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Board approves $25,000 annual PILOT for Townsend Terrace rehab at 800 W. Saratoga
Summary
The Board of Estimates approved a payment‑in‑lieu‑of‑taxes (PILOT) pilot of $25,000 per year for the Townsend Terrace rehabilitation, a 202‑unit Housing Authority property at 800 West Saratoga. The project includes substantial unit renovations, project‑based vouchers and tenant relocation plans overseen by the Housing Authority.
The Board of Estimates on Feb. 5 approved a payment‑in‑lieu‑of‑taxes pilot agreement between the city and Towns at the Terrace LLC for the rehabilitation of Townsend Terrace, a housing complex at 800 West Saratoga.
Alex Kennedy, Housing Commissioner with the Department of Housing and Community Development, said the property contains 202 rental units built in 1999 and has not had a comprehensive renovation. The developer plans a substantial rehabilitation, with estimated costs above $125,000 per unit. Kennedy said 201 of the 202 units will remain affordable to households earning up to 60 percent of area median income and that a HUD HAP (Housing Assistance Payment) contract will be executed at closing.
Commissioner Kennedy described how the PILOT will be calculated: gross rental income less vacancy and owner‑paid utilities, taxed at 10 percent of that base, yielding an annual pilot payment of $25,000. "Finance has also reviewed all of the financials, agrees that the pilot is reasonable for this project," Kennedy said.
Board members asked how tenant relocation will be handled during renovation. Kennedy said the Housing Authority uses a third‑party relocation provider, conducts door‑to‑door outreach, holds tenant‑council meetings and provides monthly and quarterly updates. "They do monthly updates, as well as quarterly meetings, tenant council, direct letters, direct conversation," Kennedy said.
The item passed; Mayor Brandon Scott was recorded as an abstention on the item.
Why it matters: The PILOT will generate new incremental tax‑like revenue for the city where none existed because the property was previously owned by the Housing Authority. The rehabilitation seeks to preserve affordable units and leverage a capital stack including Low‑Income Housing Tax Credit equity, a Freddie Mac mortgage and deferred developer fees.
Next steps: Kennedy said the HAP contract will be executed at closing; the board approved the PILOT and the project proceeds to closing and implementation per Housing Authority relocation protocols.
