Employee
In July last year, Lansing Code Compliance officers conducted an inspection of Porter Apartments, a 98-unit, low-income senior citizen on Townsend Street in downtown Lansing. More than 50 citations were issued against the property for violations ranging from inoperative smoke alarms in nearly a quarter of the units to the presence of a wide variety of non-human occupants, including cockroaches and rodents. It wasn’t the first time city inspectors had been called into the building, nowhere near. According to city records, Porter Apartments have been cited at least 17 times for security and litter violations since 2014.
More than a year later, little seems to have changed. Thanks to the excellent coverage of the Lansing State Journal this week, we know the property is still plagued by pests and unresolved physical issues that threaten the health and safety of the building’s residents. The LSJ article raises serious questions about why such dangerous and unhealthy conditions are allowed to persist in the building despite repeated interventions by city inspectors. Since the property is also inspected and subsidized by the Federal Ministry for Housing and Urban Development, the responsibility for ensuring safety for human settlement also rests on its shoulders.
Porter Apartments is one of 73 properties in 29 states owned by the California Commercial Investment Companies, based in Thousand Oaks. The company acquired the property, a former luxury hotel, in 2005 through foreclosure. Despite the poor track record of maintaining the building, the company is now calling on Lansing City Council to approve a 40-year extension of its payment in lieu of taxes (PILOT) agreement. For strangers, a PILOT is a long-term tax break designed to encourage the development of affordable housing. According to the nonprofit Community Housing Network, PILOTs can often allow developers to invest in communities and neighborhoods that would be difficult to develop if the property were taxed on the property’s appraised value. In other words, PILOTS are the special sauce that enables the economics of affordable housing for both investors and low-income residents.
For understandable reasons, city guides are reluctant to approve the PILOT extension for Porter Apartments. While the purpose of the PILOT agreements is well-founded and entirely defensible, the idea that taxpayers subsidize substandard housing leaves a bitter aftertaste. In this case, the PILOT does not appear to be an incentive to provide high quality, affordable housing, but rather to act as a slum lord subsidy that fills the pockets of the absent owner and investors, leaving vulnerable residents to live in varying degrees of misery. The owners argue that by getting the PILOT’s approval, they can invest millions of dollars improving the structure, which was built a century ago and has not been extensively updated in more than 15 years. Better late than never, we suppose, but why did it take you more than a decade to come up with a plan to modernize the building?
It doesn’t have to be like that. The most obvious solution is to use the PILOT agreement as a leverage by setting conditions for its approval, according to which the owner must maintain the property according to city standards. Otherwise the agreement would be void and the property would be fully taxed. However, based on the prosecution’s guidance in the council committee meetings, it is unclear whether such provisions are allowed in PILOT agreements based on a submission from the Michigan State Housing Development Authority, the state agency that approves all PILOT requests.
If such terms are not permitted in a PILOT agreement, we believe that it should be. We urge Lansing officials to consult with state lawmakers on this matter and request changes to any rules or laws that stand in the way. It is strange that such an agreement may require payment of the applicable wages for all work on the property, but not compliance with local building codes. We believe that such a requirement could have a beneficial effect on the quality of low-income housing across the state. But there would likely also be stiff opposition in Republican-dominated state legislation, where commercial property owners and their lobbyists have far more leverage than low-income seniors with roommate rats.
This unfortunate situation creates a real dilemma for the city guides. If the PILOT for Porter Apartments is not approved, the owners could decide that it is no longer profitable to own the building and just walk away. The last thing the beleaguered residents need is to be evicted in the midst of a pandemic, which exacerbates their misery and burdens the city with the task of relocating them in the dead of winter. A similar real estate crisis erupted six years ago when the Life O’Riley RV park was convicted by Ingham County’s health inspectors of nearly identical problems. Lansing doesn’t need to repeat this sad episode.
We wouldn’t be sure if we didn’t also point out that Lansing City Council is aware of the issues at Porter and has considered the owner’s request for a PILOT extension for at least two years. It’s time to stop talking about it and do something to put an end to the miserable conditions at the Porter Apartments before tragedy strikes. Linking the owner’s PILOT approval to compliance with the city’s building codes seems like the most promising approach.