A project to build 60 apartments for low- to moderate-income tenants on the former Golden Castings property has received a 10-year revised property tax abatement.
The Columbus City Council unanimously agreed to the abatement Tuesday after calculations showed the property currently generates $2,900 in property taxes a year. With the revised tax abatement, the apartment complex would still generate $25,000 a year for the city for the next 10 years.
City officials pledged a property tax abatement for the property in 2011 and earmarked $55,000 in local Community Development Block Grant funding to install curbs and sidewalks around the perimeter of the project.
The revised tax abatement allows Ohio-based developer Jonesboro Investments and local partner Thrive Alliance to avoid paying 85 percent of the property taxes for the proposed Gateway Apartments for the next decade.
The 2011 tax abatement would have allowed the tax abatement on a sliding scale, meaning the complex would have paid higher percentages in taxes each year during the 10-year abatement, from 5 percent to 100 percent over 10 years.
Jonesboro President Tim Morgan and Thrive Alliance were notified in February that they had received $971,161 in affordable housing tax credits, worth about $10 million over the next 10 years, to fund the equity to build the two- and three-
bedroom apartments. The tax credits are sold, most likely to a single investor such as a large national bank or insurance company, reducing the debt load for the developer to complete the project. In turn, the tax credit buyer receives a dollar-for-dollar credit against federal tax liability each year for 10 years based on the amount invested. Tax credit buyers are passive investors — they do not control, operate or own the project.
Thrive Alliance will be considered the owner of the Gateway Development because it was the sponsoring agency listed on the tax-credit application. The $10.2 million development would be located on about 5 acres on the easternmost portion of the Golden property, at 1616 10th St.
The tax abatement became more crucial after a financial gap appeared in the project following a state rule change that went into effect in January, said Carl Malysz, the city’s director of community development.
The rule change altered how much Jonesboro can raise through tax credits, leaving the project with a $598,885 gap in financing.
By revising the tax abatement, Jonesboro can proceed with the development knowing the gap will be filled, Malysz said. By capping the project’s property taxes at $25,000 each year for 10 years, Jonesboro can secure additional private-sector financing to fill the gap and continue with the project.
Gateway has been proposed as an affordable housing complex for families, something the city is focusing on after a city housing survey last year showed a need for it. In August, the city learned that as many as 40 percent of Columbus rental households were considered rent-burdened and 17 percent of households were extremely rent-burdened. Rent-burdened homes spend 30 percent or more of their household income on rent and utilities. Extremely rent-burdened households spend 50 percent or more.
The Gateway site is zoned for multifamily use but now must go through a site-approval process with the city, Morgan said. Construction could begin in October, and the project will take about a year to build, he said.
In earlier interviews, Morgan and Malysz said the company has completed an environmental study of the Gateway acreage and has its own remediation plan, which includes taking out contaminated soil in areas not sealed by pavement or under the building and capping it with at least 2 feet of clean dirt.
Golden Castings ended its operations in 2003. KLM National LLC purchased the site and then spent about a decade clearing it and salvaging materials. The state still considers the site an active brownfield in need of environmental cleanup and redevelopment.
Estimated cost to clean up the site just for the apartments is about $750,000, which caused Councilman Frank Miller to question whether families should be moved into a facility that is surrounded by a still-contaminated former foundry site.
“It’s not that I’m against affordable housing,” he said. “But what about the balance of the property? Do we want to build and move people into a more hazardous area?”
Gateway developers do not have control over what happens on the remainder of the site, Morgan said, but assured Miller his company would clean the Gateway site to state standards.
Morgan said his company is one of the biggest fans of WDG Construction Group, which hopes to build an 80-bed, assisted-living and memory-care facility on 5 acres on the west side of the Golden property. But that project isn’t quite as far along. Core sampling to
determine contamination on WDG’s site and the remaining 3 acres was done in February, and official results aren’t back yet, Malysz said.
However, preliminary conversations about core sampling test results with Indiana Brownfields officials showed the contamination on the remaining acreage — including the WDG site — is no worse than on Gateway, Malysz said. The rest of the property would require a similar cleanup strategy — taking out the soil and putting clean fill on top to cap it.
Malysz acknowledged a problem in the timing, as the cleanups are out of synch, which he said is not ideal.
Contaminated airborne dust needs to be limited and also needs to be considered when demolition begins on the existing foundry building that remains and when concrete rubble, tangled rebar and other hazards are removed.
There are demolition strategies that limit the contaminated dust, and city officials are aware that people live around the Golden property.
“We want to control the dust off-site,” Malysz said, adding that the state brownfield office and the Indiana Department of Environmental Management will monitor and regulate how the remediation and construction are handled.