PITTSFIELD -- A local developer is poised to invest $11 million toward creating additional downtown apartment units if the city opts to participate in a new state-sponsored housing program.
Allegrone Construction Co. Inc. wants to redevelop two commercial buildings it owns on North and Fenn streets by converting the upper floors into market-rate rentals. The first floors would remain as commercial space.
The Pittsfield-based firm plans to spend $4.5 million on the Howard Building at 124-132 Fenn St. and $6.5 million at the Onota Building at 64-74 North St., according to Ian Rasch, the company's director of development.
Rasch said moving the project forward -- possibly by late summer -- is contingent on the city taking advantage of the Massachusetts Housing Development Incentive Program.
Mayor Daniel L. Bianchi is seeking the City Council's approval for Pitts field to take part in HDIP.
"This program will provide the city with a tool to incentivize development of market-rate housing in our urban center, while also providing housing developers with access to state tax credits," Bianchi said.
Allegrone is seeking local tax breaks, as well as state tax credits, toward its project, according to Rasch.
"This is a make or break for us as the tax incentives help fill the gaps in our funding," he said.
Tonight, Bianchi will formally request the City Council designate a housing development zone in the city center
The council meets at 7:30 p.m. at City Hall.
In addition, Bianchi is seeking a Tax Increment Exemption agreement for the North and Fenn street properties. A TIE is the residential version of a TIF, or Tax Increment Fin ancing, that is geared toward commercial projects.
The proposed 10-year TIEs would take effect after both sites are redeveloped. They call for a 100 percent break on the residential portion of local property tax bills for the first year. The exemption is on the assessment amount above what the buildings are currently assessed by the city. The exemption will decrease 10 percent each subsequent year, with Allegrone paying property taxes on the full property values after the agreements expire.
The housing map and tax exemption proposals are expected to be referred to the subcommittee level for a public hearing and a recommendation back to the full council for a vote.
If Pittsfield participates in the new state housing program, it could compete with 23 other Massachusetts cities who qualify, according to Deanna L. Ruffer, the city's community development director.
"Five million dollars is not a lot of money for the first year of a program," she said. "So it's always nice to have a project that is ‘shovel ready' when the state rolls out a new program."
As for the tax exemptions, Ruffer noted they will benefit the city in the long run. Currently, the Howard and Onota buildings are assessed at $406,300 and $619,900, respectively. Once redeveloped, city officials estimate Howard would be valued at $1.76 million and Onota at $2.75 million.
"As these estimates demonstrate, incentivizing this development more than doubles the tax revenue the city will receive from these properties over the next decade even with the TIEs," Ruffer said.
Allegrone bought both properties within the last two years with the goal of taking part in the city's downtown revitalization. Howard is virtually vacant, while Onota has seven tenants, company officials said.
Rasch cited a company-commissioned study that indicated a need for market-rate apartments in Pittsfield, with rents ranging from $900 to $1,200.
"This project will help draw higher income individuals to the downtown," he said. "They will likely be working professionals and those looking to downsize from owning a home."