PILT measure approved
MARQUETTE — Whetstone Village Apartments is one step closer to a payment in lieu of taxes agreement with Marquette Township.
The Marquette Township Board unanimously approved the first reading of the PILT ordinance, which if enacted, would allow the township to collect 4 percent of the annual shelter rents from the 42 low-income Whetstone Village apartments situated within the township boundaries in lieu of ad valorem taxes.
Magellan Property Management, the company the oversees the low-income housing development, is seeking an allocation of Low-Income Housing Tax Credits from the Michigan State Housing Authority in order to complete building renovations.
The proposed ordinance, which is partnered with an annual service agreement, is initially expected to decrease annual township tax revenue by a conservatively estimated $1,890, township officials say.
Township Attorney Roger Zappa said the amount of estimated tax revenue loss was calculated based on an “unrealistically high” vacancy rate.
“That is probably a high estimate because it does have a built-in 20 percent vacancy rate,” Zappa said.
Medallion Management CEO Scott Beltz said that, although there is no guarantee, the amount of tax loss predicted for the township was “conservative,” especially considering the fact that the low income housing development has had a 1 percent vacancy rate over the last five years.
“This is not a market development,” Beltz said. “It’s based on people’s income. People want to live there so we have a waiting list. When somebody moves out, the longest period of time that unit’s empty is how long it takes us to get it ready.”
Beltz said once the upgrades have been made–which are expected to cost approximately $30,000 per unit and include energy efficient windows, siding and appliances–utilities paid by the complex should also be reduced, increasing the PILT amount paid to the township.
“The 4 percent calculation took into account current utility rates and usage,” Beltz said. “Those, after we rehab … well we have to upgrade all that stuff. So in theory, what we see typically (is), and I don’t know what the percentages are exactly, but a decrease in utilities — which would be an increase in rent, which would be an increase in PILT payment.”
He added that the service agreement, which requires the Marquette Township Fire Department to inspect each unit annually, will guarantee the township $3,500 in revenue in addition to whatever may be collected from the PILT.
According to the agreement, the amount collected for services will be multiplied by the inflation differential published annually by the Michigan Tax Commission for each subsequent year the PILT is in place.
Although by state law, such ordinances can only stay in effect for 50 years, Beltz said this PILT need to be revisited in 15 years, because that would be the duration of the Low-Income Housing Tax Credits being sought for the project.
“And I don’t know if it would be me, but someone would have to come in front of you and try to get the board to consider a new PILT,” he said. “The tax incentive runs out in 15 years and typically developers will come back with a new package and have to redo it. They pay off the existing mortgage.”
The developers have three years to break ground on the new project, if the second reading is approved by the township board at its first meeting in March.