City to decide on tax exemption for developers
By Brian L. Gray
Costs have unexpectedly increased to redevelop the former Mandan Junior High, but the developers are determined to see it through to the end, and have sought to receive a tax break from the city to help defer costs.
The development team has asked the Mandan City Commission for a special remodeling tax exemption, which could provide up to a full five years of tax breaks for the building.
The commission, in a 3-2 split vote, chose to direct city staff to put together a tax incentive agreement with the developer for later consideration. Those voting against the motion were Mayor Arlyn Van Beek and Commission Dennis Rohr.
Jordan Schuetzle, the president of Yegen Development Corporation of Grand Forks, the developers of the project, says the project was originally believed to cost $4.5 million. When the project began, some unplanned work needed to be done, which included an overhaul of the sewers and additional electrical and plumbing work. This increased costs to $5.8 million. The bids for the project then came in at $7.1 million, $2.6 million more than initially planned.
Schuetzle cites the increasing costs of building materials and the general lack of interest in the project as the reason for the increased cost.
“We don’t want to have to ask for this assistance,” Schuetzle told the commission. “We believed we could do this without incentives, with so much assistance being received for housing. I do take pride in my word, and we wouldn’t be asking for this if it weren’t an absolute last resort.”
The building will be transformed into 62 units of apartments, with roughly 75 percent of those committed for low-income housing. The remaining units would be available at market rate.
The building will focus on the sense of community, Schuetzle says. There will be a computer room, a workout facility, laundry room and a community room for hosting events.
The developers are planning to begin reconstructive work on the building sometime between late March to May 1, depending on how the financing comes through, Schuetzle says. Work could be completed within nine months of the start date.
He has also considered delaying the project for another year, in the hopes of receiving lower bid costs, but doing so could also mean prices would actually increase instead.
To this point, Schuetzle says, the building has been cleaned out and some of the demolition work has begun.
Schuetzle says a lot of the equipment inside the building being removed by the developers was able to be either sold or given away to other places in the community. Everything from ceiling tiles to desks were given to other parties.
Schuetzle says another $1.3 million still needs to be invested. Developers are looking at cutting costs, “but at this time I’m happy to say that we’re still sticking to our original plans,” he said.
Through a request for proposals, the developers were awarded the building in August 2012 by the school and city, the two entities that teamed together to help sell it. It was sold to the developers for $1,000.
Schuetzle said that there has been significant community support for this project. Roughly 50 percent of the investors behind the project previously attended the school, and got behind the project because they wanted to see a worthwhile alteration of the building.
“There’s been a strong commitment by the people in this community to get involved,” Schuetzle said. “Some people are excited they get to invest in a property they used to go to school in.”
To date, Schuetzle said, a total of $400,000 has been put into the renovation.
“It’s been a difficult project getting off the ground, and we knew that coming into it,” he said. “But we’re still determined to move forward with it.”