SALISBURY – The Rivers Edge Apartments and Studio for the Arts project was granted an additional boost this week, as the City Council approved an agreement that will knock off $9,000 in taxes each year.
Late last month, River Edge Apartments LLC requested a payment in the lieu of taxes (PILOT) concept on the upcoming Rivers Edge Apartments and Studio for the Arts project located at 660-680 Fitzwater Street based upon an opportunity presented to the developers from Weinberg Foundation.
River Edge Apartments LLC submitted, Weinberg offered to provide $189,480 of funding in exchange for three units being further restricted to those persons who are permanently disabled and non-elderly with incomes of no more than 30 percent of the area median income for Wicomico County. Accepting the terms of the Weinberg proposal will provide for a significant reduction in future rental income over the next 40 years.
The developer pointed out a significant rise in construction costs and a significant increase in interest rates have directly impacted how much debt the project can support. While the city’s approval in April to waive 90 Equivalent Dwelling Units of water and sewer service that equates to almost $418,000 is much appreciated, the new factors now pose additional challenges on the project.
The Resolution on the table stated, “the City recognizes that there is a significant need for quality housing units in Salisbury for persons with low or limited incomes, especially those who specialize and work in the arts and those with disabilities.
Rivers Edge Apartments LLC, has proposed to redevelop the abandoned Rivers Edge condominium project into 90 new apartment units, ranging in one, two and three bedrooms, and a 4,500 square foot community space that includes studios and/or classrooms. The units will serve persons who earn no more then 60-percent of area median income, which is $16,000 to $45,000.”
The Resolution furthered, “United Needs and Abilities, Inc. and Osprey Property Company LLC have advised the City that financing and economic circumstances warrant a contribution to the project in the form of a PILOT agreement between Rivers Edge Apartments LLC and the City of Salisbury provided Rivers Edge construct and operate a rental housing project for persons with low or limited income in accordance with the guidelines of the Department of Housing and Community Development.”
The PILOT agreement provides for a reduction of City of Salisbury real estate taxes in the amount of $100 per unit equaling $9,000 per year if the project continues to provide affordable housing for persons of lower income for the period of 40 years.
Although in favor of the project, Councilwoman Terry Cohen expressed concern over the taxpayers of Salisbury having to pick up the shortfall as well as the fact City Attorney Mark Tilghman had not had the opportunity to review the convenient of the PILOT agreement as of Monday evening. She made a motion to table the Resolution until a later date.
“By the time you start adding this stuff up for the regular folks who are trying to pay their bills and stay in their homes while making up the majority of this shortfall, and that gives me a great cause for concern,” Cohen said.
Councilwoman Shanie Shields and Council Vice President Laura Mitchell were not in favor of postponing the PILOT agreement.
“This project is in my district and I would rather see the existing building go down and have this put up that is a compliment for the whole City of Salisbury and the county,” Shields said. “I don’t see what the problem is. There is a need for it.”
Mitchell stated she is tired of having elements of the project sent back and forth between work sessions and legislative sessions to be furthered discussed.
“This is becoming like a Ping-Pong ball,” she said. “Not only is it good for the city, it is beneficial to the city.”
Adding the numbers up off of the top of her head, Mitchell pointed out the existing property is assessed at $625,100 and creates about $5,500 in taxes for the city. The new project will increase the tax revenue to about $130,000 after the $9,000 discount.
“That is a pretty good mark up in my opinion compared to what we are looking at now and we will have affordable homes for 90 people,” Mitchell said.
Council President Jacob Day also felt weighed down by the additional burden Salisbury taxpayers will have to take on “to the tune of pennies” however, it is a small burden compared to the benefit it will create for those in need.
“This is a project that has been going on for a long time. This is a property that is an eye sore and a property that I am eager to see something positive happen with. This is a project that … everyone has supported in one way or another and worked to get it to the state that it is in today, and now I think it is the time to get the job done,” Day said.
The council voted 4-1 with Shields, Day, Spies and Mitchell in favor to approve the PILOT agreement and Cohen opposed.
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