Tax credit market still stalled in wake of Trump’s election
The “Plan B” for the construction of Agassiz Townhomes on Crookston’s north end that became a necessity when “Plan A” fizzled in the wake of Donald Trump’s election as president continues to “move along,” Tri-Valley Opportunity Council CEO Jason Carlson said Tuesday, but the wait for an official go-ahead to proceed continues.
The multi-million dollar project that features 30 townhome units to be built on the west side of North Broadway near Fisher Avenue in its second attempt received approval in 2016 for the necessary tax credit financing, a package that includes a significant local investment of dollars and infrastructure. Agassiz Townhomes is expected to put a dent in the Crookston community’s shortage of affordable, “workforce” housing.
But when Trump was elected and early on talked about pushing for serious changes in the nation’s tax code, the tax credit market “dried up,” Carlson said, which essentially put Agassiz Townhomes in limbo.
“We went from having a project with zero financing gap to one with a gap when tax credit financing froze up, and it wouldn’t advance at all because we couldn’t find anyone to buy credits at any price,” Carlson explained. Eventually, Wells Fargo agreed to step in and sent a letter to Minnesota Housing indicating its intent to purchase the housing tax credits at a lower price than factored into the initial project package. That created the financing gap, so Tri-Valley went to Minnesota Housing asking that it fill the remaining gap with additional dollars.
“That’s where it’s at now,” Carlson said. “We’re getting enough activity and getting asked enough questions to indicate we’re in the mix.”
Having backing from Wells Fargo should put Agassiz Townhomes at a major advantage compared to similar projects in Minnesota that are in a similar boat since Trump’s election, he added.
But when the tax credit market starts moving again is anyone’s guess, Carlson said.
“This is not the deal we would have necessarily liked, but if the corporate tax rates go anywhere near as low as Trump wants them to go, we could potentially owe money,” he explained. “Tax credits are worth what they’re worth to companies because they can avoid taxes. If the corporate rates go too low, the credits are essentially worthless.”
Things could start to move again later this year, but Carlson said Tri-Valley and other stakeholders don’t want Agassiz Townhomes to wait any longer than is absolutely necessary.
“The Tri-Valley Board wants to deliver,” he said. “We should hear very soon, officially, where we’re at. Right now, things look promising.”
The Tax Increment Financing (TIF) district also necessary as part of the Agassiz Townhomes project is on track for approval, and on Tuesday the CHEDA Board approved six housing vouchers for the project.
“Necessary steps are being taken, and if things break the right way, the design work and all of that is done,” Carlson said. “Once we hear about the gap, we can release the RFP (request for proposals) for a general contractor, then things can really move in earnest.”