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Category: Tempo

City Council Approves Tax Credit, that it Previously Granted in Error

At last night’s meeting, the City Council voted to grant a partial 50% tax credit to Gilbane for the Tempo student housing development. Councilmembers Kennedy, Esters, Rigg and Day voted in favor, Councilmembers Kabir, Dennis, Mitchell, and Mackie voted in opposition. Mayor Wojahn broke the tie by voting in support of the application.

Last month, the Council adopted Ordinance 21-0-03 (by a 5-3 vote) which authorizes the waiver of the student housing exclusion when a Revitalization Tax Credit is approved in error to a multifamily housing project intended for undergraduate students. You can read more about the discussion and vote here on my blog.

Earlier, Gilbane requested the City make this project eligible for the full tax credit $571,020 in projected tax savings over a five-year period. During the March 16, 2021 Council Worksession, a Council majority indicated support for a partial Revitalization Tax Credit for Tempo at 75% of the full credit. The Council will consider approving the tax credit at tomorrow’s meeting.

More than a year ago, along with entire Council colleagues, I supported giving Gilbane the full tax credit. At that time, we all assumed that Gilbane satisfied the tax credit criteria – which says a graduate housing qualifies to get a tax credit

Later in summer last year, we found we were wrong Because Tempo was an undergraduate housing – which does not qualify for a revitalization tax credit. Last night, we voted to grant a tax credit to Gilbane not because Gilbane said the Tempo will be a graduate housing, but rather to address an error we made. Though I appreciate the partnership the City has with Gilbane, I could not agree with the new basis for granting the tax credit.

My thanks to everyone who wrote to us and testified at the meeting.

 

Tempo Student Housing Developer is Asking to Revisit Revitalization Tax Credit that the City Granted in Error


Back in 2019, Gilbane Development applied to the City for a Revitalization Tax Credit for the Northgate undergraduate student housing project. City staff erroneously processed the application and on January 14th, 2020 the Mayor and Council unanimously approved a resolution to provide the tax credit.

The revitalization tax credit was estimated at $571,020 in projected tax savings over a five-year period, based on the standard 75%, 60%, 45%, 30%, and 15% credit for the first through fifth years.

In June 2020, staff realized that the project was not eligible for the tax credit due to amendments in 2015 that made multi-family housing intended to house undergraduate students ineligible for the City Revitalization Tax Credit.

The City informed a representative of Gilbane that the project was ineligible for the tax credit and therefore the Council approval was in error and of no effect. Gilbane has requested the City make this project eligible for the tax credit.

In order for the project to become eligible for the Revitalization Tax Credit, the Council must amend the program by an ordinance. This requires an introduction, public hearing, and vote to adopt. The Council will discuss this option at tomorrow’s meeting.

[UPDATE (3/10/2021): The City Council voted to approve the waiver. Council members Kabir, Mitchell, and Mackie voted in opposition]

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