City takes next step with Allen Edwin for ‘workforce rental’ homes: Some commissioners wary of ‘significantly’ lower PILOT payments by developer

By Robert Tomlinson
News Director

THREE RIVERS — New rental homes that are billed as being “affordable for working families” could be coming to Three Rivers sometime in the future.
During Tuesday’s Three Rivers City Commission meeting, commissioners placed a resolution on file for 30 days for the possible sale of 611 Coolidge Pl., a 5.62-acre parcel of land owned by the city east of The Meadows at Coolidge Place and north of the Armstrong Park Sports Complex, to Allen Edwin Homes for $50,000. It is not the final action on the measure, as per city charter, a sale such as this has to stay on file for at least 30 days prior to a final approval by the city.
The intention for the land, according to the resolution, is to build 38 “workforce rental homes,” which representatives for Allen Edwin say will be affordable for working families to live in, due to new legislation passed by the Michigan legislature late last year.
The package of bills, signed by Gov. Gretchen Whitmer on Dec. 13, would establish what are called “attainable housing districts,” support the development and rehab of residential housing, expand incentives for “neighborhood enterprise zones,” and – most crucially for what has been proposed by Allen Edwin – provide property tax exemptions for owners of so-called “workforce housing” projects, instead paying an annual service charge, otherwise known as payment in lieu of taxes (PILOT).
“This project is very unique, and started before the law actually passed. What this law allows us to do is negotiate directly with the municipalities,” Brian Farkas, director of workforce housing for Allen Edwin Homes, said during his comments to the commission. “In previous iterations of this, you’d have [the Michigan State Housing Development Authority] involved to have a PILOT payment in place. We’re now able to do that, which will allow us to reduce our property taxes significantly.”
According to Public Act 239 of 2022, which established the aforementioned property tax exemptions for “workforce housing” developments, the term “workforce housing” is described as rental units or other housing options that are “reasonably affordable” and occupied by a household whose total income is less than 120 percent of the county’s median income.
Farkas said the housing that would be built at Coolidge Place would normally cost $2,500 per month, but with the PILOT, the amount they would charge would be reduced to $1,500 per month. The houses would have three bedrooms, two bathrooms, and be 1,400 square feet.
City Manager Joe Bippus said there will be some negotiation with Allen Edwin on how much PILOT will occur with the properties.
“We want to run some numbers for the commission, which we will bring back for you guys,” Bippus said. “This is the first time for us using this new law, so we’ve been working with our new attorney, reviewing it and giving us good advice on how to structure an agreement.”
Fourth District Commissioner Carolyn McNary said the new housing could be “great” for families in the area.
“This is going to be really great for a lot of families that really want to take a step up,” McNary said. “There are people in low-income housing right now that are doing better because they had that break and would like to move on.”
Mayor Tom Lowry was wary about the possible lower PILOT payments, speculating that Allen Edwin could potentially pay “way more than 50 percent” less than they would have under previous PILOT agreements, although agreed that such housing is “needed” in the community.
“In the past, when we’ve done a PILOT, the city always took the approach that whatever it was called, whether it was a PILOT or some other name, that the entity would still pay the same amount they would’ve paid in property taxes,” Lowry said. “What we’re being asked to do is a significant reduction in what they would’ve paid. I’m not passing judgement, but I’m just saying we’re being asked as a city to give a significantly, way more than 50 percent, tax reduction on this property to create this kind of entity in our community. And they’re needed. There’s a demand that hasn’t been met in this community.”
At-Large Commissioner Lucas Allen was blunt about the possible PILOT payments for Allen Edwin, saying he wouldn’t support a possible “60 percent reduction,” but made it clear that the city has not endorsed a final deal and that any numbers discussed Tuesday were “pure speculation.”
Bippus said the possible PILOT agreements with Allen Edwin, if agreed to and approved, would only last 15 years, a shorter timeframe than normal. Farkas said in exchange for the possible PILOT payment reduction, there would be a clause in the contract and ordinance that there would be limits on how much rent they will charge on the properties.
“So, it’s not a tax break where we can charge market rate, but it’s a tax break and we’re capping the charge for what MSHDA says is affordable for 120 percent median income, so it’s a two-way deal,” Farkas said.
Despite his wariness on the PILOT payments, Lowry praised Allen Edwin for being one of the few developers to build new housing developments in the city. The company has been responsible for a number of projects over the last several years, most recently high-end projects at Garfield Court, Meadowbrook Farms, and new infill housing in the Fourth District.
“Twenty years ago, we got four or five local contractors who each built one house, made money, and they’ve never done it since. As much as we’ve advertised and talked about it, Allen Edwin has been the only one that’ll consistently do it,” Lowry said. “I hope you make a ton of money, I really do, so I applaud you guys for what you guys have accomplished in our community.”
The vote to place the resolution on file was a unanimous 4-0 vote, with commissioners Chris Abel, Pat Dane and Torrey Brown absent.
In other business…
Commissioners approved a revision to sewer and water penalty charges, officially giving residents 30 days to pay their water bill before a 10 percent penalty is applied for non-payment. The ordinance revision will take affect on Monday, Feb. 27 and will be enforced beginning with the March 1 utility bills.
Commissioners approved the first draft of a proposed resolution that would vacate a portion of South Street in the city, currently occupied by a “significant portion” of the parking lot at the rear of the old Three Rivers Public Library and Community Center buildings, constructed in the street’s right-of-way. The vacation is part of the property sale of the building at 920 W. Michigan Ave. to St. Joseph County for use as a courts building, and is part of “cleaning up the title to the parcel of land.” The city scheduled a public hearing for Tuesday, March 21 to hear objections to the vacation prior to a final vote on the measure.
Commissioners approved the rezoning of 1150 Millard St. from light industrial to general business, accommodating the upcoming move of the Peaceful Rivers massage therapy business to the building.
Commissioners approved $14,000 for completing a new Fournier press installation at the Wastewater Treatment Plant, as well as $6,000 for an increase in funding for HVAC repairs at the plant.
Robert Tomlinson can be reached at 279-7488 or robert@threeriversnews.com.