Mitchell Housing: City Council Approves Tax Breaks for First Avenue Project

The Mitchell City Council voted on Monday, Nov. 2, to approve a new tax increment district for the Hitchcock Homes development on First Avenue. The decision allows the private developer, Van Buskirk, to capture future property tax growth to finance the construction of 26 new houses. In exchange for the tax breaks, the city expects to recoup a large portion of the money it spent to acquire the land.

The tax district, designated as No. 48, encompasses the former mobile home park site. The city originally purchased this land for $1 million and sold it to the Mitchell Area Development Corporation for $1. The district boundary includes the north and south sides of First Avenue between Kittridge Street and Hunter Street, as well as the full block south of First Avenue between Hunter Street and Foster Street.

Financial projections indicate the district will generate $1.46 million in revenue over its 20-year lifespan. Of the $1.45 million in eligible project costs, $531,717 will go to the developer. The remaining $923,000 is set aside to reimburse the city for its administrative costs. City Attorney Justin Johnson noted that the project is feasible but operates on a thin financial margin. He explained that the projected revenue exceeds the reimbursement limit by only $2,998.

“If there is a shortfall in that amount, basically we're just recouping less of our costs,” Johnson said. He added that the city could have reduced the reimbursement amount to improve the paper margins, but doing so would have meant losing out on potential future tax revenue. The developer receives its financing before the city collects its portion.

Independent fiscal reviews are now required by the state for these projects. Todd Meierhenry of Meierhenry Sargent law firm conducted the review for a cost of $25,000. Meierhenry noted that a one-year delay in collecting property taxes could reduce revenue by approximately $88,027. The plan projects that the developer will finish receiving payouts in 2036, while the city’s reimbursement period will extend through 2046.

Van Buskirk Homes Operations Director Jordan Hefner stated that the company would have moved forward with the project even without the tax breaks. He said the financing helps cover the costs of three alleyways and new sewer, water, and electrical infrastructure. “There are an awful lot of development costs that come along with free land. Any developer that tells you that ‘free land is free’ is completely wrong,” Hefner said.

Local resident Steve Sibson questioned the need for the tax breaks. He argued that the city made a poor economic decision by buying the trailer court for $1 million and transferring it for $1. Sibson said, “The developer is in a high risk situation and deserves this TIF,” while also expressing that tax increment financing is not an effective way to increase the economy. He asked the council to remove the $920,000 reimbursement due to a lack of detailed administrative cost descriptions.

The development plan includes 12 single-family homes priced at $305,000 and 14 townhomes priced at $231,900. The first home is scheduled to be ready for showing by Feb. 1, 2027. A row of houses along East Hanson Avenue is expected to be complete by Nov. 2027, and construction on seven townhomes along First Avenue is planned for the summer. Improvements to the site are expected to add approximately $6.22 million in taxable value.