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It was number crunching time for Gaylord’s City Council last Tuesday as a financial consultant presented the Tax Increment Financing (TIF) plan for the proposed sale of Lakeview Homes.

For the past year, the City has been involved in discussions with two developers from Mankato who are interested in purchasing Lakeview Homes (the nursing home, Oak Terrace, Heritage House). The development of an $8 million continuum care facility is being proposed.

The purchase proposal includes 14 years of TIF and a $1 million loan from the City. This is being offered to entice development, according to City Administrator Lonny Johnson.

Last week, Dick Asleson of Northland Securities presented the TIF plan to the Council and approximately ten members of the public.

According to Asleson’s report, the City is proposing the establishment of a TIF District to provide financing for land acquisition, site improvements and other activities required to support the developer’s plan.

That plan involves the development of a 90-110 unit private-sector senior low and moderate income facility to be located on site. According to the report, the development would include the construction of a new building and the rehabilitation of the existing nursing home currently owned and operated by the City. This proposed development is expected to result in at least 15 senior apartments, 22 assisted living units, 16 memory care units and at least 37 nursing home beds.

According to Asleson’s report, the proposal by the developers is part of the City’s long-range objective to encourage affordable housing for low and moderate income persons, and make the best use of the existing nursing home.

Currently, the Lakeview Homes property is tax exempt, Asleson explained. The Sibley County’s assessor’s office recently established a taxable market value of $862,500 on the property. If the property is developed as proposed, that taxable market value is projected to climb to $8 million.

It is the total tax increment or tax increase produced by the development that is reimbursed back to the developer for financing the project, according to City Administrator Lonny Johnson.

Asleson’s report projected that the development will produce a total tax increment of $1,898,303. The City’s TIF-related share would be $889,195, the County’s $909,041 and the Sibley East School District’s $85,674.

According to Johnson, the City’s TIF investment with this $7 to $8 million project will achieve a higher tax return in the end compared to a buyer who would not develop the property.

“The TIF will create a greater outcome in taxes,” Johnson said. “The amount of taxes captured with a buyer who would not develop the property is less than the overall taxes that would be collected once the TIF is over.”

Asleson’s described the TIF plan as a “riskless approach” and risk free from a credit basis. It is a pay as you go approach and the City is not obligated to pay unless it receives the TIF money, he explained.

The City Council did not take any action on the TIF proposal. Another public hearing on the proposed sale of Lakeview Homes is planned for Wednesday, January 3rd at City Hall (7:00 p.m.). According to Johnson, this meeting will consist of a question and answer session with the developers. No final decision on the sale is expected at this meeting, Johnson explained.