City may sell land for senior housing

Published 2:13 pm Tuesday, January 10, 2006

By By JAN GRIFFEY / Niles Daily Star
NILES - A Mishawaka, Ind.-based company wants to purchase about 7.7 acres of undeveloped city-owned land and construct on it 40 duplex rental units in 20 buildings for senior, low-income residents.
The Sterling Group specializes in developing multi-family housing in Indiana, Illinois, Ohio and Michigan. Locally, the company operates Main Street Village, an upscale community in Mishawaka, as well as The Arbors at Ironwood, affordable apartments for families in South Bend, Ind.
The undeveloped acreage is located north of North 11th and 12th streets off of Lake Street and behind North Niles Villa apartments off of North Fifth Street.
City Administrator Terry Eull said the city purchased the property "many years ago" to have as a potential site for a well field and pump house.
However, it hasn't needed that to date.
If the city council chooses to sell the property to Sterling, Eull said the city would retain some of the property in the event it needs to develop the well field and pump house sometime in the future.
"The city owns several parcels of property like this one. You don't need all that land to do that. About an acre is what you'd need," he said.
No purchase price has been determined for the property. Eull said he will seek an appraisal of its value. City Council members, while not voting on the project, seemed to embrace the proposal on Monday night at a committee of the whole meeting held prior to the council's regularly-scheduled meeting.
In addition to seeking to purchase the property from the city, the company wants the city council to grant is a PILOT - Payment in Lieu of Taxes. That move would allow the company to pay 10 percent of its rent revenues instead of making a tax payment. Kent Heckaman, vice president of development for The Sterling Group, estimated that payment would be about $21,500 annually.
Heckaman said the company would spend about $4.3 million constructing the development here. He said the one- and two-bedroom units would each include a one-car attached garage. The company proposes to construct 10 one-bedroom units and 30 two-bedroom units. Only those 55 and older with moderately low incomes - $13,000 for a single senior and $30,000 for a couple - would be eligible as renters.
Heckaman estimated that rent for a one-bedroom unit would run between $307 and $500 a month and rent for a two-bedroom unit would run between $376 and $575.
Heckaman said the project would be constructed using private funds. However, Eull said the incentive to undertake the project is the tax credits offered by the State of Michigan for the development of housing for low-income residents. The Sterling Group, if granted the tax credits, would sell those credits.
Eull said competition for the tax credits is fierce.
Eull said the sale of the property would hinge on the company successfully securing the Michigan tax credits.