Detroit city officials announced a new proposal that aims to speed up affordable housing development in the city.
Detroit Mayor Mike Duggan and city council members on Tuesday pitched the so-called Fast Track PILOT ordinance, a plan that would offer property tax cuts to developers based on rent prices. In other words, the more affordable, the deeper the tax reduction, according to a news release. The ordinance would also cut the approval time for projects from eight to 10 months to one to two months if developers agree to keep rents reduced for 15 years.
Housing developers need funding to afford to keep rents low. State law historically has made property tax abatements difficult because tax breaks were limited to 12 years when construction usually needs to be financed for more than 30 years and, in most cases, the law required five hearings and approvals at the state and local levels, which can take up to 10 months, according to the news release.
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The city ordinance would expand access to what is known as Payments in Lieu of Taxes, which is currently available on certain projects that use federal dollars. If council members approve the proposal, city property tax rates on affordable housing developments would be connected to rent prices, instead of property value. For instance, if the property owner offers a one bedroom for $500 to $900 a month for those making below $39,000 on average, the taxes for a year, under the ordinance would be $100 instead of $600.
The ordinance also seeks to make it easier to finance the rehabilitation of multi-unit vacant apartment buildings. If the owner offers a one bedroom for $500 to $900 a month for households making below $39,000, their taxes for a year, under the ordinance, would be $50 instead of $600.
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In order to see the tax cut, under the ordinance, the developer would need to commit to 15 years of affordable rent, finish the development and get a certificate of compliance, guarantee that low-income residents can remain, and pass an annual audit to ensure affordability, according to the news release. The city will do quarterly reviews, which will be reviewed by City Council as well.
A draft of the ordinance is slated to go to City Council next Tuesday.
This article originally appeared on Detroit Free Press: Mayor Duggan, council members pitch new plan for affordable housing
