Tag:Affordable Housing
GC Horizons at the Plymouth Common Council
It was a very disheartening meeting of the Plymouth Common Council this past week. What should have been a relatively easy vote for the council, acting on the Plymouth Plan Commission‘s recommendation to rezone property for Garden Court’s GC Horizons project, went nowhere because of misunderstandings, miscommunications and emotional responses. The arguments at the plan commission meeting, some of them not much more than mudslinging, were apparently repeated over the last week, inundating the council with calls, texts and emails. The Plan Director, Ralph Booker, was not allowed to make his presentation nor present the recommendation of the Plan Commission. With no discussion, a motion to deny the rezoning was made, seconded and passed 4 to 2.
Some of the comments from the board after the vote were difficult to hear. It was said that this wasn’t the right location… This site was found after a year of searching, because the council voted down the site we presented last year. We vetted a dozen sites, some turned down by the City in pre-discussions and some because property owners were unwilling to sell or unable to make a decision to sell. This was a good site, following the Comprehensive Plan in a transitional neighborhood, adding apartments and single family homes in an existing neighborhood with apartments and single family homes.
The project was conflated with the motels on the north side of town, but not as a solution… just a spreading of the problem. Paraphrasing one statement made, “We (City, Council) should be directing our funds and efforts towards the motel issue instead of this project.” This is a specious argument since Garden Court has not requested any funds from the City. This project would bring in $14MM in outside investment to the community and put a new property on the tax rolls, maybe delayed by an abatement, but still, a property paying taxes above the current farmland rate. There is nothing preventing the City from investing in a different motel solution. These are different projects!
The volunteer Garden Court board stepped up to the challenge of helping with the housing problems in Plymouth with this project. They were encouraged by IHCDA, providing training and offered $14MM in capital investment. It is not the total solution, but it would have been a great first step. Hopefully, the effort hasn’t been completely in vain, but like me, many involved are feeling unappreciated and beaten down. Garden Court’s name has been dragged through the mud throughout these discussions. These were undeserved attacks on their reputation. We’ll see how or if this moves forward. Disheartening…
GC Horizons
GC Horizons, Garden Court’s latest project was before the Plymouth Plan Commission last week. There were a lot of people there to speak on both sides. Jamie Fluery did a nice job on an article in the Pilot News that went through a lot of it before the meeting. The drawing from the paper shows the concept plan. Along with the new apartment complex, the City of Plymouth will sponsor some single family homes.
There was a lot of Vitriol spent attacking Garden Court and the potential tenants for these units. Sister Connie spoke in favor of the project and was shouted down at the end. After the meeting she commented, “People look at these things with compassion or fear. Tonight there were a lot of people speaking from a place of fear.”
The proposed zoning change recommendation that was before the Plan Commission passed. That puts the issue before the Common Council this evening and there has been a lot of pressure put on the Common Council Members. I hope they are able to see that the few speaking out don’t represent the majority, but I know it’s hard when you’re being attacked for doing the right thing. Below are three positive letters that were sent to the Common Council stating the case better than I could. I thought it was important to include them here:
From Linda Yoder, Marshall County United Way:
Good afternoon, Plymouth City Council Members,
Thank you for your consideration of the Garden Court Horizons Project. Last week, United Way hosted a review of preliminary findings from the Housing Gap Analysis launched in February 2024.
For those that were unable to attend, attached is a copy of the presentation slides and, for your convenience, a summary of key findings.
Based on data included in the study, your favorable consideration of the rezoning and annexation request on Monday would:
- Address a projected housing shortage of 1300 units
- Focus on the largest housing need today which is rental units
(Due to multiple factors: high interest rates, high cost of construction making home ownership unattainable for many and a higher than normal % of population under 30)
In addition, a favorable vote will:
- Bring $13 million in investment for a mix of 28 low/moderate (affordable) rental units and 8 permanent supportive housing units
- Set the stage for a potential READI grant proposal to develop an additional 13 single family housing units for even more state investment in housing shortages
The 2019 Marshall County Stellar Designation opened this door to capture additional state funding through the Indiana Housing and Community Development Authority to address a critical housing shortage.
Michael Fortunato, the Housing Gap Analysis Consultant, shared this summary:
The combined effects of a) a large, young renter class emerging, b) another large generation aging in place and therefore locking in the housing supply, and c) suppressed education levels that translate to lower wages overall would create a housing crisis anywhere.
Marshall County’s greatest assets are a) a county working together to be proactive around these issues, and b) a housing supply (with some vacancy) that is still not as constrained as some other neighboring counties.
Those that attended the IHCDA Housing Institute and serving as team members includes:
Bowen Center: Zach Cook
Bradley Company: Rod Ludwig, Alonda Jenkins
- City of Plymouth: Sean Surrisi
- Easterday Construction: Kevin Berger
- Garden Court: John Myers
- SRKM Architecture: Brent Martin, Jeff Kumfer
- United Way of Marshall County: Linda Yoder
Additional advocates invited to the team are Jack Davis and Eric Holsopple.
We would be glad to talk with you to answer questions or provide additional information. You can contact me any time (evenings and weekends included).
Best regards,
Linda
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From Brent Martin, SRKM Architecture:
Dear Council Members,
As members of the Garden Court team know, I have been reluctant to reach out to plan commissioners or city council members regarding this most recent Garden Court project. I am self-aware enough to know invective is thrown my way as my career as an architect is designing buildings. At the same time, my history with Garden Court goes back over 33 years. Longer now, I think, than anyone else on the team. I guess that makes me “the old man”. Given that, if you’ll allow a bit of a ramble, here’s some perspective.
Mayor Glaub was instrumental in creating Garden Court in the early 1970s. I’ve been told he did so as his elderly mother could no longer take care of her home, wanted to remain in Plymouth, and had nowhere to go. So, the founding of Garden Court was based on providing housing for low-income seniors.
The first projects, Garden Court East & West, were funded by USDA Rural Development, back then called the Farmer’s Home Administration. A bit of history:
During the Great Depression, rural Americans needed the power of electricity that had been established in urban areas. Unfortunately, providing electricity to rural places was cost prohibitive and up to 90% of farmers were not able to access electricity because existing distributors would not build lines to their farms. In 1935, President Franklin D. Roosevelt signed an executive order to create the Rural Electrification Administration.
My Dad remembered when electrical power came to his Mom & Dad’s farm. He told me the deal was the farmers had to get together and set the poles and the REMC would then string the wire and bring in the service, but I digress……..
In 1984-5 Garden Court was approved for what’s called a HUD 202 project for low-income elderly and adults with disabilities of any age. That project is Garden Court downtown, the three-story building on Garro Street.
Then, in 1986 some crazy young architect moved to Plymouth and in 1991 was hired by Garden Court to design what is now known as Neidlinger Garden Court. The Garden Court board was not happy with a three-story building for seniors (no surprise there) and so I was directed to design a single-story building. However, the three-story design was the “HUD Model” and a real donnybrook ensued. (Long and occasionally humorous story there, best told over a beer). As you can see, Garden Court prevailed.
The Rev. Dr. Ronald Liechty was President of Garden Court by this time. He, along with Dean Byers, had the vision of building a Garden Court in every community in Marshall County. A development team of Ron, Dean, Bob Toothaker (Real Estate Management), Scott Huges (Hughes Associates Grant Administrators), and myself was formed to go after funding.
And we were highly successful without much fanfare getting projects funded in Argos, Bourbon, Lapaz, and Culver, along with Knox in Starke County and Mentone in Kosciusko County. While all this was going on we were also successful in funding Fairfield Garden Court and Hurford House Garden Court. You may notice Bremen is not mentioned. That’s because Bremen has a similar 202 project developed by a different non-profit. I would wager Marshall County may be the only county in the state with a facility in each community. That’s something to be proud of.
There is a part of me nostalgic for those development team meetings. The good conversations, the not-so-good coffee, and the real friendships that developed over time. 2024 isn’t 1995, that’s for sure. Not worse, just different. Rev. Liechty is deceased, Bob Toothaker retired, Scott Hughes pretty much out of the grant administration game, but Dean Byers, at 80 years old, is still going strong with Habitat and soon to be our next county coroner!
Since those days, Real Estate Management Corp. is now Bradly Company and has grown to a very large group based in Indianapolis with property management, real estate, and development portfolios. Plymouth is very fortunate Rod Ludwig, a hometown person, is the managing director of multi-family housing for Bradley.
I would be remiss if I did not note over the past 50 years federal agencies have changed the rules for both the development of, and the management of, these properties. And, depending on the funding source, the requirements vary. It’s the nature of bureaucracy. “Use our money, play by our rules.”
You may ask why Garden Court hasn’t expanded low-income senior housing recently? About 15-20 years ago HUD moved the decision making from Indianapolis to Chicago. I’m sure you can deduce where the funding goes now. Garden Court is consistently asking “where is the need?’ And, over the last 4-5 years, they determined there is tremendous need for the housing insecure.
And Garden Court continues to thrive and serve low-income persons, winning awards for excellence and most recently voted Favorite Apartment Complex 4 years running.
Kindly forgive my rambling history, but context and history are important.
As to the current project, here are a few things I’ll mention.
I’ve heard it said Garden Court could sell off this property or develop the whole thing as multi-family. After a 50-year legacy of doing precisely what was proposed for each project, this all volunteer, local non-profit is not going to pull a “fast one”. To say otherwise, ignores reality. Should the tax credit application be successful, we have an understanding with the City to donate the single-family property which becomes part of the match for the City’s proposed READI 2.0 single family housing grant. If not successful, the option to purchase expires.
I have also heard about traffic and of course this project won’t add a whit to issues with school pick up and drop off traffic as the elementary children living there are certainly going to walk to school. I am pleased sidewalks on Lemler to Michigan are planned in the coming year.
The Plan Commission tenders this petition to you with a favorable recommendation after a lengthy public hearing and your plan consultant recommended approval. Those recommendations should carry great weight as these are the people you appointed to make dispassionate decisions removed from political office. They reviewed the request, heard the comments, and then decided. (I’m sure you’ve also heard plenty of comments that aren’t fit to be in the public domain). And your recently adopted comprehensive plan says this:
1)COMPREHENSIVE PLAN: The City of Plymouth’s Comprehensive Plan and any other applicable, adopted planning studies or reports; The new Comprehensive Plan identifies this area to be a Traditional Neighborhood. The traditional neighborhood character area reflects Plymouth’s vision of diverse and inclusive community. This locale offers a range of housing options and living arrangements that cater to every stage of life, all while preserving the historical essence of residential neighborhoods. In this area, you’ll find a harmonious blend of smaller lot single-family detached homes, single-family attached homes like townhomes, apartments, and the versatile option for accessory dwelling units (ADUs). The architectural theme aligns with that of the Transitional Mixed-Use area, where homes stand closer to the street, with cozy front yards.
(from the plan consultant’s report)
In other words, the project is a precise fit to your new comprehensive plan, full stop. Note your plan doesn’t speak to who may reside in any of the mentioned uses. To do so, would be inappropriate at the very least.
I’m also sure you’ve seen Mr. Fortunato’s report on housing and the identified need, crisis really, at the bottom of the demographic ladder. I’m not going to repeat that study, simply encourage you to read it.
And of course, the Economy Inn and Red Rock have become conflated with the Garden Court project. Other than the possibility that a small number of the residents may qualify to move to this new project after going through the coordinated entry process, there’s no connection. None. Having said that, I’d encourage you to accompany Sister Connie or Jack Davis when they deliver food. I suspect you will be surprised to find the vast majority of the residents living there are good people.
Does Plymouth have too much low-income housing? A per capita comparison with Columbia City and Logansport says no. Will property values decrease? Studies in both Kokomo and Plymouth refute that assertion. Garden Court can only meet the need. To deny the need is just not supported by the facts.
Much of the vitriol is driven by fear, although generally people are loath to admit it. All I can say to that is I’ve completed about 25 low-income housing projects over the years, mostly in residential and mixed-use neighborhoods. Some controversial, some not so much. One of the comments I’ve heard from opponents after the project is up and running a few years is often: “I didn’t know it would be like that.”
I understand how difficult a vote can be when you’re being hammered by constituents. Keep in mind the loudest voices are not necessarily reflective of what is best for your community, nor the majority of your community for that matter. Everyone is entitled to their opinion, but the facts matter. I have always believed an elected official should carefully consider what is in the best interests of their community as a whole and then vote that belief.
Thanks so much for your time reading my somewhat rambling thoughts. I urge you to weigh carefully the recommendation before you and evaluate the veracity of comments both for and against this project. I will make myself available this weekend if you wish to contact me.
Brent
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From Gary Neidig, ITAMCO
Dear Plymouth City Council Members,
Our community is experiencing a dilemma. Everyone is concerned. Everyone has an opinion. Everyone wants something done. Everyone knows the need is real.
However, we all have a “not in my back yard” concern when it comes to something that is different than what we are accustomed to in our neighborhood.
I have a personal story that speaks to this subject.
A few years ago, I was made aware of a variance being requested for a home in our neighborhood across the street from my home. It was being requested by Pathfinders to open a Group Home.
Some of my neighbors, and myself were not pleased with that possibility, and began to investigate what could be done. After some investigation, we then discovered that there was already a Pathfinder Group home in our neighborhood, and that I didn’t even know about it. The variance was granted, and there have been no problems with the tenants. In fact, the house has been well maintained, and there have been no negative incidences that would have warranted the concerns we had.
I realize that this is a different demographic, organization, and project. However, Garden Court, and Bradley Company have done an outstanding job to vet residents, and to maintain a proper and safe environment.
The affordable housing crisis is a problem for all of us. Allowing the two former motels on the North side to be the nexus for aggregating citizens that are working but lack the resources to get a down payment, or security deposit is not the answer. This is now giving the appearance of a magnet, and is not indicative of what Plymouth has to offer.
Distributed projects like the Garden Court Horizons project are not the final answer, but it is a step in the right direction. If we can work together to create a strategy of helping people that are doing their best to succeed, then our whole community will benefit.
Duane, Don, Shiloh, Randy, Linda, Kayla, Dave, I’ve known you all for many years. You have caring hearts, and you want what is best for our community. We’ve witnessed together our community grow, and have seen improvements in so many areas. Let’s start the process of reducing the blight on the North side by allowing Garden Court to build this project.
Please vote yes for this zoning request.
Gary L. Neidig
President
ITAMCO
6100 Michigan Road
Plymouth, IN 46563.
O: 574.936.2112 D: 574.935.6903
glneidig@itamco.com
“Let the words of my mouth, and the meditation of my heart, be acceptable in thy sight, O LORD, my strength, and my redeemer.”
Psalm 19:14 KJV
LaPaz Commons Ribbon Cutting
On Thursday, May 23rd, we had the Ribbon Cutting for Riverside Commons Apartments in Plymouth and LaPaz Commons Apartments in LaPaz. This project resulted from Marshall County Crossroads‘ Stellar Designation.
In LaPaz, Matthew Celmer spoke on behalf of the Crossroads committee. Gary Neidig spoke on behalf of One Marshall County, the new reiteration of Crossroads. Roger Ecker, LaPaz Town Council President, spoke on behalf of the Town of LaPaz. Alan Rakowski, Director of Real Estate Acquisition, for IHCDA spoke as well. It was also nice to see Council member, Ryan Young; Clerk Treasurer, Jenn Gilmer; Former Clerk Treasurer, Lorraine Dove; and some of the town employees there as well. All of them praised the new development and the what it would do for the Town of LaPaz. (Marty Oosterbaan was there as a former Crossroads’ leader. He was also responsible for a lot of help in pulling the Ribbon Cutting together.) Thanks also to Easterday Construction Co., Inc. Project Superintendent, Bob Cooper, and Office Manager, Julie Heise for their help throughout the project and at the Ribbon Cutting. Thank you to Gavin Greer for his coverage in the Pilot News on May 29th.
When we have a project like this, I try and attend all of the local town council meetings. I hit most of them and the council made me a standing agenda item. My time there helped me understand the struggles LaPaz is going through and the good people that are involved in the town’s government, contributing their efforts. This made it all the more significant that LaPaz stepped up to help make this project happen, understanding their tight budget. LaPaz punched above their weight, providing more assistance than we received for Riverside Commons in Plymouth and for The Paddocks in Culver.
The LaPaz Council helped find a suitable site and made initial contacts with the owner. They also obtained an appraisal for the property.
The site required a variance. LaPaz Council President, Roger Ecker, appeared with us before the Marshall County BZA and spoke in favor of the variance request. (That was a late night and much appreciated!)
Troyer Street was not much more than a cow path before this project. The town provided and installed stone where the “street” had become a mud hole. Later, the town was able to grade and stone the remainder of the street in-house and then applied for Community Crossings funds to pave it and provide storm water infrastructure. This didn’t just benefit LaPaz Commons, but since these improvements, there has been steady traffic from the other apartments to the east. This was a great improvement for LaPaz.
LaPaz also waived tap fees for the sewer hook-up. A small thing, but helpful to project costs.
And as a final gesture of support, the LaPaz Council provided a picnic lunch at the Ribbon Cutting. That was a touching gesture!
LaPaz and Plymouth were the only communities that stepped up to the challenge for this project. We approached Argos, Bremen and Bourbon (Culver was not eligible), but they either did not have a site available or wanted terms that didn’t fit the IHCDA application. It took courage and a lot of effort for LaPaz to do this and they should be commended. As Alan Rakowski from IHCDA stated in his speech, including LaPaz strengthened the overall application and probably made the difference in it being awarded. I also think that including these projects made a difference in Marshall County Crossroads receiving the Stellar designation and all the ancillary that came from that.
LaPaz Commons is an eight unit townhome project. There are 6 townhouse units and two ADA accessible flats. All of the units are ADA visitable. Before we were even done with construction, there were 10 applications for the units and at the Ribbon Cutting, there were four units filled. This is the first new housing in LaPaz since we did the LaPaz Garden Court senior housing in 2010.
LaPaz has suffered with the Highway 31 bypass literally bypassing them. They are working hard to keep their community thriving, using the limited resources which they have. We are happy that we could make a dent in this and provide some much needed housing. Fingers crossed that this helps kickstart some other positive additions for LaPaz!
An Odd Juxtaposition this Week
On Thursday we had the Ribbon Cutting for Riverside Commons Apartments in Plymouth and LaPaz Commons Apartments in LaPaz. This project resulted from Marshall County Crossroads‘ Stellar Designation. Matthew Celmer spoke on behalf of the Crossroads committee. Gary Neidig spoke on behalf of One Marshall County, the new reiteration of Crossroads. Mayor Listenberger spoke on behalf of the City of Plymouth. Alan Rakowski, Director of Real Estate Acquisition, for IHCDA spoke as well. It was also nice to see Don Ecker there representing the Plymouth Common Council, Lynn Gorski, Clerk Treasurer, representing the Plymouth Clerks’ office and Ralph Booker representing the Plymouth Plan Commission. All of them praised the new development and the what it would do for the City of Plymouth. (Marty Oosterbaan was there as a former Crossroads’ leader. He was also responsible for a lot of help in pulling the Ribbon Cutting together.) Thanks also to Easterday Construction Co., Inc. Project Superintendent, Bob Cooper, and Office Manager, Julie Heise for their help throughout the project and at the Ribbon Cutting.
The juxtaposition occurred later that day when a letter began circulating around Plymouth, on Facebook, and in other venues, condemning the Mayor and others such as myself involved with the proposed GC Horizons project – a project very similar to Riverside Commons. That was followed by a negative Letter to the Editor in the Pilot News. It was odd, being praised for doing something good for the community at the Ribbon Cutting and then later the same day, being attacked on Facebook for wanting to do more of the same.
Riverside Commons and the proposed GC Horizons are both IHCDA RHTC (Rental Housing Tax Credit) projects. The only difference is that GC Horizons will include 8 PSH (Permanent Supportive Housing) units similar to those at Serenity Place – 8 of the 34 total units. The “GC” in GC Horizons stands for Garden Court. Garden Count has been a respected not-for-profit entity providing affordable housing to the community for decades. They were also denigrated for attempting to do more good in the community.
While I know it’s unwise to feed the trolls by attempting to rebut their falsehoods online, I thought it worthwhile to present some of the facts here:
- Garden Court is a true not-for-profit (NFP). Their board is totally volunteers and they recruit board members from all of the communities that have Garden Court facilities in them. The board members receive no compensation for their participation. Maybe it’s not their official mission statement, but from my association with them, there mission is to provide clean, safe housing for underserved populations in Plymouth and the surrounding area. (They haven’t even invested in a website! More about them pops up from our website than anywhere else.)
- Garden Court is the best landlord/property owner with which we have worked. Because they are a NFP, their bottom line is to cover expenses. They have no employees or shareholders to compensate. That lets them put all the money to work for the best facility possible.
- Garden Court requires their management team to vet applicants and residents. They do no allow applicants that fail their strict criteria to become residents. Their facilities are well maintained and I have experienced a sense of pride and ownership in their residents.
- Garden Court was invited to the IHDCA Housing Institute for several reasons: One being their past work in Plymouth with Serenity Place and another being IHCDA’s recognition of the need in Plymouth. This opportunity was designated for Plymouth, not for other Marshall County communities.
- Serenity Place experienced some issues in the first six months of operation that resulted in police calls. Once an equilibrium was established and some of the trouble makers were removed, those police calls tapered off. There was a learning curve for both new residents and management. This has not been a continuing problem.
- GC Horizons will receive tax credit funding through IHCDA, but it is not a tax exempt project. Sales tax is required on the construction. Property taxes will be assessed and collected on the property at some point.
- GC Horizons will not draw its tenants from outside Marshall County. The list of deserving and qualified applicants in Plymouth and Marshall County will be the pool from which they draw. There is a long list…
- GC Horizons would love to move some of the north side motel residents into their facilities! The ones that meet the application standards and are looking to improve their situation… It’s unfortunate that there are bad apples in the motels, but there are also good people deserving a chance at better living conditions and the hope of getting on their feet and changing their lot in life.
- GC Horizons has no ability or desire to circumvent laws, restraining orders or other legal devices that protect schools from past offenders.
- GC Horizons is not a Mayor Listenberger project. The community team that began this journey at the IHCDA institute was formed a couple of years ago. The former City Attorney was part of that team because the previous administration recognized the community need. Mayor Listenberger’s support is a continuation of that recognition of need.
There were other specious Facebook comments that were just mean spirited and unworthy of responses. Few of them suggested alternate solutions, though at least one’s solution advocated violence and destruction of property. The negativity is hard to shake off. That said, one thing stood out from the Riverside Commons Ribbon Cutting on Thursday… We had a two story townhouse unit open after the ribbon cutting for guests to tour. Everyone was complimentary. As I was walking out with a couple of guests, there were two women sitting and talking on a neighboring porch. One of the women asked if we liked the unit? She then asked if we would like to see one of the flats, since she lived in a flat. I smiled and thanked her, saying I was familiar since I was part of the construction team. She smiled broadly and proceeded to tell me how happy she was with her new apartment, how she had made new friends there and how there was a sense of community. She ended it saying thank you for making the apartments available to her. She is one of the reasons for doing this and her heartfelt, unsolicited gratitude helps as some of the negativity comes my way.
Cost of doing business
August 12, 2024
Kevin Berger
Commentary, Plymouth, Politics
Affordable Housing, Community, government, housing, Multi-family, Politics, Trends, Volunteering, Workforce Housing
The Pointe has been all over the news and social media lately due to the City of Plymouth deeming the property unsafe to occupy. This has forced the charitable community to jump to action to help the residents of the 16 units there. On top of the general low income housing shortage in Marshall County, there is the issue that this property was renting at the very low rate of $400 per month. To the best of my knowledge, this is not a subsidized housing site.
As has been described to me, the facility is a former nursing home, so the “units” are small rooms with half baths, i.e. a sink and toilet. They are set up with common (shared) men’s and women’s showers and a community kitchen. There has been some deferred maintenance that includes roof leaks leading to other damage. Pictures from the Pilot News indicate that there is some mold/mildew, but the level and danger from that would have to be professionally assessed.
The landlord is taking it on the chin for this. Again, I know none of the background, reasons for deferred maintenance, etc. But I do think the $400/month is an unworkable business model. So if all the work that is projected to be needed there is done, there’s no way it supports itself at that rental rate. Here are some numbers to start the conversation:
So lets total that up as if someone were to buy this this and puts it back the way it should. That comes to $626,000. I think this is probably a cheap number, but it’s a starting point for this discussion.
First pass: 20% down = $125,200 The remaining $580,800 financed per the above at 5% = $45,996 in loan payments, against fully rented 16 units x $400/month x 12 months = $76,800. Seems like a decent return of $30,804, but remember, right now, plunking that $626,000 into a government bond funds would pay in excess of 5%, or a yearly return of $31,300 with no risk.
But lets do a second pass the way a developer would look at this:
Now we’re at a loss of $28,706 despite some of those numbers being generously on the low side. Not including the time value of money, i.e. the $125,200 down payment would earn $6,350/yr at 5%. So looking at the first three numbers in the above list, it would take a rent increase of $173/unit to get to break even. Most banks won’t finance a break even project and most developers want to make some money and have some cushion for unforeseen things. And nowhere in there was any maintenance reserve savings for when the roof needs replaced again or whatever unforeseen problem comes up.
Granted, this is an extremely simplified analysis. It doesn’t take into account the benefits of depreciation, since those are only a benefit when there is profit. Likewise it doesn’t take into account any taxes on the theoretical income. It also doesn’t take into account any escalators for inflation. There would be a large spreadsheet that a commercial developer would run this through to make their analysis.
Minimum Rent to make this begin to work would need to be $700/month, when existing tenants say they are struggling with the current $400/month. Reality is more like $800 – $900 to get to comparable rates in Plymouth that make economic sense to cover the myriad of additional things that will come up in the renovation and the probably greater management, vacancy and bad debt costs that are likely. The significant age of the building warrants a large maintenance reserve.
But lets take a step back and do really, really rough math (because I don’t know their expenses) on existing conditions assuming with the initial investment of $126,000. Assume 20% down leaves $100,800 financed. Using the 5% interest rate number in the previous scenario, that’s $665/month = $7,980 per year.
This would give us a profit of $14,944/yr. There may be other expenses I haven’t put a number to and conversely there are those that would suggest the maintenance line items should be zeroed out, since maintenance has been less than needed. In any case, this is not a gold mine as it exists today.
This is the real life example of what I’ve said for years… I would rather have a leaky roof over my head than no roof at all. Some of these residents have been living that situation, but the City has (rightly) cited safety concerns that removed their leaky roof.
the $626,000 number is a low number for the renovation, but it’s an impossible number to duplicate that building. $626,000/9,840sf = $64/sf. New construction on a facility such as this would be in excess of $200/sf. It is also questionable that a new facility such as this would meet current zoning standards, though a variance might make it possible. Then there is the issue of where to put it. Even if built on the same site, rezoning would be required along with the variance. That would prompt the same NIMBY protests that Garden Court ran into with the two sites they considered for their project. Theoretically, Garden Court’s GC Horizons project should have been less objectionable as fully functioning apartments.
Plymouth as a community has some hard decisions to make regarding housing. Complaints are rampant about facilities like The Pointe, but solutions are few. As seen with The Pointe, just shutting down the problem facility without a viable alternative creates a different crisis. As seen with Garden Court’s GC Horizons project, those that step up with a solution are often disparaged. Mayor Listenberger is making efforts, but is getting a lot of pushback. It’s tough when there’s a cry to “Do Something!“, but it’s accompanied by a chorus of “But Not That!“… no matter what “that” is…
Some things never change… That’s just part of the cost of doing business…
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