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Commission approves 30‑year tax‑exemption pilot for Lot O housing project; estimated tax reduction $2.0M
Summary
The commission adopted a resolution granting a 30‑year payment‑in‑lieu‑of‑taxes (PILOT) for the Lot O project with Homestretch Nonprofit Housing Corp., authorizing a 4% tax rate and estimating a $2,000,381.61 reduction in taxes over the pilot term.
The City Commission adopted a resolution April 7 approving a tax‑exemption pilot (payment in lieu of taxes) for the Lot O affordable housing project proposed by Homestretch Nonprofit Housing Corp. The resolution authorizes a 4% PILOT rate for a term not to exceed 30 years (the resolution language notes the pilot applies for the life of the mortgage or 30 years, whichever is longer).
Proponents described the project as a mixed‑use redevelopment with residential units aimed at lower income levels and some commercial space. Homestretch and partner representatives discussed affordability targets for units across AMI bands and said preserving long‑term affordability increases the project's competitive scoring for state or federal housing funds. John (Homestretch representative) presented sample monthly rents tied to AMI: studios at 30% AMI were cited as approximately $429 per month (excluding utilities); 60% AMI rents for studios were cited around $958 per month.
Commissioners asked about the total fiscal impact. Assistant City Manager Deb Allen and the assessor provided an estimate: the total tax reduction over the 30‑year pilot would be about $2,000,381.61 (roughly $74,000 per year on average). Commissioners discussed protections, including a first right of refusal for the city and development agreement terms to maintain affordable units; staff said the pilot includes customary deed restrictions and that lenders and later MSHDA mortgages commonly extend affordability terms.
The commission voted to adopt the resolution authorizing the pilot. Supporters framed the PILOT as a tool to leverage financing and incentivize construction of deeply affordable units downtown; some commissioners reiterated the need for long‑term deed restrictions and development agreements to ensure ongoing affordability.
Why it matters: The pilot can make a major downtown infill affordable housing project more financially viable; the estimated foregone tax revenue over the pilot was disclosed at the meeting and staff noted the property is currently tax‑exempt.
