A divided council gave its blessing to a property management company seeking tax subsidies for an apartment complex in Gardner.
The MACO Development Company needed a resolution of support from the Gardner City Council in order to apply for a federal tax subsidy to upgrade Gardner Estates, an apartment complex at 130 E. Madison Street. MACO Development took over management of the rent controlled apartments last year. The property taxes on the complex have been in arrears since 2009. The property owners, a group of investors including the MACO Development Company, owes approximately $80,000 in back and current property taxes.
Dan Sanders, a representative from MACO, said that if the property receives a tax subsidy, the property will be sold to other investors and property taxes will be paid prior to the sale. Sanders said if MACO is granted low income housing tax credits, new property owners will refinance the first mortgage on the property and get a second mortgage to finance upgrades of more than $1 million to the apartment complex.
Built in 1990, Gardner Estates is a 24-unit apartment complex. It currently receives low income housing tax credits. Renters pay 30 percent of their income in rent. Subsidies make up the difference in the actual rent price. Sanders said rehabbing will allow MACO to raise the rent approximately $100 per month, but residents would still only be required to pay 30 percent of their income. The remainder would continue to be subsidized.
Council member Steve Shute said the tax subsidies and loans appear to be a shell game.
“I’m just going to be frank. This is really tough stuff,” he said. “Not only are you in arrears in taxes, but (the property) hasn’t been maintained here… Until those taxes are brought up to date, I’ve got a real problem supporting this.”
Sanders said when his company began managing Gardner Estates last year, maintenance problems made two apartment units uninhabitable. Money that may have been used to fix problems in those apartments was diverted to fix the parking lot, which Sanders said was a liability.
“We had to immediately pave the parking lot, which took almost every dollar we had,” he told the city council.
He explained that a federal program popular in the 1970s and 1980s built several similar apartment complexes throughout the country. Gardner Estates was built in 1990.
The federal program no longer has the funding to rehab those old properties, Sanders said.
“What we have been left with is this tax credit,” he said. “It’s a federal tax credit allocated to states every year for the construction or rehab of affordable homes.”
The deadline for Kansas applications is Feb. 6, Sanders told the council. If they deferred a resolution of support, it would be a full year before MACO Development could apply again.
“I still get a sense that there’s subsidies chasing subsidies,” Shute said.
However, council member Heath Freeman said approving a resolution will speed the payment of back and current taxes. Todd Winters agreed saying the federal tax credits will go to someone.
“If this would be something that would improve Gardner and get taxes back into the community, I’m for it,” Winters said.
Council member Kristina Harrison joined Freeman and Winters in support of the resolution. Council members Tory Roberts and Shute voted against it.
In other business council members:
• approved an agreement for technology infrastructure services with Alexander Open Systems. The agreement is $293,000 over the course of the next three years and includes equipment and maintenance.
• approved the hiring of Gould Evans Associates, consultants who will assist the city in rewriting its land development code.
• approved amendments to the city’s animal regulations ordinance that will formally allow Gardner residents to keep chickens in their backyards.