By Zachary Barnes
Old Town Lansing Times Staff Reporter
The plan to add a mixed-use community development to Old Town is in the process of trying to obtain more financing.
It’s been about two and a half years since Mayor Virg Bernero announced $3 million in renovation for the property that stands at 1113 N. Washington Ave. Since then, the property to the right of it, 1119 N. Washington Ave., has been torn down, leaving the lone tattered and vacant building by itself.
Dr. Sam Saboury, the head of the project, plans to add on to the current building, bringing in 18 one-bedroom lofts, 5 two-bedroom units, and 5,035 square feet of space to be rented for a commercial shop or shops. The hope for him is to start the project this summer.
As it stands right now, the lofts are not open to the public.
“The tax credit we have signed is for low-income people, but it doesn’t mean it’s going to be income-particular because they (the city) want us to keep some of them for senior citizens,” Saboury said. “But it depends on the money we are getting from different sources.”
According to Bob Johnson, the director of Lansing’s Planning and Neighborhood Development department, the money will come from tax credit allocation. More specifically a program administered by the Michigan State Housing Development Authority (MSHDA) called Low Income Housing Tax Credit. The state of Michigan receives roughly $20 million annually for this program.
Johnson says multiple projects, like the one to renovate the property on North Washington, in the state are all competing for this money. One way to help the chances of getting this money, Johnson says, is by the city council approving a payment in lieu of taxes (PILOT).
Professor Glenn Pape of Michigan State University Extension was able to break down a PILOT and why it is necessary.
“Agencies will sometimes make a one-time payment instead of making property tax payments because they’re property tax-exempt,” said the land use planning expert. “It’s to offset the property tax loss” because the federal public land Saboury is using for his project is property-tax exempt. This is a way he “will compensate the local government.”
Now this seems like a sure thing deal for the city council to accept, but Pape adds that there is sometimes good reason for the City Council to decline a PILOT.
“If the property in question could be redeveloped by the private sector and generate tax revenue to be used for the city, that’s always the first choice,” Pape said. “The issues with the city are, ‘are we doing too many of these? And is that going to be fiscally smart for the city in the long run?'”
If this is the case, there may be further back up in the project if this PILOT isn’t approved by the City Council. Once already has the project not received the funding it was hoping for from MSHDA, which is why two and half years later there is still a vacant building on North Washington.
“We were hoping to get MSHDA’s money in 2013,” says Saboury. “It’s been up and down with the financing.”
Johnson, who seeks no personal benefit in this project, besides the fact that it will help the growth of Old Town Lansing, believes there is no reason for the City Council not to accept the PILOT. It’s a win for all parties involved, and the PILOT is the best chance for the project to receive some of that Low Income Housing Tax Credit funding.
Johnson believes otherwise the property will just sit there not giving the local government any income tax from the residents who would rent out the lofts or give the local government the single payment from the PILOT.
It’s not only the local government that will benefit from this but the neighborhood too, according to Johnson.
He believes there’s a negative stigma behind low income housing that isn’t true. The reality is the median household income in Ingham County is $45,327 according to the census bureau. To qualify for low income housing as a single person, your income must be $36,900 or below. For one person paying for a single bedroom affordable apartment, that isn’t extremely poor like many are brought to think, Johnson admits.
So these people, although living in affordable housing, are still able to have money for leisure spending that they can put into the Old Town community.
There will be a public hearing discussing the property at 1113 N. Washington Ave. on Feb. 29. The City Council vote on whether the building will get a PILOT or not is set to take place on March 14.