The Lansing City Council on July 17 approved Ordinance 11-35 to establish a Reinvestment Housing Incentive District and adopt the development plan for Fairlane Townhomes Phase 2.

The development plan covers roughly 21 townhome units, five triplexes and three duplexes north of Fairlane Street and Santa Fe Drive. The RHID provision will reimburse eligible project costs on a pay-as-you-go basis using 80% of new property tax increment generated by the project, for up to 20 years, with a maximum reimbursement of $851,570, city staff and the developer said. Councilmember Robinson and colleagues voted unanimously to approve the ordinance.

Jeremy Greenemeyer, vice president of Greenemeyer Reynolds, told the council the city faces “a serious housing shortage” and urged use of economic development tools to encourage infill housing. Greenemeyer said the development could break ground this fall if county and school taxing jurisdictions approve similar terms and that the project aims to produce 21 market-rate units adjacent to Phase 1.

Council members asked detailed questions about how the RHID pay-as-you-go structure works. City staff explained the RHID reimburses the developer from 80% of the annual new property-tax increment (the increment above current property tax receipts) and that reimbursement is limited to eligible expenses identified in the development plan and development agreement. City staff and the developer said the project includes eligible vertical construction costs; the packet lists a construction cost line of $2,950,000 as an eligible expense under state RHID rules for infill projects.

Councilmember Clemens pressed for clarity on dollar limits and years; staff said the package includes three caps: a 20-year term (the council’s request), the 80/20 split, and a maximum reimbursement dollar amount of $851,570 (documented on page 9 of the packet). Staff and the developer said the risk of underperformance falls to the developer: reimbursement only occurs if property tax increment materializes.

Councilmember Gardner suggested amending the motion to include the dollar cap explicitly. The council rescinded the initial motion and then approved the ordinance and the development agreement language including the $851,570 cap. A roll call recorded unanimous "yes" votes from Councilmembers Robinson, Clemens, Brumgard, Studnica, Gardner, Kirby, Kowalewski and Garvey; the motion passed.

No public speakers addressed the RHID during the public hearing. The council’s approval now forwards the project to the other taxing jurisdictions (county and school district) for their separate consideration; city staff and the developer said approval by those jurisdictions is required for full implementation.

Council and staff repeatedly framed the RHID as a tool to close a gap between rising construction costs and achievable rents. Greenemeyer noted financing and interest-rate pressure since Phase 1 ("When we broke ground on phase 1, interest was 3 and a quarter percent. When we went permanent, it was at 8%.") and said the RHID was part of the package that would make the Phase 2 project feasible.

The ordinance and associated development agreement as approved include the 20-year/80% structure and the $851,570 maximum reimbursement; other taxing entities may accept or reject the city’s requested term and percentage.