City issues letters of support to two housing developers

Housing developers looking to create new affordable rental housing in Rochester have received letters of support from the city to include with their applications for federal tax credits.

The Rochester City Council on Tuesday approved providing letters of support to two developers looking to secure federal tax credits to create new affordable rental housing. 

One letter was for Fort Wayne-based Keller Development, which has plans to construct an affordable apartment complex at 1329 College Ave. It would be comprised of 35 units and be for those 55 and older.

"Please accept this letter as confirmation that the development site for the proposed Hawkins Homestead development at 1329 College Ave., Rochester, IN 46975 will be zoned R2," the letter reads. "This was passed by our Area Plan Commission, however, due to a bit of oversight and poor communication, the procedure to hold an additional public hearing with 10 days notice for the council to affirm was not followed. We will have to go through this process for our Aug. 27 council meeting."

The letter continues on, noting the new zoning designation allows for multi-family housing as a permitted use on the property, which has not been used for agricultural purposes in the last 5 years.

The city also provides Keller Development a letter of financial support to include in its application for the tax credits. It states the city will support the project in an amount up to 10 percent of the total project cost. That amount is estimated at a little more than $764,000 and to be provided by any combination of property tax abatement, waived fees, provision of infrastructure or utilities, or other similar support to be determined at the time to project receives rental housing tax credits. 

"Rochester welcomes the addition of Hawkins Homestead to the community, and we look forward to the positive impact this development will have for our residents," the letter ends. 

The council also approved a letter of support for another housing project proposed by Indianapolis-based Vasil Management Company Inc., doing business as Village Management Company – the property management agent for most of the properties in The Englewood Group’s portfolio.

VMC manages more than 58 rental properties, containing in excess of 2,200 rental units.  Its portfolio consists primarily of affordable rental communities, with some market-rate rental properties and commercial office space.

If its Chamberlain House project proposed in Rochester is awarded an allocation of rental housing tax credits, the city has expressed it would be pleased to enter into an agreement for a payment in lieu of taxes, or PILOT, program. The goal of PILOTs is to encourage development of projects that might not be financially viable on their own by allowing municipalities to negotiate payments with developers instead of property taxes. 

The city's letter included an illustrative chart to show the anticipated savings a PILOT program would generate over the 15-year term of the affordability compliance period with a 3 percent annual increase. A formal process for approval with a public hearing, just as with more typical tax abatements, would still be required.