Eastlawn affordable housing PILOT to be decided Nov. 20

The proposed development plans to construct six buildings hosting 204 units as well as a clubhouse building. 

The development was originally approved by Midland City Council in January. At that time, the project was expected to provide market rental rates. 
President of River Caddis Development John McGraw returned to City Council last month with a new plan for the development: a mixed-income development providing affordable workforce housing. 

The PILOT request would set an annual fee to be paid to the City of Midland instead of ad valorem taxes. 

With a low-income model, rent rates would be based on the renter’s area median income percentage. Rental rates in this case would be set by the State of Michigan. Renters from 30% AMI to 120% AMI would live at the complex. 

Since 1979, City Council has approved 22 PILOT developments for a total of 678 units. Prior to 2021, all of the PILOTs were approved for 4%. The three most recent PILOTS – Center City Lofts and Lincoln Park Residences I and II – were approved for 9%.

The estimated PILOT fee for this development in 2023 would be $97,712. The estimated tax bill if the property were charged ad valorem taxes would be $704,800. Currently, the lot is owned by Midland Public Schools, which pays no taxes on it. 

While other councilmembers, including Mayor Maureen Donker and Tim Soler and Diane Brown Wilhelm, liked the idea of receiving any tax dollars from the lot, Arnosky argued that the city could be making a lot more if the development were to continue with market rates.

Public Comment

Residents gave a variety of comments and concerns at the meeting. One resident from the Disability Network pointed out that the development is ADA-compliant, which would fill a specific need in the City of Midland for that type of housing. 

Resident Linda Barth said that if the development was approved at market rate, then the developer should downsize the project to something it can afford instead of asking the citizens to pay for it. 

A resident from the neighborhood said a developer who has been building for over 10 years should know how to figure out finances and finish a project without changing to a PILOT program. 

Trudy Laufer, Executive Director of Cleveland Manor, which is just a block away from the Eastlawn site, said everyone “deserves an opportunity to live and work in our community” and that the Manor is a good example of how an affordable housing development can fit into a neighborhood. 

President of MyMichigan Health Midland Chuck Sherwin expressed a need for housing in the city for his new employees. As the largest employer in Midland, MyMichigan hires hundreds of new employees each year who need housing. 

Dow – another of Midland’s largest employers – sent a letter of support for the PILOT to the council, stating its experience with the housing shortage and the impact of that shortage on its ability to attract and retain talent in the community.

Discussion

Brown Wilhelm started council’s discussion by saying that the development would provide housing to retirees on a fixed income who do not need or want to live in senior housing or assisted living. 

Arnosky said that there are many other tools for affordable housing besides a PILOT, but Donker and Wazbinski both stated that a PILOT is the only affordable housing tool that the city can use. 

Arnosky had other concerns for the development, including why it suddenly needs a PILOT when back in January it was approved for market rate rents. He was also confused why the rate was 4% instead of 9% and was concerned for the length of time of the tax incentive. 

City Manager Brad Kaye explained that River Caddis had a proforma that showed the finances and what was needed to make the project feasible., and that this document shows the need for the 4% PILOT.
 
Soler asked Wazbinski – the longest standing council member – to give his thoughts on PILOTs as he has dealt with many. Wazbinski said he is a firm believer in the PILOT program, but that the 45-year time span was concerning for him as he could not recall ever having such a long PILOT before.

Donker emphasized that Midland has a need for housing and that while 45 years is a long time, at least the city would be receiving some tax dollars as opposed to the $0 it receives now for the Eastlawn property.

Other business
• Council approved a permit to allow The Learning Place Child Development Center to operate out of rooms in Midland Church of the Brethren at 1717 E. Sugnet Road. 
• Council rezoned the new Creative 360 at 5501 Jefferson Avenue to be Community instead of Single Family Residential.
• Council rezoned 3420 and 3410 Isabella Street to Neighborhood Commercial. The applicant, Wolgast Corporation, is working with Dollar Tree to open a retail store at the location.
• Council awarded a bid for Swede Avenue engineering services to Prein and Newhof. A member of the public from OHM Advisors asked that the item be removed from the consent agenda, as OHM’s bid for the project was just $81 higher than that of Prein and Newhof. The man questioned if preference should be given to a local contractor, but City Engineer Matt Lemon explained that the City does not have a local preference policy. It only has a low bid policy, which made Prein and Newhof the preferable bidder.