Garfield Township trustees will discuss tax breaks for three workforce housing projects at their 6:30pm meeting tonight (Tuesday). While payment-in-lieu-of-taxes (PILOT) agreements are already in place for two of the neighborhoods – Oak Terrace Apartments and Oak Park Apartments – and would simply be extended under new owners, a new PILOT proposal for Ridge45 could gradually transition the 484 apartments there from market-rate to workforce housing.

Changes in recent years to state law offer more flexibility to communities to enter into PILOT agreements with developers as an incentive to build workforce housing. Instead of normal property taxes, a developer under a PILOT agreement pays a defined percentage of net shelter rents to the local municipality. The PILOT agreement remains in place for a certain number of years – typically 15, though agreements can be renewed.

One of Garfield Township’s largest apartment complexes could come under such an agreement. Tonight’s discussion on Ridge45 is meant to serve as an “introduction” to the topic, according to Township Assessor Polly Cairns, meaning action isn’t planned. Development and investment firm River Caddis Communities hopes to partner with Garfield to “preserve and enhance (Ridge45) as a long-term attainable workforce housing community, serving the teachers, nurses, first responders, hospitality employees, and other residents who drive the local economy,” according to the proposal.

The firm, which operates workforce housing developments from Kalamazoo to Midland, is seeking a four-percent PILOT agreement for Ridge45. The agreement would be for 15 years, though the company said it hopes to renew for up to 45 years. Under the PILOT, 60 percent of Ridge45’s apartments – 291 units – would be restricted to tenants earning 80 percent or less of the area median income (AMI). The state of Michigan lists a two-person household income of just under $68,000 for 80 percent AMI. The remaining 40 percent of Ridge45 apartments would be restricted to tenants earning under 100 percent AMI.  

“Our goal is to preserve affordability without displacing existing residents,” River Caddis wrote. “Income limits will be implemented gradually, with renewal rights for current tenants.” To increase efficiencies, the company plans to make updates including “LED lighting, smart thermostats, low-flow fixtures, AI-based building management, and common-area enhancements,” according to the proposal. 

A sample chart shows potential Ridge45 rent rates ranging from $1,351 for a studio apartment up to $1,765 for a two-bedroom, two-bathroom unit for tenants earning 80 percent AMI. A household with 100 percent AMI could pay $2,100-$2,600 for either two or three bedrooms plus two bathrooms. Under the PILOT, River Caddis would pay the township just over $479,000 annually – a combination of the four-percent PILOT rate and a payment for municipal services, like fire and police – with Grand Traverse County to receive nearly $115,000 of that amount as the other local taxing authority. Both township and county officials would need to approve the PILOT agreement.

River Caddis said in its application that “we are not short-term developers. We own, operate, and manage the communities we create.”  A PILOT is crucial to providing the income-restricted rents envisioned for Ridge45, the company said. “We believe Ridge45 offers a meaningful opportunity to stabilize housing for the local workforce and to demonstrate how public-private partnerships can strengthen the township for decades to come,” the proposal states.

Township Manager Chris Barsheff says he wants to gauge board support for backing PILOT projects with higher AMI levels – the 60-120 percent range – like Ridge45. Such projects are often called “missing middle” or workforce housing, compared to low-income or affordable housing units that typically focus on a lower AMI. Garfield Township has traditionally backed PILOTs for those lower ranges, Barsheff says, but could also support workforce housing in the higher AMI ranges. If trustees express support, an updated township ordinance could come back for future board approval along with the Ridge45 application, Barsheff says.

Township trustees tonight will also consider requests from Steve Lyman to renew four-percent PILOT agreements for Oak Terrace Apartments and Oak Park Apartments, both of which he recently purchased from longtime owners Tom Lapka and Jeff Gates. Oak Terrace has 48 units designated for families earning between 30 and 60 percent AMI, while Oak Park has 94 units for the same income range. The renewals would update the ownership and resolution language for the agreements, which would be extended through 2041.

Lyman wrote that having PILOTs in place “enables us to reinvest in the property, upgrading the units and essential building infrastructure, giving the residents a place that they can proudly call their home.” According to Lyman, the agreements ensure “that working families can remain rooted in the community and the property can remain financially viable without placing undue burden on residents. Garfield Township, in turn, benefits from increased housing stability, neighborhood continuity, and an ongoing commitment to responsible ownership.”