City approves MSJ development agreement

WASHINGTON — City council members approved a development agreement for the first phase of the MSJ subdivision in a 4-0 vote Tuesday night, where developers hope to break ground in the next six weeks and construct 30 houses over the next decade.

City Administrator Deanna McCusker said the subdivision was a priority for the city, which has struggled with a housing shortage for years.

“They are willing to put houses in … and Washington has a big need for housing right now,” she said. “That’s the big take-away, the city entered into an agreement with MSJ to get houses built.”

McCusker said the agreement spelled out mutual obligations for the city and the developers.

“We did meet a couple of times and went back and forth, we do have some safeguards in this agreement and to of course protect them as well,” she said at the meeting.

Those precautions include explicit obligations for both sides. While the developer is required to build a certain number of houses by various deadlines — at a $15,000 penalty for each house not finished by various deadlines, totaling 30 houses by 2031 — the city is obligated to invest up to $800,000 on infrastructure for the area, not including a sewer boring project funded with American Rescue Plan dollars.

Developer Jeff Hazelett said he was also satisfied with the agreement. While it took a few months to iron out, he said it could lead to more development agreements in the future.

“We just had to fine tune a few things … the city was very open to making the agreement work for the developer along with the city themselves,” he said in an interview after the meeting. “We took extra time, but what we’ve accomplished is the city now has a boiler plate development agreement, they can go forward with other developers when that opportunity presents itself. The groundwork has now been laid.”

The agreement declares the subdivision a “Tax Increment Financing (TIF) district,” a status that allows the city to collect the majority of its property taxes rather than splitting the usual amount with the county and school district, both of which signed off on the proposal citing the need for more housing.

Hazelett said the TIF status would pay the city back for its infrastructure investment.

“If it’s worked correctly, the TIF passes through to … offer those lots at a much more reasonable price to the public,” he said. “People think the city is just giving money, (but) the money is created by building homes and using the taxes from those homes, and then it offsets some of the costs of the developer, which in turn allows those lots to be at a much better price point.”

With other phases of the development much further down the road, some in the city had suggestions for the neighborhood’s future.

“I would just like to ask that if possible, as you’re laying out your subdivision, you think about some green space, some park area,” said Council Member Illa Earnest.

Hazelett said that matter would be addressed later, likely in the next few years as planning begins for phase II.

“The second phase will accommodate that,” he said. “This ground here is prime ground for the housing part of it. The next phase would have some really nice places, especially down by the water, that would be perfect for park spaces … we don’t have that second phase laid out, that’s some point in the future.”

Comments: Kalen.McCain@southeastiowaunion.com