Boyne City Parkview Apartments upgrade plan tax break ordinance scheduled for 2nd read

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Should Parkview Apartments receive a tax break and tax deferral so it may make improvements like adding new doors, stoves, fire suppression systems, air-conditioning, windows, carpet and more?
"[W]hy should the taxpayer take a hit for buildings that are already built?" —Boyne City Mayor Tom Neidhamer

This in-depth story is 1,688 words long


Major changes have put the plan, to decrease the tax burden of a low-income housing complex so its owners may make improvements, closer to fruition.

On Tuesday Dec. 8, Boyne City Commissioners completed an official first read of the latest version of the Payment in Lieu of Taxes (PILOT) ordinance and agreement which would allow Parkview Apartments to put a percentage of its tax payments toward fixes to parking, as well as the interior and exterior of the 96-unit complex.

“That is a significant change from the last version that was originally introduced a couple months ago,” said Boyne City Manager Michael Cain, who added that this new compromise version came about after talks between city officials and Parkview Apartments representatives.


The plan went from a three percent payback over 35 years to a seven percent rate over just 15 years.

Other key changes to this revised draft ordinance: instead of the city being repaid in full while other local taxing authorities—like school, library, county and Char-Em ISD—lose money, the new proposed agreement would have all entities taking on the burden equally.

The Money
The amount local entities will receive in taxes is broken down thusly:
• Boyne City Public Schools will receive $18,300.96—That is down from $27,350.
• Boyne District Library will get $648.80—That is down from $970.
• Char-Em ISD will receive $1,861.08—This dollar amount is down from $2,781.
• Charlevoix County will get $5,185.83—The county would normally get closer to $7,750.
• Boyne City will get $12,178.34—Without the PILOT, the city would receive $18,200.

Sewer Request
According to Cain, Parkview Apartments officials have asked if they may be able to tie into the city’s stormwater system if the drainage improvements the city has made in the area are not sufficient.

Cain said the answer would be “yes” but with certain restrictions.

“The city reserves the right to restrict the flow to a manageable level to make sure it does not over-task the city system,” Cain stated in a Dec. 8 letter to Robert Brooks of Parkview Apartments. “For example, it may require that Parkview connects gradually as the system can accept it.”
Other conditions the city has include:

1. Proper design documentation for the tie-in must be prepared by a licensed professional engineer and will be provided for review by the city.

2. Parkview must submit a completed Right-of-Way use form.

3. All work will be required to adhere to Boyne City’s municipal standards.

Keeping Track
Parkview principal owners Robert and Pam Brooks’ attorney Joseph Quandt of Traverse City told the commission that Parkview will provide audit information and any annual reports which they would normally supply to the USDA Rural Development Agency.

“You can make sure that the capital needs assessment and the rehabilitation process is working hand in hand and that the money being provided as part of the PILOT is being utilized for those purposes,” Quandt said.

Parsing Words
Boyne City’s attorney Jim Murray said the language regarding the definition of “rehabilitation” must be addressed before the city signs off on it.
As it stands, “Rehabilitation” in the ordinance is defined as:

“any work scope, redevelopment or personal property purchase which is identified in the USDA-RD Approved Capital Needs Assessment for Parkview Apartments dated March 26, 2012. Included in this definition is any repair, reconstruction or rehabilitation of infrastructure at Parkview Apartments including roads, utilities, parking areas and facilities.”

He also said the issue of when the PILOT officially begins must be clarified.

When rehabilitation officially begins will determine when the PILOT begins.

The last item Murray said needed to be addressed involved Parkview’s pending tax appeal.

“We talked about the staff’s recommendation and the commission’s thoughts that adoption of this ordinance would be conditional upon dismissal of the pending tax appeal and the signing of a release agreement releasing the city from liability from prior claims,” said Murray.

Commission Discussion
Boyne City Commissioner Hugh Conklin asked about the definition of rehabilitation in the proposed agreement and the $1.5 million worth of improvements listed in the rehab capital needs assessment.

“Is the assumption then that this will allow those rehab projects to be done?” Conklin said.

Quandt responded that this project will allow $283,000 worth of capture for rehabilitation work as defined by state law and the USDA’s Rural Development Capital Needs Assessment.

Quandt said the road and parking lot at the apartment complex are included in improvements which need to be made.

Conklin also asked why the needs assessment showed a $3.2 million price tag several years ago but $1.5 million now.

“There’s up to $3 million worth of capital needs that can be utilized,” Quandt said… “The point of it being that, of the money that is captured through the PILOT, you have to be able to demonstrate that every penny of that is being utilized to address any item that’s in the capital needs assessment and then the capital needs assessment is an extensive inventory of things that would be done.”

Quandt said the Brookses will invest the $283,000 and unspecified additional funds into the project as well.

Conklin asked Quandt whether non-profit or for-profit companies generally operated low-income housing units.

Quandt said you must have a non-profit or limited profit entity to own and operate such a business.

The profile of tenants at Parkview, according to officials, is a mix of families, middle aged folks and seniors with fewer and fewer families renting now than 20 years ago.

“I think supporting this housing is really important—this workforce, low-income housing,” said Conklin… “I think this is really important for the community and I think we need to try to work on a compromise to make this work for everybody involved.”

Boyne City Commissioner Laura Sansom asked how long the project will take.

Parkview officials said the number one priority of the USDA Rural Development is to get the parking lot and road fixed. That portion of the project is expected to cost between $80,000 and $90,000.

The plan is to begin work in spring of 2016.

“We just want to make sure that, the minute the excavator hits the site, the PILOT goes into effect because then we’re able to start paying ourselves back money that we’re putting out to fix that,” said Bob Brooks.

He added that some of the more minor items on the capital needs assessment from 2012 have already been taken care of because Parkview is continually making improvements.

The First Step
While the entire project must be completed within 15 years, the Brookses said they don’t know what the time-line will be in dealing with the government and its requirements for tax credits.

“With the PILOT in place, then we can go and make application to MSHDA for low-income housing tax credits to make the next step: which is to try to do more of the work that is included in the CNA,” Bob Brooks said.

At A Minimum
Cain said all Parkview is guaranteeing is that it will spend $283,000 on improvements.

“I don’t want anybody getting the impression that they’re guaranteeing that they’re going to make the $1.5 million or $3 million worth of improvements on that CNA,” Cain said.

Bob and Pam said they would love to make more improvements if they had more funding.

Boyne City Commissioner Delbert “Gene” Towne said the city needs to do what it can to encourage the development to make improvements.

Boyne City Commissioner Ron Grunch asked if there is a possibility that Parkview was planning another development.

Bob Brooks said he is looking to improve the development he and Pam have at this time but that he would be interested in looking at something more down the road.

Tough Questions
Boyne City Mayor Tom Neidhamer supported the project, saying that the city certainly needs affordable housing.

However, he mentioned other low-income housing in the city and asked at what point does the city have too many housing units which are not on the tax rolls.

“A lot of people are going to say maintenance—rehabilitation is the proper term—is something that should have been budgeted over the lifetime of the building,” said Neidhamer. “So, why should the taxpayer take a hit for buildings that are already built? At what point does Boyne City hit a saturation point of taking things off the tax rolls. That’s the question that I’m struggling with.”

He added, “Can we afford to take 96 units off the tax rolls?”

Proponents of the project say the city needed to decide how important low-income housing is to the area.

Quandt said the city is essentially giving Parkview a 30 percent break on its taxes and requiring the owners to use the money for improvements to the apartment complex.

Quandt said, if the city did not support the PILOT, some of the Parkview Apartments units may have to be turned into market rental units instead of cost-controlled units.

Neidhamer said he understood the need for affordable housing but was concerned with the loss of tax revenue to local entities—like schools and the library—which rely on that money.

Neidhamer also said that there is a need for housing that working families can afford.

Public Comment
Chris Christensen, who is both a Charlevoix County Commissioner and Boyne City-based Realtor, said he was thankful the city rethought how the PILOT funding was to be collected so that it was more equitable to the taxing entities affected.

“I don’t deny the need for affordable housing. I can’t argue that,” he said… “It’s important to not convolute the two different issues.”

Christensen said the discussion has focused on subsidized housing and family-sustaining jobs but that a family-sustaining job should pay too much to qualify a family for low-income housing.

Christensen also pointed out that Parkview Apartments owners have said over and over that the bulk of their residents are not working families but instead older people.

“There has to be a balance in there,” Christensen said, adding that there are many landlords who are struggling to keep up with maintenance costs on their units and that everyone ends up paying more in taxes when one person gets a tax break.

A second reading of the proposed ordinance was scheduled for the Tuesday Jan. 12, 2016 Boyne City Commission meeting.