Lahti Responds to Citizen's Concerns Over Hovey Project

IRONWOOD, MI - Wednesday, October 22, 2008 - On October 7, 2008, former Ironwood City Commissioner John Cain sent Michigan State Representative Mike Lahti the following email message:

Dear Representative Lahti:

I must take a stand of total non-support of the development of low-income apartments by the Hovey Development Corporation here in Ironwood.

A number of local citizens have made written requests from the City, Hovey and MSDA for a copy of the marketing study which shows a need for additional housing in Ironwood.

To date, not one of the requests have been honored. We have a lot of available rental units not just here in Ironwood but in our neighboring communities that would suffer if this new development is allowed to be completed.

The City of Ironwood has over 400 homes for sale in the city limits alone. MSHDA is supposed to help families with purchasing of homes. I find the entire situation to be confusing.

As an elected local official, you should know the importance of a solid local tax-base. Hovey will not pay a red cent in taxes. I would rather see the $2.5 million from MSHDA go to families to purchase homes. At least they would be paying taxes!

This purposed development will not help our City and I ask your help in finding out what study was done and when it was done that showed a need for additional housing in our area.

Thanks,

John Cain

Ironwood, Michigan

On Monday, October 20, 2008, Mr. Cain received the following response from Representative Lahti's office:

Hi Mr. Cain:

Thank you for contacting me on this issue. As I understand from MSHDA, Hovey Companies provided a market study to the State. Also, the city only has quotes that Hovey Companies provided in council. MSHDA has acknowledged that they have received FOIA requests, and offered to provide a copy of the study, and the submittals they control, but there is a cost for copying this paperwork and shipping.

I understand the FOIA request was then withdrawn. MSHDA has identified the need for housing and has completed its review of the proposed development. I was also told that in a public hearing, Ironwood passed a resolution fully supporting this development.

I was also told that MSHDA does provide funding for such developments, but mostly in the form of loans. MSHDA also requires a tax abatement, but allows the property to make a payment in lieu of taxes, which this development will be paying. MSHDA also restricts the cash flow the developer can receive from the property. Some of the advantages to this project is increased local spending due to affordable rent, lower utility bills resulting from new efficient housing.

MSHDA's direct lending developments target residents with a wide range of incomes, and typically house school teachers, young professionals returning from college to start new careers, young families trying to save money to buy a home of their own, police officers, fire fighters, and state employees still at entry level incomes, retirees and the list goes on and on. MSHDA says this type of development is viewed as an opportunity to bring economic growth and investment into a community, not to mention work for those in the area helping to build and operate such a property.

MSHDA says more than 83% of the existing housing in the Ironwood area was built before 1970. These existing housing properties can also work with MSHDA to make improvements to their current housing properties. Thank you for your comments to this current development project.

I have expressed your concerns to MSHDA and they assisted me with answers to your concerns and questions.

Thank you,

Rep. Mike Lahti's office

EDITOR'S NOTE: I am one of the several people who requested the information through the Freedom of Information Act. At no time did I ever withdraw my request for the information, and to date I have yet to receive any of the information that I requested through MSHDA. Evidence that the Chronicle has uncovered demonstrates that there never was a market study done as Hovey claims. According to December 20, 2006 City Commission minutes Mayor Bruce Noren asked Hovey Representative, Tim Hunnicutt if there was a need for additional housing in Ironwood.

According to the minutes, "Mr. Hunnicutt did a preliminary profile for this community from Hurley, Ironwood, Bessemer, and Wakefield and the Hovey Company would only be absorbing 3% of the market, well below what is targeted leaving more room for other developments."

At a January 8, 2007, Public Hearing, according to City Commission minutes, "Mayor Noren asked Mr. Hunnicutt to share with the audience his market study of rental properties. Mr. Hunnicutt noted there was little in the City of Ironwood similar to the Towering Pines project and there was a strong market for this type of housing according to the demographic study." He never did produce a market study -- he merely referred to it.

Also, according to the January 8, 2008 minutes, "Mark Silver, from Silver Properties questioned who did the market analysis. Mr. Hunnicutt informed him they work with a market analyst by the name of Woods Consulting and the market data showed they would be capturing only 3% of the market divisions leaving 97% for others to build their apartment complexes. The Market Analyst shopped for properties in Wakefield, Bessemer, Ironwood, and Hurley."

The Chronicle surveyed over twenty local rental property owners in the area, and not a single one was ever contacted by Hovey Companies, Woods Consulting, or anybody else for that matter regarding apartment rentals and vacancies.

Mr. Lahti's insensitive, ill-informed letter to Mr. Cain is a slap in the face to our entire community. NO JOBS will ever be created by the Hovey Complex. They will hire ONE MANAGER. Local contractors have already been pretty much eliminated from the bidding process on the project. The City needs additional housing like they need more pot holes in their roads.

All the Hovey project will do is put long-time taxpaying citizens at risk. Existing housing projects will suffer, and our tax base will suffer as well. Hovey will pay NO TAXES. They even get a break on their "Payment in Lieu of Taxes" agreement if they are unable to rent their apartments. How many taxpayers in Ironwood have the luxury on NOT PAYING TAXES if they cannot afford them? Guess what folks, if YOU can't afford to pay YOUR taxes they will take your property away from you!

Jim Albert

Email Mike Lahti and let him know what you think! His email address is mikelahti@house.mi.gov