The current house at 58 (left) and 60 (right) N. West St. – pro­posed site location for Wells Apart­ments. Col­legian | Julia Mullins

More than a year and a half ago, an Ohio-based devel­opment company approached the city of Hillsdale about a building project for a new 50-unit apartment complex at the corner of Westwood and North West streets. At the next city council meeting on Sept. 4, members will vote on a Payment in Lieu of Taxes for the pro­posed rent-con­trolled Wells Apart­ments. 

Tom Gry­walski, the co-founder and prin­cipal of Spire Devel­opment and Spire Con­sulting, said the PILOT is one part of the developer’s appli­cation process in order to receive project approval from Michigan State Housing Devel­opment Authority. The PILOT is one way of cal­cu­lating real estate taxes by tying the property taxes Spire pays to the amount of revenue the property brings in. 

Hillsdale’s City Zoning Admin­is­trator Alan Beeker said approval of the PILOT would give Spire the go-ahead to com­plete the appli­cation process to receive tax credit by the state’s Oct. 1 deadline. Only one-third of appli­cants in Michigan will receive a tax credit from the state. The PILOT is essential to meeting Spire’s goal of “de-rent bur­dening” people in the com­munity by making the taxes on the property rea­sonable enough to control market rents. 

Gry­walski said Wells Apart­ments would not be sub­si­dized or Section 8 Housing. Instead, local banks would invest in the project through a federal tax credit. Under the Com­munity Rein­vestment Act, which was passed by the federal gov­ernment in 1977, banks are required to invest in com­mu­nities from which they take deposits. 

“One of the qual­i­fying invest­ments for them is to invest in these tax credits,” Gry­walski said. “It is a private investment from the banks ful­filling their statutory oblig­ation.” 

The monthly rates of these units will be based on Hillsdale’s “area median income,” a term referring to how much one household earns rel­ative to the city of Hillsdale’s average household income. House­holds that qualify for sub­si­dized housing fall at or under 30% AMI and are con­sidered extremely low-income. 

The purpose of the new apartment complex, Gry­walski said, is to provide a safe, new, and alter­native housing for the “missing middle” of Hillsdale County. 

“Wells Apart­ments will serve this 50, 60, 70 percent AMI that we’re talking about – not low enough to qualify for subsidy, not high enough to buy the new house,” he said. 

Spire will be required by MSHDA to obtain both employment and income ver­i­fi­cation letters from prospective tenants’ employers in order to prove they can pay the rent. 

“There are a lot of levels of reg­u­lation that we have to go through,” Gry­walski said. “And the scrutiny that’s pro­vided and the con­sis­tency of that scrutiny of that screening process that’s applied to the res­ident is in all like­lihood a greater degree of scrutiny than the average landlord that has a property that doesn’t involve MSHDA.” 

Some Hillsdale res­i­dents have expressed concern about the project and its chosen location. The pro­posed site location includes 52, 58, 60 and 66 N. West St. Res­ident Lauren Fink said 58 N. West St. was orig­i­nally built by judge Edward H.C. Wilson in 1800, and 60 N. West St. was orig­i­nally built by pub­lisher Harvey B. Rowlson in 1849. 

“A lot of us really don’t want this aes­thetic in our town,” Fink said. “Not because there’s some­thing wrong with it in general, but because the reason we live here is because we’re willing to buy an old house and fix it up because we find that beau­tiful.” 

Beeker, however, said neither of the homes are con­sidered “his­toric” despite their old age. 

“If it were to become a his­toric dis­trict, it would dictate what type of plumbing you use, what type of elec­trical you use, what type of windows you install, and what type of fin­ishes you use,” Beeker said. “Any improve­ments you make have to be set through the state his­toric office before you can move forward with them. And nobody wanted that.” 

Hillsdale City Manager David Mackie added that two of the prop­erties that would be destroyed to make room for the apart­ments are vacant and not main­tained. 

“There will be vagrant issues, and these houses will need to be taken down at some point,” Mackie said. “And this is kind of a win-win sce­nario because the city doesn’t have to take them down.” 

In 2011, the property at 58 N. West St. was damaged in a meth lab explosion. Addi­tionally, the other pro­posed sites for this project did not meet state require­ments due to the presence of con­t­a­m­i­nants or the inability to divide and sell the desired land. 

Gry­walski added that when an appro­pri­ately posi­tioned tax credit project devel­opment removes blight, sur­rounding home values can increase. The apart­ments could also lead to further devel­opment in the area. 

In the case of Hillsdale County, the apart­ments may create more oppor­tu­nities for job growth. Exec­utive Director of Hillsdale Eco­nomic Devel­opment Susan M. Smith said the county does not have enough housing to meet the needs of recently hired employees and com­panies seeking work­sites. 

“These people that are coming in at that entry-level have nowhere to live,” Smith said. “And the problem for me and trying to attract business to Hillsdale County is that if I don’t have a place to put and house workers, I cannot grow these indus­tries.”

Often­times, Smith must tell employers seeking a worksite that Hillsdale County does not have the housing or the work­force for a project. Without these two factors, Smith said it’s dif­ficult for the com­munity to grow.

Leading up to the vote on Tuesday, the project already has permit approval for zoning, Beeker said, as its pro­posed location site has been a high-density housing zone since the 1960s. 

“This is the dis­trict that the city, long-term, expected to have high-density housing devel­op­ments, which is what this is,” Beeker said. “It’s exactly where, his­tor­i­cally, the city would want this devel­opment.”