at it was approved by the council.

Next, the council discussed the creation of a tax abatement for a commercial property at 318-326 N. Broadway owned by SLD Properties. Dr. Matt Downs is listed as the owner of SLD.

Clearing and grading work began on the property in November ahead of a construction for a 6,500 square foot building.

City Planner John Knisley said there would be three separate commercial spaces in the building with approximately 32 parking spaces with a driving lanes on the north, west and south sides of the building.

Brown County Assessor projected a $1.5 million increase in the properties values following the project. The maximum abatement for the property is $256,958 and would be payable over a 13 year term.

Councilor Christian asked why this project was for 13 years, since most tax abatements were for 10 years.

Knisley said the reason this abatement is for 13 years is due to the soil conditions on the property. The abatement will assist with the removal and remediation of the soils on the site. In addition to rubble and debris left on the site, an inspection found the soil was unsuitable for supporting the building and pavement. Structural fill will be needed to ensure stability and safety of the development. It was estimated it would take 13 years to abate the cost of the soil replacement.

City Manager Chris Dalton said the city could go up to 15 years on an abatement. In the event the county or school refuses to abate the project, the city could use a 20 year abatement.

Councilor Larry Mack said he was glad the site was being developed because the corner had been vacant long enough.

Councilor Warmka said it would be great to see businesses operating from this 318-316 N. Broadway site and made a motion to establish the tax abatement with a second from Christian. It was unanimously approved.

The final abatement project was an amendment to the Garden Terrace tax abatement project. Earlier this year, the New Ulm Economic Development Authority (EDA) sold the two existing Garden Terrace buildings and an adjacent vacant lot to Rebound Real Estate.

Rebound is planning to construct a third Garden Terrace building on the vacant lot. The new building will be three stories with 39 units. Upon completion of the new building, Rebound plans to lease the building to Oak Hills Living Center, which operates a senior living facility on an adjacent property. Oak Hills will take over all expenses associated with the property.

In October, the city received a request from Rebound Real Estate to create a tax abatement program to cover the cost of building due to soil conditions. The total abatement for the project is $585,176 to be paid over a 10 year term.

In addition to New Ulm granted an abatement, Brown County would need to sign off on the project. Schnobrich said the commissioner unanimously agreed to support the abatement project. The will provided an additional $276,000 for the Garden Terrace project.

Councilor Tom Schmitz made the motion to approve the abatement with a second from Warmka. It was unanimously approved.