Rehab is done

Shelby Township Attorney Steven Wright is hoping Almont Village officials will lower the property taxes at Plaza Towers, a low-income apartment project on North Main Street, so he can lower the residents’ rent and keep his occupancy rate up. ALMONT — It’s difficult to understand at first why a property owner would be fighting for lower rents, but the owner of a local low-income housing development says it’s partly economic self-interest.

Steven Wright, a Shelby Township attorney and builder, recently bought a 24-unit low-income apartment project on North Main Street in Almont from the US Dept. of Agriculture and spent $720,000 renovating the project from planting grass and paving the parking lot to refurbishing the apartment buildings inside and out.

Wright, who owns 11 USDA-funded projects across the state, said USDA recently foreclosed on Plaza Towers, which was built in 1983. Wright explained that while the federal department of Housing and Urban Development handles lowincome housing in metropolitan areas, the USDA is responsible for low-income housing in communities with populations of less than 350,000, which includes Lapeer County and the rest of The Thumb.

He said he got involved with Plaza Towers because “The government took the property away from the old owners. They didn’t take care of it.”

As part of his purchase agreement with USDA, Wright said he had to agree to bring the 26-yearold complex up to current building codes and comply with the Americans with Disability Act. That, he said, meant, among other things, replacing all of the balcony railings and adding an inch of concrete to the patios and replacing many of the sidewalks.

Wright called rents at the project a “zero sum game,” determined by the USDA. He said USDA officials use the mortgage payment (which is set by the USDA), utilities, annual maintenance, taxes and a reserve fund (which is set by the USDA) for the eventual replacement of things like building roofs and heating systems to set the rents.

Last month the complex’s management company, Kalamazoo-based Gardener Management Co., posted a notice proposing a $120-per-month rent increase for each of the units at Plaza Towers effective Jan. 1.

That created confusion at the Almont Village Council which is considering a PILOT (payment in lieu of taxes) request from Wright. PILOT, said Wright, would allow the village to set the taxes on the project below market rate by ordinance, which would lower the project’s budget and along with it the residents’ rent.

Wright said his proposal would increase residents’ rents by $60 a month, which is still below market value in the area. He said the current rent for a onebedroom unit at Plaza Towers is $425 a month, while the USDA says market value is $615. He said the monthly rent on a twobedroom unit is $445, about $195 below market value; and the rent on a three-bedroom unit is $460, or $200 below market value.

Wright noted that 10 of the complex’s units are on rent assistance, so they would see no change in their rent, regardless of what happens.

He said currently all but two of the units are occupied, and he has five applications sitting on his desk.

One of Wright’s concerns is that if the rent is set too high, even though it’s below market value, tenants would move out and he would have to make the mortgage payment out of his own pocket.

Wright said he’s asking the village to lower the complex’s property taxes and he’s asking the USDA to cut the amount being put in the reserve fund since he just finished rehabbing the entire project. USDA inspectors, who referred all questions to their Lansing office, were on site Thursday for a final inspection of the work.

“Lower taxes doesn’t put anything in my pocket,” said Wright. He noted as part of a Michigan State Housing Development Authority tax-exemption application, he’s agreed to forego the $1,785 annual return-to-owner fee in the project’s current budget.

Wright said his profit in the project came during the construction phase. He said Plaza Towers and several other projects he’s been looking at, including three south of Detroit, has kept his crews working. “There are a lot of guys who wouldn’t have jobs without this,” he said.

Wright added that he eventually hopes to have enough USDA units to form his own management company. He said currently, Gardener has a contract with USDA to manage projects around the state and is paid $41 per unit per month at Plaza Towers to manage the complex.

Wright said he plans to meet with village officials Nov. 17 to explain PILOT. He said a similar request approved by officials in Capac helped him trim a planned rent increase from between $115 to $120 to just $48 a unit.