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City backs Lockwood workforce housing pilot, transfers ARPA funds to county housing trust fund
Summary
On unanimous voice votes the Commission approved a PILOT ordinance (2% of gross shelter rents for 40 years) enabling a 59‑unit mixed‑income building at 400 E. 3rd, authorized an interlocal agreement to transfer $1.95M ARPA funds to the county housing trust fund and approved a municipal services agreement to offset public‑safety costs.
The Royal Oak City Commission approved a package of actions June 23 to support the Lockwood (third‑street) workforce housing project, including a payment‑in‑lieu‑of‑taxes (PILOT) ordinance (first reading), an interlocal funding agreement with Oakland County and a municipal services agreement with the developer.
Staff described the Lockwood proposal as a seven‑story building over two levels of parking delivering 59 units to the downtown. Under the financing proposal the developer would designate 31 units as affordable (targeting 60% area median income) and 28 as workforce units (up to 120% AMI) with rent limits tied to MSHDA rules for 20 years on the affordable component. Because rents on income‑restricted units do not fully cover development and operating costs, the petitioner is seeking gap financing from multiple sources including MSHDA LIHTC, county Housing Trust Fund dollars and a city PILOT.
The Commission approved a pilot framework that city staff said would allow the developer to remit a fixed percentage of annual gross shelter rents (staff presented a 2% pilot in the ordinance) for a 40‑year term. Staff presented a table showing that a 2% PILOT over 40 years would equal about a 6.7% effective tax break for the developer versus no pilot, and emphasized the affordability protections built into the LIHTC and PILOT structures.
The Commission also authorized an interlocal agreement to transfer the city’s $1.95M ARPA allocation to Oakland County for administration through the county’s Housing Trust Fund; county staff committed about $5M in additional trust fund financing toward the project. City staff said the interlocal includes safeguards: the $1.95M will be devoted to this project only, and if the project does not proceed any returned funds will be reallocated for local affordable‑housing needs per Commission direction.
To ensure the city recovers incremental public‑safety costs associated with adding residential units downtown, the Commission approved a municipal services agreement that calls for an initial first‑year payment of $17,000 from the developer (with annual adjustments thereafter) to defray emergency services costs. Staff noted that the developer will also receive fee waivers under the city’s new 'Reno Grama' pilot (approximately $220,000 in waived inspection and permit fees), partially offsetting developer costs.
City and county staff indicated they will finalize legal language with the county and the developer; the interlocal was approved subject to minor non‑substantive revisions and a pending county review. Commissioners said the package strikes a balance between incentivizing workforce housing in the downtown core and protecting municipal fiscal interests.
Next steps: finalize the county agreement, execute the municipal services agreement, complete MSHDA LIHTC applications and return any final adoption steps or implementing documents to the Commission.
