ISHPEMING — A proposed Alger-Marquette Community Action Board senior housing development for the city of Ishpeming hit a snag at the regular Ishpeming City Council meeting last week.

The council failed to approve the second reading of an ordinance that would allow Jasperlite Senior Housing Development to pay 4 percent of the net rental revenue collected in lieu of property taxes.

The council had approved the first reading of the proposed ordinance at its regular meeting in February, after an informational meeting was held on the project.

The move means AMCAB will be unable to submit an application by the April 3 deadline for the current Michigan State Housing Development Authority funding round.

Amy Lerlie, executive director of AMCAB, said the organization proposed to use Housing Tax Credits, which are awarded by MSHDA on a statewide competitive basis.

“MSHDA scoring requires that we secure a Payment in Lieu of Taxes for the site,” Lerlie said in an email. “The payment is made as a percentage of net rent minus the utilities we purchase from the City.

“If we cannot secure a PILT, the project is not viable and will not happen.”

Several community members, primarily landlords, expressed concerns about the proposed housing complex, which would consist of 36 rent-controlled residential housing units for senior citizens 55 and older at the former Bell Hospital site on South 4th Street.

Objections to the proposed ordinance included: over-saturation of the city’s rental market; rising property taxes for existing property owners; concerns about security, parking and safety; and a lack of concrete information about how much money would actually be collected by the city.

Robin Baird, the owner of the Mather Inn, cautioned the council about approving the ordinance without knowing more information about the project.

“It gives me great pause that here we are looking at another development,” Baird said. “Instead of developers having a part of and contributing to our city and the resources that are necessary to run it — we are looking in the other direction and taking a lot less. I encourage you strongly to look at this and look at what the actual costs are, and at least if you are intent on doing this, look at the amounts, because this can’t be covering them.”

Council member Mike Tonkin said he was concerned that the service charges collected by the city in lieu of taxes would be minimal once utility costs were deducted from rental revenue, a fact that would be difficult to explain to taxpaying residents.

“That 4 percent is going to end up being really small,” Tonkin said. “We’ve got people who came to the podium and said (they) paid $2,000 in property taxes this year, and we’ll be lucky to get $2,000 to $4,000 a year for all of these properties. So are we putting extra things on the community? We have to be very careful.”

Lerlie said that allowing the project would increase the revenue in the city.

“With 36 new housing units, the city will increase their utility income by roughly $2,500 per month, based on $70 per month charge. This is in addition to the tax payment,” Lerlie said.

She pointed out that the parcel being considered for the project has not produced tax revenue for the city in decades.

“The land has been sitting there, no one has paid taxes on the property, no one — not Bell Hospital, and before that CCI Hospital,” Lerlie told the council. “It’s been sitting now for years with Great Lakes Recovery, another non-profit. We formed a for-profit so that you can capture some revenue.”

“AMCAB, a private non-profit organization, went to the expense of creating a for-profit entity to develop the $5 million to $7 million project,” Lerlie said, as an effort to provide additional economic benefits to the community.

“We will pay sales tax,” Lerlie said. “There will be employees on the property. They will be buying snow removal. They will be buying services from the city and from local businesses, which is really important. We need jobs and we need development.”

Lerlie said a recently conducted market study showed that the vacancy rate for senior citizens in Marquette County is less than 1 percent, and waiting lists for other AMCAB-run properties like Lost Creek in Marquette bear that out.

“That is only going to get worse going forward. I listen to our seniors and I hear what they are saying,” Lerlie told the council. “We’ve got 350 Meals on Wheels home-bound seniors that could benefit from a barrier-free facility.”

Council member Stuart Skauge said he was supportive of the project, but only under certain conditions.

“I am in support of this project, because I think we need it in Ishpeming, but I will not support the project unless the contractors would be getting prevailing wage,” Skauge said.

Lerlie said it was her goal to use a local contractor at a fair price, but she was unsure if project financing would support paying prevailing wage.

“I am a Marquette County girl, born and raised, and I know how important wages are,” Lerlie said.

Lerlie said despite the need, she also recognized the decision was a difficult one for members of the city council.

“We understand and appreciate that the Ishpeming City Council’s job is to represent their constituents by doing their due diligence, exploring the facts, and ensuring equity in their decisions,” Lerlie said. “Many good questions were raised Wednesday night as they considered the PILT as part of making way for the project. We also understand they need revenue to sustain and that decreased State revenue sharing and increased costs put them in the unenviable position of serious deliberation. We appreciate their service to the community and their willingness to accept this tremendous responsibility on behalf of the community.”