FORTVILLE — Officials are considering granting $100,000 and a 10-year tax break to an apartment complex planned for the town.
The amount of the incentives is the same as the one the town agreed to in the past, but the proposed sources have since changed.
MVAH Partners of West Chester Township, Ohio, is planning the four-story building with 31 one-bedroom and 27 two-bedroom apartments at 215 S. Madison St., Fortville. It’s estimated to cost about $12 million to $13 million. The development, called Madison Lofts, aims to fill a need for workforce housing. Units won’t be subsidized, but rather reserved for and at rents geared toward those making 80% to 30% of area median income.
The Indiana Housing and Community Development Authority granted $1 million in tax credits to help fund Madison Lofts earlier this year, an award all but guaranteed due to Fortville’s inclusion in the state’s Stellar Communities Program in 2018.
Local matching funds are required for the tax credit program, and Fortville officials agreed to commit $350,000 if Madison Lofts was awarded. The initial idea for those funds was an arrangement in which MVAH would receive them from taxes it would pay on the apartment complex over a 15-year period. Coordinating the financial and legal requirements for that would’ve been expensive, however, leading the developer and town officials to change course toward a tax abatement. Under that, MVAH would pay no taxes on the real property improvements for the first year, then 10% the following year, and growing by 10 percentage points each year after that until the liability was fully phased in.
State law only allows such a tax abatement to last 10 years, resulting in an estimated savings of about $250,000 for MVAH, $100,000 less than the originally proposed incentive. To fill that gap, town leaders are also considering giving $10,000 from its economic development income taxes each year over the course of 10 years to the developer.
“We’re building a higher-end project and then committing to delivering it with lower rents, which means lower cash flow, which the tax abatement and these incentives are going to help offset and keep the project financially feasible,” said Pete Schwiegeraht of MVAH Partners.
Town council members voted unanimously to table the considerations at their meeting earlier this week due to just recently receiving much of the information.
“I’m not ready to proceed with anything until I get a better feel for what this is,” said Robert Holland, a Fortville Town Council member. “These were new for me to look at.”
MVAH also applied for tax credits from the state to help fund a 57-unit senior housing apartment building on the same property as Madison Lofts, but its application was denied due to not scoring high enough. The developer was able to submit its workforce housing proposal in the program’s far less competitive Stellar Communities pool, while the senior housing application had to go through the general pool in which more projects sought the limited funds.
Schwiegeraht said MVAH still wants to develop the senior housing complex, however, and continues to consider ways to help fund it.
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Madison Lofts
- 215 S. Madison St., Fortville
- 31 one-bedroom, 27 two-bedroom units
- Four stories
- Workforce housing
- $12 million-$13 million
- Developer: MVAH Holding LLC, West Chester Township, Ohio
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