Developers of a proposed mixed-use residential and retail building on Main Avenue in downtown Bismarck received approval from the Renaissance Zone Authority.
The Authority's board members voted unanimously to recommend approval of a five-year 100 percent property tax exemption and a five-year state income tax exemption. The Bismarck City Commission and state have final say on approval.
Developers said, in their application, they expect to invest $8.2 million on the 52-unit apartment building, with 11,000 square feet of ground floor retail, located at 630 E. Main Ave.
Development partner David Witham told the RZA board that developers plan to seek rents in the mid-$800 range for a one-bedroom unit, based on a market study conducted over the summer.
Denizen Partners Development has a purchase agreement with the city, which owns the empty lot south of the Radisson hotel, to buy the property for $508,195 by March 15. Witham said the partners are still working through financing for the project but they expect to meet the mid-March deadline.
Denizen is seeking to raise $2.6 million in private investment, in addition to the investment being made by the partners themselves. Witham said they’re finalizing their operating agreement and then will begin finding investors over the next couple months.
Witham told the RZA board construction is expected to take about a year, with hopes of getting started in the spring.
The RZA board also discussed the potential of adding to the size of the city’s Renaissance Zone. Board member Joe Fink asked Witham and Jeff Ubl, another member of Denizen Partners, about what they see as the benefits to developers of the Renaissance Zone program.
“The intent of the program, as far as I understand it, is to spur investment and development in older parts of town that otherwise wouldn’t occur,” Witham said.
It’s about getting projects over the threshold of feasibility, he said.
“As I’ve been running the numbers on this project … I see the difference it makes,” Witham said.
The tax benefits will allow Denizen to get potential investors the return on investment within the time frame they would expect, according to Whitham.
From the standpoint of a general citizen, Witham said he also has appreciation for the Renaissance Zone program because the tax aid is set at “a nice balancing point that helps but it’s not so helpful that any old project would work.” He said the city’s requirement for a high minimum amount of investment is another credit to the program.
Denizen Partners is expected to see $475,000 in estimated property tax benefits and $165,000 in estimated income tax benefits.
“The proposed project contributes to several goals and objectives of the Renaissance Zone Program, especially the promotion of increased housing opportunities, for which the program has only achieved limited success to date,” the city staff wrote in its report on the project.