The developer of Lions Gate Apartments wants to refinance the almost two-year-old property after the COVID-19 pandemic negatively impacted its business plan, and it has also asked the council to lower the minimum assessment, claiming the complex is at a “competitive disadvantage” to other apartments in Newton.
Lion Development Group, LLC initially consented to a minimum assessment of $4.5 million in its development agreement with the city to build a multi-family apartment complex in the city’s North Central Urban Renewal Area. The county assessor agreed to the group’s proposal to lower the minimum assessment.
City records say the bank is unable to refinance the group at this time “because the expense ratio is too high solely because of the property taxes that are owed.” Although the developer would receive 100 percent TIF rebate for the next four years and a slide scale thereafter, the bank does not take that into consideration.
The council voted in favor of amending its development agreement with Lion Development, reducing the minimum assessment to $3.2 million.
Jon Dunwell, of Newton, asked the city for clarification and more background. Newton City Administrator Matt Muckler said Lion Development created a 38-unit, market-rate apartment complex in the downtown area. One of the city council goals over the past few years has been to grow multi-family housing.
“We had a developer that expressed interest in building this complex in Newton but simply could not make the numbers pencil out, so he approached the city and asked for some consideration on his taxes,” Muckler said, noting they agreed to a $4.5 million minimum assessment in exchange for TIF rebates.
The city provided a TIF rebate agreement that was originally seven years in length, but was later amended. The issue now, Muckler added, is the property owner looked at other commercial properties in town and believes Lions Gate is assessed “well above” all of the competition.
“Maybe he should be in a certain sense. He acknowledges that, yes, he’s got a brand new complex that’s going to assess for a higher rate, but he feels … even considering that he’s got a new complex it’s above what it should be,” Muckler said.
Newton Finance Officer Lisa Frasier said the property’s rebate schedule is currently classified as multi-residential at $4.5 million. In time, that will change.
“We’re looking at beginning in taxes paid in FY23 then that would go down to the $3.2 million. That does also follow the multi-residential step down that’s part of the new law,” Frasier said. “In 2024, then the taxable (amount) will be the same as the residential. It will go down to 55-65 percent would be the rollback.”
Muckler added, “I think the other consideration is while we’ve seen some residential assessments increase we haven’t seen it on the commercial side. We believe that’s probably coming down the road here. I think at that point we’ll kind of get these multi-residential landowners kind of on a level playing field.”
Lion Development is a partner with the city, Muckler said, and it has put together “a nice development.” The city wants its partners to be successful, as well.
“It will not affect the city’s revenue, per se, when we’re giving 100 percent rebate it’s not going to affect us; at least not for the years where there’s 100 percent rebate, which is for the next few years,” Muckler said.
Newton Mayor Mike Hansen said the reevaluated $3.2 million minimum assessment was not a number that was “pulled out of a hat.” It was in consultation with the county assessor. The city asked the assessor what the value would be had there been no development agreement.
“That’s where we came up with the $3.2 million,” Hansen said.
Valuations of Newton apartment complexes in 2021 & 2020:
Bristol Square Apartments, 315 First St. S.
Brookfield Apartments, 1600 W. Seventh St. S.
Courtyard Apartments, 1453 N. 11th Ave. E.
East Town Apartments, 400 E. 8th St. S.
Forest View Apartments, 1800 S. Seventh Ave. E.
Hunter’s Run, 821 S. 13th Ave. E.
Linden Place Apartments, 1105 E. 12th St. S.
Lions Gate Apartments, 320 W. Third St. N.
Midtown Apartments, 105 N. Second Ave. E.
2021: $515,370 ($1,784,630 exempt)
Newton Park Apartments, 1425 N. 11th Ave. E.
Newton Place Apartments, 222 N. Fourth Ave. W.
Newton Plaza Apartments, 901 S. 13th Ave. E.
Newton Sundance Apartments, 210 E. 28th St. N.
Roberts Apartments, 912 First Ave. W.
Walnut Creek Apartments, 510 E. 17th St. S.
Woodland Heights Apartments, 1800 W. Fourth St. N.
Contact Christopher Braunschweig at 641-792-3121 ext. 6560 or email@example.com