An agreement that would help pave the way for an 83-unit workforce housing project planned for a historic building east of downtown Frederick received unanimous approval Tuesday from the Frederick County Council.
The Payment in Lieu of Tax (PILOT) agreement, for an 80,000-square-foot project at 400 E. Church St., saves the developers $31,200 annually in county property taxes after improvements are made to the structure. The building is the former site of the Ox Fibre Brush Co. and current headquarters of Goodwill Industries of Monocacy Valley.
Milton Bailey, director of the county’s Department of Housing and Community Development, said the project would attract teachers, restaurant workers and others in the workforce to live in the city.
“It’s a historic preservation, and the fact the developer is undertaking it, it’s going to help stabilize that community and breathe a new vibrancy in the community,” Bailey said. “The rents are well below what rents are for one- and two- and three-bedroom apartments from a market-rate perspective.”
One-bedroom units will cost $854 per month, two-bedroom units will cost $1,500 and three-bedroom units will cost $1,660, hundreds of dollars below market-rate rent for apartments in Frederick, Bailey said.
County Councilman Steve McKay (R) asked Avram Fechter, a developer representing 400 East Church LLC, about how difficult it was to execute the project near Frederick’s historic district.
Fechter said meeting the state’s energy efficiency requirements, given the age of the building, was more difficult than financing and completing the project.
McKay also wondered what happens if a resident begins to make more money than when he or she moves into the apartment. According to the PILOT agreement, 73 apartments must be reserved for residents earning 60 percent of the area median income, with the remaining 10 being for those earning 40 percent of the area median income.
For the former, that’s $51,000 for a single adult and $72,780 for a family of four. For the latter, it’s $34,000 for a single adult and $56,000 for a family of four, according to the agreement.
Fechter said rents wouldn’t rise for that current resident, but the developer and landlord would need to make sure the next tenant was someone meant to occupy that unit.
“As a general rule, you come in kosher, you stay kosher. ... The program does not penalize success,” Fechter said.
After improvements, and given the PILOT agreement, the county property taxes for the building will be $37,348, after the $31,200 tax credit. City property taxes will be $28,984, a $24,213 annual decrease, if Frederick’s Board of Aldermen approves its PILOT with the developer in the coming weeks. State property taxes will remain level at $8,156.
Those changes take effect in fiscal 2021 and last for 40 years, according to staff reports.
The building was constructed in the 1890s and soon after, the Ox Fibre Brush Co. began manufacturing brushes there. It continued operations until 1967. Two years later, Goodwill moved in. Goodwill still has operations at the building, but it plans to move to a new location.