Developer, city decide Central School PILOT

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 — The Iron Mountain City Council on Wednesday granted a tax abatement arrangement to a Wisconsin developer looking to convert the former Central School into low-income housing.

Commonwealth Development of Fond du Lac, Wis., gained a Payment in Lieu of Taxes, or PILOT, from the city that will send 12 percent of its rent revenues to the various taxing bodies. This equates to about $26,875 in the first year, with the city taking about a third, or $8,958.

The PILOT arrangement passed on a 5-2 vote, with Mayor Dale Alessandrini and council member Amanda List opposed.

A PILOT is intended to help offset costs of providing local services to the property, such as police and fire protection and infrastructure improvements.

David Ritchay, Commonwealth’s vice president of development, told the council the PILOT was needed to give the company better standing as it reapplies Monday for a Michigan State Housing Development Authority grant.

The first round of applications in October, awarded in January, saw the project fall just short of obtaining funding.

Commonwealth plans to create 28 apartments in the former 78-year-old school building, plus build 12 new townhouses on four lots on West Hughitt Street and two lots on West Ludington Street.

The Iron Mountain School Board in August accepted Commonwealth’s offer to buy the school and lots for $445,000. But that sale hinges on the developer securing grants and tax credits for the project.

City officials initially balked at Commonwealth’s proposed 10.23 percent PILOT, with its Infrastructure Committee later suggesting a variable PILOT that would decrease by a certain percentage each year.

Ritchay said the 12 percent PILOT will bring in nearly the same amount.

“I really tried to be responsive to your concerns and increased the PILOT. The approval provides five additional points for the competitive application process and, if we are successful, it will help the school district retire its debt,” Ritchay said.

They expect a 116 score with the next MSHDA application for low-income tax credits, though they intend to press for a change in one area where they believe the project was underscored.

“I do think that 116 points is still very competitive in this process — especially for a rural project. Five of those (rural) projects got funded in the fall and we don’t expect many more to be applying this round,” Ritchay said.

Commonwealth is seeking $686,000 in tax credits for its proposed $8 million project. Ritchay said the decision on funding should be made by July 15.

The council Wednesday also had a public hearing on seeking a Michigan Department of Natural Resources Trust Fund Grant for City Park play equipment, later deciding to apply for $100,000.

The project would add a large play structure and replace the cast-iron smaller equipment that includes a teeter-totter, merry-go-round and some rocking pieces, City Manager Jordan Stanchina said.

“When the previous trust fund grant of $500,000 was received, the playground was not touched. To replace and add equipment is not cheap — a large play structure runs between $40,000 to $50,000. The grant would be a 75 to 25 match, so the city needs to pledge $25,000 for the project. During the past couple of years, projects looking for $100,000 or less have had a better time in getting approved,” Stanchina said.

Council member Scott Celello suggested the city also look at a Risk Avoidance Program grant through the Michigan Municipal Risk Management Authority, which requires a 50-50 match.

The MDNR will review the grant applications in October, but the grants won’t be awarded until December, Stanchina said.