The new subdivision may include the Integrity series of homes. Pictured is Integrity 1610. Courtesy | Allen Edwin Homes
City officials tout the plan as a good investment, but critics say it won’t pay off
The Hillsdale City Council voted 5-3 to help finance a $15 million development in Hillsdale’s Three Meadows Subdivision, following an almost three-hour public hearing Nov. 4.
The hearing presented a range of local perspectives on the issue, as well as comments from the development company and its consultants.
The 22-acre parcel, at 280-286 W. Bacon St., will hold 61 single-family homes, 80% of which will be sold at market value, with the other 20% as “income-qualified workforce housing rentals,” reserved for middle-class families, according to the city.
The city will use Michigan’s Brownfield Tax Increment Financing structure to help fund the housing development project by reimbursing some of the project’s upfront costs with property tax revenue in the coming years.
According to council documents, more than $7 million worth of eligible activities will need to be reimbursed over 25 years. Portions of the homeowners’ property taxes will pay the developers, with an intended stop date of 2050. The builder is anticipating $350,000 per year in property tax revenue.
The Brownfield system, which previously accounted for the development of contaminated or historical land, was amended in July 2023 to help reverse the statewide housing shortage, said Joe Augstinelli of Michigan Growth Advisors, the consultants helping Allen Edwin with the project.
“We aren’t going into this blindly,” said Brian Farkas, director of workforce housing for Allen Edwin Homes, during the public hearing. “We are looking at some really old housing stock in Hillsdale. I gotta tell you, we build across the state, and this is exactly the type of market we thrive in.”
Sam Fry, Hillsdale’s marketing and development coordinator, said most Hillsdale property pre-dates 2010.
“In Hillsdale in particular, a lot of the homes we have in the community are older homes,” Fry said. “About 58% of the units in Hillsdale were built before 1970 — we only have 2% that were built since 2010. There really has not been any level of building in the last decade.”
But Ward 4 Councilman Joshua Paladino said he opposes the project because the new homes would be incongruent with the aesthetics of the rest of the city.
“The homes don’t look like they belong in Hillsdale. They look like they could belong in any suburb in the United States. I don’t want to undermine the character of Hillsdale that way,” Paladino said. “The whole historic City of Hillsdale is three streets. I think we should keep that character.”
The homes, which will sell in the mid-$280-360,000 and rent close to $2,000 per month, according to the builder, will have three to five bedrooms. The size of the home is to supplement the demand for new housing in the city.
“When you look at the vacancy rate for Hillsdale, we are at 0.9% which means for every 100 homes in the community, you’re gonna have one that’s actually available,” Fry said.
City Manager David Mackie said he supports the measure and reiterated the need for new homes in Hillsdale.
“We’ve heard of folks commuting from Fort Wayne, Jackson, Marshall, and Coldwater,” Mackie said. “They’re paying their taxes to those communities and going to their stores and participating in those communities, versus staying here, even though their job is here in Hillsdale.”
Because property taxes will be redistributed to the developer under the Brownfield plan, Paladino opposed Mackie’s point.
“They’ll pay for the infrastructure development, but now you have 61 three-to-five bedroom homes, so we could potentially be talking about 400 new citizens that won’t be paying at all toward current city services,” Paladino said. “What does that mean? The people who currently live here are paying for their police, their fire, their road maintenance.”
According to Paladino, the plan is an act of corporate overreach.
“We are creating a tax increment authority, and that means we’re going to raise taxes on those lots and pay the tax money directly to the corporation as a subsidy,” Paladino said. “Essentially, we will be giving a private organization the power to raise taxes.”
In contrast to Paladino, Fry said he views the project as a risk-free opportunity for the city and an act of good faith on behalf of the developer.
“The developer is putting their own money and their own financing forward to build out the infrastructure initially so it removes risk and liability from the city,” Fry said.
Typically, if the city were to be responsible for the development of utilities, if the developer walks away from the project, the city would be on the hook, according to Fry.
“The developer is asking for no upfront money from the city. There’s going to be no checks written from the City of Hillsdale to Allen Edwin Homes,” Farkus said. “We are solely asking for the taxes that we generate, get funded back to us.”
Paladino said he questions the lucrativeness of the project.
“The city took the first offer, and their argument is these lots have sat for 20-plus years, I believe, and no one wants to develop them, therefore we have to take whoever’s willing,” Paladino said. “My perspective is, if no one wants to develop it, that means it’s not profitable. It’s not a project that should be undertaken.”
Mackie, however, said that due to the current housing shortage in Hillsdale, as well as the interest in the homes,the city will likely be able to start paying off the eligible activities soon.
“Allen Edwin could potentially start foundations in the fall. If not, it would be the following spring,” Mackie said. “The faster you sell the homes, the more tax increment it creates, and the faster the eligible activities are paid back.”
Paladino cites the price of the homes as a concern for the Hillsdale demographic, and worries about the fate of the empty homes if they are unable to be sold or rented.
“What do they do when they sit empty? They say, ‘Oh, there’s all this housing that needs to be used. We can use state housing vouchers to bring in new citizens,’” Paladino said. “In other words, this is the model that they’re using all around the country to resettle migrants.”
Send tips to the City News Team: collegiancitynews@gmail.com