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No tax credits for Central School project

VP for developer Commonwealth says they will re-apply for next round of funding

A PROPOSED PROJECT by a Wisconsin-based development company would turn the former Central School into 28 apartments. Commonwealth Development is waiting to hear from the Michigan State Housing Development Authority on whether the project will get awarded $686,000 from the Low Income Housing Tax Credit program. The 78-year-old building is vacant and no longer used by the Iron Mountain School District. (Theresa Proudfit/Daily News photo)

IRON MOUNTAIN — Commonwealth Development was notified Wednesday they did not receive funding for its proposed apartment project at the former Central School.

David Ritchay, vice president of the Fond du Lac, Wis., developer, said the Michigan State Housing Development Authority indicated that the application for funding was close but did not make this round of awards.

“We intend to submit another funding application in April — the next round of MSHDA grants,” Ritchay said.

At a city council meeting earlier this week, the city manager said that there seems to be some misunderstanding about who will be able to live in the former Central School apartments if established in Iron Mountain.

To qualify for Michigan State Housing Development Authority tax credits, at least 20 percent of the residents at the property can’t make more than 50 percent of the area’s median income.

An alternative for the project is 40 percent of the units must be for incomes that do not exceed 60 percent of the area median as set annually by the U.S. Department of Housing and Urban Development, according to MSHDA standards.

The median income for Iron Mountain is $37,642, according to figures from the U.S. Census Bureau’s 2010 census. And the average household income for the city is $51,511.

City Manager Jordan Stanchina said that low-income housing is central to the project.

“The idea that people that are hired at Systems Control or some other business will be living there is not true. It is a low-income project — where a single person having an income of $17,000 or less a year can live,” Stanchina told the Iron Mountain City Council.

Commonwealth Development of Fond du Lac, Wis., has applied for $686,000 from the MSHDA’s Low Income Housing Tax Credit Program. They also seek historical preservation funds for the project that will create 28 apartments in the former school building and 12 new townhouses on nearby properties.

Commonwealth originally had looked to make Central School a senior housing project, but changed direction after a market study showed no need for that type of housing but a gap for low-income housing.

Ritchay said today all 40 planned units will be affordable. HUD defines this as housing for which occupants are paying no more than 30 percent of their income for gross housing costs, including utilities.

“The 12 new construction, three-bedroom townhomes will be marketed as workforce housing for families with children and hopefully the children will be school-age and can walk to school and extra curricular activities. The preference for the units in the school will be seniors and/or veterans. However, this preference wouldn’t exclude an individual or young couple just starting out,” Ritchay said in an email.

The company has offered to buy the former school building from the Iron Mountain School District, along with six other lots, for $445,000, contingent on getting the tax credits.

Commonwealth then asked the city council in September for a Payment in Lieu of Taxes that would pay 10.23 percent of the gross revenues of the development annually, saying it would better position the project for the competitive tax credits.

The council’s Infrastructure Committee recently suggested a variable PILOT instead that would adjust over the years. That proposal was forwarded to Ritchay.

Stanchina told the council Monday that Ritchay had said he would look into at it next week.

In his manager’s report, Stanchina said Commonwealth’s 15-year financial statement shows more income from the project in the early than later years. With that in mind, the committee put together a variable PILOT that would start at about 23 percent of the gross revenues and would be reduced by .8 percent a year until it was fixed at 12 percent.

Council member Bill Revord pointed out that there were also some concerns expressed by people about low-income housing for that development on the west side.  He wasn’t sure as to why they would be concerned.

“The thing people have to remember is that there will be an on-site manager on duty all the time. It’s a part of the project they proposed. It’s not like no one will be there — they are bringing in someone to make sure that this complex is managed correctly,” Revord said.

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