City entertains sale of Fox Point site
By Collin Lueck
The Merrill Area Housing Authority (MAHA) remains intent on acquiring the former Fox Point site for development of a housing project. After an unsuccessful application to obtain tax credits as a funding source, MAHA is now offering to purchase the property from the city of Merrill for $200,000. Following a joint meeting Tuesday, the city’s Redevelopment Authority (RDA) and Committee of the Whole (made up of all members of the Merrill Common Council) both approved moving forward with negotiations for that sale.
Last fall, the city had approved MAHA’s proposal for an initial development plan on the Fox Point property. That plan called for a 60-unit development, featuring townhome-style units with attached garages constructed beneath the living units. Units consisted of 1, 2 and 3 bedroom options. At that time, the city was offering to give the property to MAHA.
The original proposal came with a price tag of $9.8 million, $6.8 million of which being contingent upon approval of Wisconsin Housing and Economic Development Authority (WHEDA) tax credits and an $850,000 affordable housing grant. MAHA found out in May that the project did not make the cut for the competitive WHEDA tax credits. At a June 13 joint RDA/Committee of the Whole meeting, the Committee of the Whole declined to extend the development agreement with MAHA. MAHA sought the extension to allow them to re-apply for the WHEDA tax credits in the next funding cycle.
The proposal brought by MAHA at this Tuesday’s meeting includes the development of 24 housing units starting in this fall, and potentially another 40 units starting in the fall of 2020.
The city has over $304,000 invested in the Fox Point property, which they purchased from the previous owner in July 2016 after the former building was removed. Under the proposed terms of the sale to MAHA, the city would receive annual payments of $25,000 for four years, followed by a $100,000 payment in 2021.
Because MAHA is a tax-exempt entity, a development agreement would work out the Payment in Lieu of Taxes (PILOT) MAHA would make to the city.
If MAHA completes the first 24 units and obtains WHEDA tax credits for the second phase of 40 units, the city would consider offering MAHA a $250,000 development incentive from TID 10.
According to Merrill Finance Director Kathy Unertl, the economic viability of TID 10 is dependent on this project.
“This cash flows if we have both phases developed and generating revenue by 2022,” Unertl said. “Fox Point is the only property in TID 10 potentially generating any kind of revenue.”
MAHA Director Paul Russell said the development would get underway as soon as possible. MAHA would not be relying on WHEDA tax credits for the first phase of construction, Russell added.
“Our timeline will be to start a phase one development not later than the spring of 2018,” he said.
Mayor Bill Bialecki urged the RDA and Committee of the Whole to work with MAHA, adding that there is a substantial waiting list for public housing in Merrill.
“They’ve been trying to get something going here to fill a void in the city,” Bialecki said. “There hasn’t been any public housing created since 1979.”
Russell noted that a percentage of the new units created would by classified as Affordable Housing, while the remainder would be offered at “market rate.” That percentage has not yet determined, Russell added.