Smith School developers seek additional funds from city, cite increased construction costs
OSHKOSH - A low-income housing project requires more financial assistance from the city amid rising construction costs and after a grant fell through.
The Oshkosh Common Council on Tuesday approved $300,000 in additional assistance for the Smith School Lofts low-income housing redevelopment at the former Smith Elementary School, 1745 Oregon St.
The funds will be a deferred loan with a 0% interest rate and a 15-year payback period. Community Development Director Kelly Nieforth said the money will not impact the city's budget and doesn't come from taxpayer dollars. However, it is one way the city can help spur the creation of low-income housing.
"We do have resources we can offer ... (for) these development projects, specifically for low-income projects," Nieforth said. "Many times it is difficult to find all the resources that make the project feasible."
A memo to the council said the developers did not receive an expected state Department of Administration HOME loan that would have helped fund the project, and that project costs had increased by more than $600,000.
The $300,000 will come from the city's Healthy Neighborhood Fund, which currently has $2.7 million in unallocated funds that Nieforth said are accrued using tax increment financing districts.
The Healthy Neighborhood Fund comprises funds the city has accrued from extended TIDs, Nieforth said.
"Whenever we have a tax increment district about to close, we keep it open for one extra year, collect that increment and put it in the Healthy Neighborhood Fund," she said.
The city is able to do this through an affordable housing extension, section 66.1105(6)(g) of the state statute, that allows a municipality to extend the TID's life up to one year by formally adopting a resolution that clarifies how the extension will improve housing stock.
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The city in November applied for a state DOA Neighborhood Investment Fund grant that Nieforth said it planned to use for low-income housing construction projects, but they haven't heard if they were accepted. If that comes through, the city would use $300,000 from that grant, instead of the Healthy Neighborhood Fund, to loan to the Smith School developers.
The council approved creating a pay-as-you-go TIF district for the project in October. That agreement estimated a 25-year TIF obligation and $2.05 million as the value of the new land. Developers will receive 90% of the taxes paid on the increased value and the city will receive 10% for administrative costs.
Tim Hess, one of the project's developers, said work is expected to begin on the project in February.
Contact Katy Macek at kmacek@thenorthwestern.com or 920-426-6658. Follow her on Twitter @KatherineMacek.
This article originally appeared on Oshkosh Northwestern: Oshkosh to provide Smith School project more aid after costs rise
