Gary could gain $420K in taxes from Miller Apartment complex renovation
By michelle L. Quinn Post-Tribune correspondent November 26, 2012 10:28PM
Updated: December 28, 2012 6:19AM
GARY — The city will gain at least $420,000 more in real-estate taxes from the purchase and renovation of the Miller Village apartment complex, should the Common Council vote favorably for it.
Finance Committee members got to hear more about the pilot program that would finance the massive overhaul at the Miller Village apartment complex at its Monday night meeting. Laura Anderson, general counsel with Cleveland-based property manager Millennia Housing Management Ltd., broke down for the committee the financing involved with the purchase of the 246-unit complex as well as the property tax implications.
The pilot agreement first presented to the Finance Committee would have Millennia pay the taxes currently paid on the property the first year — in this case, $81,943 — with future payments increasing either by 2 percent multiplied by the total rent revenue, or the base pilot amount of $81,960 increased annually by 3 percent over the course of a 30 year-loan as payment in-lieu-of-taxes. The city has since asked Millennia to lower the loan length to 20 years, Anderson said.
The property at 860 N. Wells St. is valued at $3,031,000; if current owner Thomas Corson kept the property as it is, the city would receive at most $2,088,000 in property taxes — assuming Miller Village didn’t depreciate further, Anderson said. But the property has already decreased from $3.3 million in 2011.
With the pilot program, on which Millennia worked with City Attorney Richard Leverett, the city would see substantial gains.
“If rents increase to percent at year, and (Park Shore Commons’) rate is 1.9 percent vacancy as most of Millennia’s properties have, the amount of taxes under the program are $2,349,000, or $710,000 more,” she said.
The program will be funded through a U.S. Housing and Urban Development loan of $15.6 million, including $10.8 million in tax-exempt bonds, Anderson said; the Indiana Bank is contributing $5.6 million in exchange for tax credits.
The city is also contributing $300,000 of its HUD-based Home Investment funds.
Millennia will purchase Miller Village for $3.3 million and is expected to close on the deal Dec. 5th, Anderson added.
Mayor Karen Freeman-Wilson said the administration worked with Millennia in coming up with the program and therefore fully supports it. She said she views the deal as an opportunity to raise quality of life in the Miller section.
Millennia specializes in purchasing properties built in the 1970s and 1980s that are still structurally sound but haven’t ever seen anything in the way of renovations. With partnerships forged with Northshore Health Center, residents, many of them elderly, would have access to on-site, basic medical care. Employment services, GED classes, tax preparation and mentoring programs are also among the services the Parks Shore Commons Partnership would bring.
The council will vote on the program at its 6 p.m., Dec. 4 meeting.