Nonprofit serving immigrants plans to expand to New Hope

City leaders dropped a restriction that prevented property sale to a charity

Somali Community Resettlement Services plans to expand to New Hope after city leaders agreed to drop restrictive covenants that would have prevented the move.

The city’s Economic Development Authority previously had placed restrictions on property at 7300 42nd Avenue that banned sale of the land to tax-exempt property, including a charity, church, hospital, school district or other tax-exempt use. The move dates back to a 1996 EDA redevelopment agreement with Gill Brothers Funeral Chapels on the site. The EDA required the declaration because of the property’s location in a tax-increment financing district used to assist redevelopment in the area of Winnetka and 42nd avenues. The restrictions “ensure that the proper amount of taxes would be generated,” according to a city staff report.

The restrictions had been scheduled to last until June 2026, although the EDA had the right to waive or release them. The TIF district actually came to an end at the close of 2012.

“Therefore, the need to perpetuate the covenants no longer involves protecting the taxing power of the TIF district in question,” the staff report says.

Somali Community Resettlement Services leaders asked the city to drop the covenants to allow them to move into the property with the aim of providing services in New Hope.

A volunteer network of Somali refugees founded the organization in 1999 “to directly respond to the growing needs of refugees and immigrants resettling into Minnesota,” according to the city report.

Services include assistance with the nation’s immigration system, access to legal assistance, English language education, health care, workforce training and suicide prevention services, according to the document.

After purchase of the building, the group plans to seek property tax exemption as an “institution of purely public charity” – a purpose the covenants specifically barred.

The property is projected to owe nearly $33,000 in property taxes payable for 2024, of which nearly $8,000 will go to the city. A city report anticipated the city would collect about $25,000 in taxes from the property before it became eligible for tax-exempt status if the restrictions remained in place until June 2026.

With a release of the conditions, the city would still receive the nearly $8,000 in taxes for 2024. Assuming the sale goes forward and the organization filed for tax-exempt status, the city would not receive taxes for 2025 and 2026 but the nonprofit “but would be able to provide its services in New Hope to New Hope residents and the surrounding area,” the city report says. The school district and county also would not collect taxes, noted Jeff Sargent, New Hope’s director of community development.

He said city staff recommended that the EDA, made up of council members, approve the release of the restrictive covenants, allowing the nonprofit to move in.

Given that the TIF district has already expired, Sargent said at a March 25 EDA meeting, “The reason for the inclusion of those covenants to begin with is no longer there.”

He said the property has been on the market less than a year but that the owner wants to ensure the building is sold. Anchor Point Properties currently owns the facility.

Nonprofit’s plans

Abdullah Hared, executive director of the Somali Community Resettlement Services, wrote to the city Feb. 28 with the request. His organization has more than 25 years or service to refugees and other immigrants in Rochester, Faribault and Minneapolis.

“With an annual budget of $3.5 million and 45 employees, SCRS has identified New Hope as an ideal location to expand its services due to the city’s increasing immigrant and refugee population,” Hared wrote.

Last year, the organization served 271 clients from New Hope. The site would be its fourth location and would support its growing staff, Hared wrote.

“The space will be used to help New Hope’s and surrounding communities’ refugee and immigrant families secure basic needs and resources for self-sufficiency and to acclimate to a new way of life as they resettle in the region by providing an opportunity for walk-in services in this building,” Hared wrote.

The nonprofit anticipates the transfer of 10 employees to the site and expects to serve more than 350 new clients at the location in its first year there.

Hared told commissioners at the meeting that the nonprofit serves more than Somali immigrants. For the last two years, the group has served immigrants from Ukraine, Afghanistan and Latin America. He said the nonprofit is considering a new name as a result of its expanded focus.

Commissioner Michael Isenberg replied, “In my mind, that just makes it an even more valuable asset to our community and the decision’s, you know, a no-brainer for me.”

When called on to vote, Mayor Kathi Hemken responded, “Absolutely, yes.”

The commission voted 4-0 to remove the restrictions, allowing the nonprofit to move in. Commissioner John Elder voted remotely for a medical reason while Commissioner Jonathan London did not attend.