Berkley council votes for partial tax exemption for La Salette project

By: Mike Koury | Woodward Talk | Published October 27, 2021

BERKLEY — The Berkley City Council voted to approve a partial commercial rehabilitation exemption certificate for the project at the former Our Lady of La Salette School.

At its Oct. 18 meeting, the council voted 4-3 on an exemption certificate for only the school property for developer 2219 Coolidge LLC, whose project will revitalize the building into new apartment units.

The project consists of renovating the school building into 54 apartment units, the construction of an underground stormwater detention system and 109 parking spaces, and construction of two three-story buildings, each 10,600 square feet, to create 24 additional units.

On Oct. 4, the council met and discussed the exemption, but members felt there was missing information from the developer needed to move forward with a vote, such as financial information to show there was hardship in developing the project.

In a letter to the council from the city’s finance director, Mark Pollock, who reviewed the developer’s finances, stated that protecting the historical character of the property created a significant added cost to the development project, and granting the Brownfield credits would assist in those costs.

“However, when considering all of the financial factors, the overall return on the project including the approval of the PA 210 abatement does demonstrate an additional financial hardship,” he wrote. “When reviewing the economic feasibility of the entire project, granting the PA 210 abatement is an extremely important factor in the overall viability of this development.”

“Based on my review of the financial pro forma presented, loss of this PA 210 abatement would likely significantly alter or possibly cancel the development as it is currently designed,” he continued.

Tom Herbst, the chief financial officer for the developer, stated that the tax abatement, on top of the brownfield reimbursement, is necessary for the project to go forward in the manner everyone wants, which was to save the character of the school.

Herbst stated that without these abatements, they will not be able to get financing for the development from their lenders, and they will have to go back to the drawing board and come up with another type of use for the project.

“I can’t speculate on what that might be,” he said. “It’ll be a matter of what is financially feasible and economically able to be financed by our lenders, but most likely it will involve a reducing (of) the scope of the project, i.e. the overall dollars spent.”    

The overall project cost, he added, was $15 million.

“If we have to go in and build some type of smaller project here, that will result in smaller assessments in the future, which will result in fewer tax dollars for the city. And so while you might get a few more dollars in years five and six and seven, over the lifetime of this project, in years 10 and years 20 and years 30, by having a smaller project there you will ultimately have cost the city tax revenue if you reject these abatements,” Herbst continued.

The council moved forward with discussion on the exemptions. The board had three choices in front of them: give a full approval for exemptions on the entire project, which includes the school building, the stormwater detention systems under the parking lot and new apartment buildings; a full denial; or a partial approval for specified sections of the project.

The majority of council did not feel comfortable moving forward with either a full approval or denial, which left council members to discuss how much of an approval the project would get.

Councilman Dennis Hennen said that while the answers from the developer got him closer to a yes on the project, he was still a no on any abatement.

“My belief is if we say no, we’re still going to get apartments in the school, we’re still going to get apartments in the backlot,” he said. “They just won’t be as fancy, and if they aren’t as fancy, I think they’ll be more affordable, and to me the city getting more apartments that are — I’m not going to say they are affordable, but are more affordable — I see that as a double win and that’s why I will be voting no on any tax abatements for this property.”

Councilman Steve Baker previously expressed support for brownfield abatement for the asbestos removal in the school, though he still struggled on approving an abatement for a section of the parking lot.

“I remain in support of doing what needs to happen to preserve the architecture and structure of the school building with appropriate abatements so that they can tackle that additional work and make it safe for residents for decades to come,” he said. “I remain unconvinced of the need for the second and third parcel to receive a similar treatment.”

The decision was made to vote on the abatement for the school property only, which received a 4-3 vote. Baker, Mayor Dan Terbrack, Councilman Ross Gavin and Councilwoman Natalie Price voted yes, while Hennen, Councilman Jack Blanchard and Mayor Pro Tem Bridget Dean voted no.