Erik Burgess, Published August 19 2013
Proposed $30 million development in Stonemill Estates could help heal Moorhead budget woes
In a nonvoting meeting Monday, the City Council took its first look at a proposed $30 million, 740,000-square-foot development proposal for Stonemill Estates.
As proposed by Eagle Ridge Development, the development would be called The Trails at Stonemill Estates, and would feature 37 two-story townhomes, each with three beds and three bathrooms; a three-story, 36-unit apartment; another apartment complex with multiple 8- to 12-unit buildings; and a 6,500-square-foot commercial space anchoring the subdivision on the corner of 46th Avenue and 8th Street South.
Several council members took time to thank Jonathan Youness, acquisitions and development manager for Eagle Ridge, who attended Monday’s meeting.
“We look forward to many more residents making their home in Moorhead because of your project,” Councilwoman Nancy Otto said.
The proposal is still in negotiations. Eagle Ridge offered to pay $700,000 in cash on closing and specially assess $1.5 million for the development. Moorhead countered that offer on Aug. 15 with $800,000 cash on closing, with about $2.1 million specially assessed.
The city can provide more than $406,000 in tax exemptions based on the project proposal and current tax rates, council documents state.
If an agreement is reached soon, construction of the 36-unit apartment building and half of the townhome units would begin in August 2014, with an anticipated completion date of March 2015, according to council documents.
Construction on the first phase of 12-plex apartment units would be completed by December 2015, and the rest of those units would be done by September 2016.
Rents in the townhomes would be about $1,350 a month, and apartment rents would range from about $715 to $1,095 a month, according to the Eagle Ridge proposal.
The money lost from Stonemill Estates and other tax-forfeited lots in Moorhead – Parkview and Johnson Farms – is one big reason the city is looking at a $500,000 shortfall in its preliminary 2014 operating budget.
Finance Director Wanda Wagner said without development at Stonemill Estates, the tax-forfeited subdivision will cost the city $900,000 next year.
If the Stonemill project goes through, “That will really, in one fell swoop, take care of a lot of issues,” City Manager Michael Redlinger said.
Some council members were concerned there are not enough safeguards in place to keep a developer from abandoning the development again.
The original developer of Stonemill Estates was from the Twin Cities and did not provide a letter of credit to the city. When the recession hit in 2008, the developer simply walked away, Redlinger said.
At the time, several housing projects were coming in and the Stonemill development was erroneously allowed to proceed without a letter of credit, Wagner said. A development agreement would not be made today without that letter of credit, she said.
The city requires a developer to provide a letter of credit for 30 percent of the city’s cost to extend infrastructure to a new development, but Redlinger said a tax forfeiture can happen “whether there’s a letter of credit or not.”
Councilman Luther Stueland said because the city fronts much of the infrastructure costs for developers, “there is no guarantee this won’t happen again.”
As proposed by Youness, the city would also put an additional $500,000 into park improvements in the development, costs that could be specially assessed over the entire Stonemill Estates. Half of those improvements would be spent on playground equipment and a sports court.
Youness told the council he wants to “maximize the park area,” and that he was open to the city’s suggestions.
Deputy City Manager Scott Hutchins said the city needs about two or three more weeks to finalize the deal and that much could change in that time. Both parties are interested in going forward, he said.
Eagle Ridge Development has multifamily housing developments in Moorhead’s Johnson Farms, as well as in West Fargo, Fargo and Minot, N.D., Youness said.
“We’re excited about this project,” he said. “We feel that there’s an opportunity to do something very nice out here.”
Readers can reach Forum reporter
Erik Burgess at (701) 241-5518