Citizens Group Attempts to Stop Hovey Project

IRONWOOD, MI - Saturday, August 16, 2008 - A group of concerned Ironwood citizens and property owners is making an effort to stop the construction of the Towering Pines apartment complex on Ayer Street. The proposed 49-unit, low-income housing project is being largely funded through the Michigan State Housing Development Authority (MSHDA) and the U.S. Department of Housing and Urban Development (HUD). Hovey Companies, LLC, of DeWitt, Michigan is the out-of-town developer that is attempting to build the subsidized project in Ironwood.

The City of Ironwood has agreed to accept a PILOT (Payment In Lieu of Taxes) of $9,000 per year, instead of charging the developer the same tax rates the rest of the City property owners pay. The chart below shows what the taxes on the Hovey project should be, and how much money the City is willing to sacrifice to bring the project to Ironwood. Keep in mind that the developer has its own contractors and will not be creating a single local job with the project.

How many street repairs could be done if the City had an additional $76,500 in revenue per year? Wouldn't our schools love to add almost $80,000 to their budget yearly? Our County, which is also struggling financially, could sure use an extra $21,000 each year!

Currently the group opposing the project is circulating petitions to stop the release of MSHDA and HUD funds for the project. According to the petitions, the reasons for the group's opposition to the proposed housing project are as follows:

The environmental review done on the site for the project was too limited, incomplete, and inaccurate. Recent information obtained from old iron ore mining records indicate that the site is unstable ground due to iron ore mining activities which occurred beneath its surface, namely the mine shafts and drifts. The City of Ironwood's then Community Development Director acknowledged in an October 8, 1998 letter, that this area was unsuitable for building. There are also wetlands on the property. Clearly, an environmental impact statement should have been made on this site.
City of Ironwood Statutes specifically state that City-owned property must be appraised before it can be sold, and the sale must be done by competitive bids. The property was never appraised to determine its value, and this transaction was merely negotiated between the City of Ironwood and the Hovey Companies.
The ordinance enacted by the City of Ironwood for the abatement of real estate taxes for this project is now invalid since it specified that construction must be started on the project within one year of the effective date of the ordinance, which is January, 2007. Further, at the public hearing regarding this ordinance, some of the concerned citizens in attendance were not allowed to speak to voice their opposition. This can be verified from video tapes of the meeting. If such an ordinance were to become effective it would result in unfair government-assisted competition to present apartment owners, would increase the tax burden on existing City of Ironwood taxpayers; and would deprive our local schools; the Gogebic Community College; Gogebic County; the Carnegie Library; and other needy entities of badly needed tax revenue.
The City of Ironwood would be committed to paying for much of the infrastructure for this project. This is unfair to the taxpayers and illegal as well.
Despite repeated requests to MSHDA and the City of Ironwood for the marketing study used to justify the feasibility of this project, none has been forthcoming. Local apartment owners have never been contacted regarding area business conditions or vacancy rates. A monitoring of the advertising sections of local newspapers shows an alarming number of vacant apartments and houses for rent, certainly not indicating a need for additional apartments in the Ironwood area.

The petition goes on to say.. "All in all, this project is ill-conceived; improperly analyzed; illegally manipulated; anti-free enterprise; and will be terribly costly to local taxpayers and institutions. As to existing apartment owners, it could well mean economic destruction.

In these troubled economic times, our government – local, state, and federal – would better serve their citizens and communities by spending their time and money helping to attract new industries which would provide good jobs for our people – not more apartments that are not needed and will only add to economic hardship."

According to recent estimates there are over 600 vacant houses in the City of Ironwood. Each and every day there are dozens of vacant rental properties (houses and apartments) listed in our local newspaper. Does Ironwood really need yet another housing project? Does it make any sense to even consider construction of such a project on unstable land that will not support the structure?

"If Hovey came to Ironwood with their own money and didn't ask the City, State of Federal government for any special favors, tax cuts, or utility deals, etc., I'd support the venture." said one Ironwood landlord who wished to remain anonymous, "I'd even say 'okay' to the City giving them tax breaks if they were creating jobs or somehow benefiting the community. But, what is happening here is rotten. Whatever happened to free enterprise? I struggle to provide quality housing for my tenants. I pay full taxes on my property. Then the government turns around and uses my tax dollars to put me out of business. How does Hovey lose on this deal? MSHDA is providing the financing to build their complex, then they will be providing them the income to pay for the financing. It's like going to the bank -- getting a loan -- and having the bank offer to make the payments for you! Then, the City comes along and says, 'We won't charge you the $178,000 per year you should be paying on your 5.5 million dollar apartments. We'll only charge you $9,000!' How do you compete with that? What do you think would happen if I went and asked the City for a 95% reduction in my taxes? Yeah right! They'd laugh me right out of the building. Why should an out-of-town developer get everything for nothing while the lifelong residents pay through the nose? Enough is enough! And to make matters worse, it's not even an etched in stone $9,000 -- it's 2% of their rents -- so if they aren't full to capacity, they pay even less! Where do you get a deal like that? Bend over taxpayers!"

To join the opposition group against the Towering Pines project click the link below and download, sign and circulate the petition attached to this article. To download the petition [CLICK HERE]. Completed petitions can be sent to: HOVEY PETITIONS, P.O. Box 237, Ironwood, Michigan 49938.