Last July, Lansing code compliance officers conducted an inspection of the Porter Apartments, a 98-unit, low-income apartment building for senior citizens located on Townsend Street in downtown Lansing. More than 50 citations were issued against the property for violations ranging from inoperable smoke detectors in nearly one-quarter of the units to the presence of a variety of nonhuman occupants, including cockroaches and rodents. It wasn’t the first time city inspectors were called to the building, not by a long shot. According to city records, Porter Apartments has been cited at least 17 times for safety and trash violations since 2014.
More than a year later, it appears little has changed. Thanks to excellent reporting this week by the Lansing State Journal, we know that the property is still plagued with pests and unresolved physical issues that endanger the health and safety of the building’s residents. The LSJ article raises serious questions about why such hazardous and unhealthy conditions have been allowed to persist at the building, despite repeated interventions by city inspectors. Because the property is also inspected and subsidized by the federal Department of Housing and Urban Development, the responsibility to ensure that the property is safe for human habitation also falls on their shoulders.
Porter Apartments is one of 73 properties in 29 states owned by California Commercial Investment Companies, based in Thousand Oaks. The company acquired the property, a former luxury hotel, out of foreclosure in 2005. Despite their lackluster track record of maintaining the building, the company is now asking the Lansing City Council to approve a 40-year extension of its Payment in Lieu of Taxes (PILOT) agreement. For the unfamiliar, a PILOT is a long-term tax break that aims to encourage the development of affordable housing. According to the nonprofit Community Housing Network, PILOTs can often make it possible for developers to invest in communities and neighborhoods where it would be difficult to develop if the property was subject to taxation on the assessed value of the property. In other words, PILOTS are the special sauce that makes the economics of affordable housing work for both investors and low-income residents.
City leaders are reticent to approve the requested PILOT extension for Porter Apartments, and for understandable reasons. Even though the purpose behind PILOT agreements is well established and entirely defensible, the notion that taxpayers will be subsidizing substandard housing leaves a bitter aftertaste. Rather than an incentive to provide quality, affordable housing, in this case the PILOT seems to operate as a slumlord subsidy, lining the pockets of the absentee owner and investors while leaving vulnerable residents to live in varying degrees of squalor. The property owners argue that approving the PILOT will allow them to invest millions of dollars to improve the structure, which was built a century ago and hasn’t had a major update in more than 15 years. Better late than never, we suppose, but why has it taken them more than a decade to come up with a plan to modernize the building?
It doesn’t need to be this way. The most obvious solution is to use the PILOT agreement as leverage by placing conditions on its approval that require the owner to maintain the property to the city’s standards. Failure to do so would void the agreement and subject the property to full taxation. However, based on guidance provided by the City Attorney’s Office in Council committee meetings, it is unclear if such provisions are permitted in PILOT agreements, which are based on a template provided by the Michigan State Housing Development Authority, the state agency that approves all PILOT requests.
If such conditions are not permitted in a PILOT agreement, we believe they should be. We urge Lansing officials to confer with state legislators on the matter and request changes to whatever rule or law stands in the way. It is bizarre that such an agreement can require that prevailing wages be paid on any work done to the property but cannot require compliance with local building codes. We daresay that such a requirement could have a salutary effect on the quality of low-income housing across the state. But it would also likely face stiff opposition in the Republican-dominated state legislature, where commercial property owners and their lobbyists have vastly more clout than low-income senior citizens with rats for roommates.
This unfortunate situation creates a real dilemma for city leaders. If the PILOT for Porter Apartments is not approved, the property owners could decide it is no longer profitable to own the building and simply walk away. The last thing the beleaguered residents need is to be evicted in the middle of a pandemic, compounding their misery and burdening the city with the task of relocating them in the dead of winter. A similar housing crisis erupted six years ago when the Life O’Riley mobile home park was condemned by Ingham County health inspectors due to nearly identical issues. Lansing doesn’t need a rerun of that sad episode.
We would be remiss if we didn’t also point out that the Lansing City Council has been aware of the problems at Porter and reviewing the property owner’s request for a PILOT extension for at least two years. It’s time to stop talking about it and start doing something to put an end to the miserable conditions at Porter Apartments before tragedy strikes. Linking the property owner’s PILOT approval to their compliance with city building codes seems like the most promising approach.