Our Views: City of Janesville's deal with Marshall Apartments owner is good overall
Critics who think the city got taken in this week's complex deal with the Marshall Apartments management company are missing the big picture.
They also might be missing the fact that the two loans that Stone House Development will not repay won't have much, if any, impact on local property taxes.
Marshall Apartments, 408 S. Main St., opened in the late 1990s in a historic building that once housed Janesville High School and later Marshall Middle School. Former classrooms serve as 55 living quarters. The building also houses the Janesville Performing Arts Center, which uses the former school theater and opened in 2004.
Stone House, based in Madison, and partner Housing Horizons spent about $5 million on renovations. They got three loans totaling $550,000 through the city. In turn, the developers donated land between the school and Hedberg Public Library to the city and agreed to a 30-year JPAC lease at rent of $1 annually.
The housing market's decline did the developers no favors in recent years. Now, Housing Horizons wants Stone House to buy out its interest, as the partners' initial deal allows.
The city council agreed to forgive a $225,000 loan that came from federal grants to provide low-income housing. Yes, it's taxpayer money, but it didn't come directly out of local pockets. While repayment would have served more low-income projects in the city, the Marshall Apartments include 32 affordable-housing units, and Tuesday's deal requires Stone House to provide those for 14 more years.
The city also agreed to forgive a $175,000 tax incremental financing loan. Money raised through increasing property taxes pays for public improvements in TIF districts. Jennifer Petruzzello, the city's neighborhood services director, points out that Marshall Apartments have already paid $660,000 in property taxes—far exceeding all three loans. Those taxes wouldn't have been realized if the school district still owned the property.
Tuesday's deal gives the city two more benefits. Stone House will work with JPAC to add 30 more years to the lease. Stone House also will release a deed that otherwise might hinder development of the land between the building and library.
The agreement also puts Stone House on better financial footing. That helps assure that Stone House will repay the third city loan—$150,000 in state money designed to foster affordable housing.
If Stone House couldn't buy out its partner, the property would have gone on the market. If the developers couldn't sell it for market value, they might have sought more city concessions. If the city balked, that might risk foreclosure and nonpayment of the third loan, Petruzzello told The Gazette.
A new owner also might not maintain and manage the property as well as it is now, she said.
Marshall Apartments and JPAC have become a Janesville cornerstone and boost hopes for more downtown revitalization. Councilman Douglas Marklein was right to suggest “JPAC is a treasure the residents of Janesville have grown to love.”
Tuesday's revised deal helps assure that this treasure enriches our lives for decades to come.
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