Developer outlines 46-unit senior affordable project; council reads PILOT ordinance on first reading

Englewood Development told the Lebanon City Council on June 22 that it plans two adjacent apartment buildings behind the former Optum medical office, including a 46-unit age-restricted (55+) affordable senior building that would be financed in part with federal low-income housing tax credits. Nick Surak, the developer's representative, said the senior phase would cost just under $15 million and include 18 one-bedroom and 22 two-bedroom units.

Surak said a local payment-in-lieu-of-taxes (PILOT) agreement would improve the project's score in the state's competitive tax-credit application, lower operating expenses and support a larger permanent mortgage, making the affordable senior phase financially viable. "It makes us more competitive and it helps the financials of the project," Surak said.

City staff and the developer told council that the project consists of two buildings on roughly a 4-acre site: one market-rate building (which would pay full property taxes) and one senior affordable building. Surak said the developer hopes to start construction in August or September 2026 and estimated about 14 months for construction, putting completion near the end of 2027.

Rob read Ordinance 2026-22 on first reading, which would authorize a PILOT under Indiana law tied to federal Section 42 extended-use agreements administered by the Indiana Housing and Community Development Authority (IHCDA). The ordinance as read describes a construction-period payment and an annual pilot payment of $12,000 that would escalate 3% annually for 15 years beginning with the 2028 assessment year, with all PILOT receipts deposited into a newly created City Affordable Housing Fund.

Councilors and staff identified a discrepancy between the drafted ordinance and the attached pilot agreement: the ordinance listed a $12,000 construction-period payment while the pilot agreement and city staff said the construction payment should be $6,000 (reflecting a lower assessed value during construction). City staff said the discrepancy is a typographical error that will be corrected before second reading.

City staff emphasized program safeguards: the owner must enter into extended-use agreements required by tax-credit regulations to preserve affordability for the project term, and IHCDA oversight will apply. Surak noted the project addresses a shortage of senior affordable units identified by the state; he referenced the success of a prior senior project the same developer built in Lebanon, which he said remains fully leased.

The ordinance was read on first reading; no final action was taken and council will revisit the item at second reading on July 13. "We set the pilot period at 15 years," Rob said during the reading, "and the payments will be deposited into the affordable housing fund as required by statute."