Finance Director/Treasurer David Clark says the timing is right to transfer the $1.2 million trust fund, with investments maturing August 31.
By MAGGIE LANOUE
Contributing Writer
Albion City Council’s regular meeting Aug. 18, took place in the Opportunity High School library. About 40 people attended, most of them there to hear and weigh in on a proposed Payment in Lieu of Taxes ordinance for the redevelopment of Washington Gardner School. Built more than a century ago, it once held 1,600 students. With its Gothic Revival features and more than 700,000 square feet, it remains an Albion landmark.
A PILOT ordinance is a framework adopted by a city council to receive payments from entities that would otherwise be exempt from regular property taxes. Instead of paying the full tax bill, the developer or nonprofit agrees to make structured payments, often calculated as a percentage of rental income, for a set period of time. Cities use PILOTs to encourage projects that align with local goals while still recovering some of the revenue needed to fund services. Albion’s ordinance set the rate at 7 percent of net rental income for 40 years. Supporters said that without the PILOT, Washington Gardner School would likely remain vacant and deteriorating.
The payments are expected to bring in $7,000 to $9,000 annually once the project is complete and occupied. If a Municipal Services Agreement can be arranged with an update to the City Charter, the city could see more in annual tax revenue. Residents of the building would pay income taxes, water bills, and bring in additional state revenue sharing.
At the start of the meeting, Interim City Manager Doug Terry reported on a conversation Mayor Victoria Garcia-Snyder had at the Michigan Mayors Conference earlier this month.
C.J. Felton, director of housing for Community Housing Network, was present to answer questions about a possible MSA. He explained that if the City approved the 7 percent PILOT, it could later amend it to shift 3 percent into an MSA, leaving 4 percent in the PILOT. That adjustment could add nearly $8,000 per year to city revenue, bringing the combined total to about $17,000, enough to offset extra city services the project might require.
Garcia-Snyder reflected on the statewide housing shortage and noted that housing is a major part of the City of Albion’s comprehensive plan. The comprehensive plan points out that the City lost 15.5 percent of its housing units between 2010 and 2019, leaving nearly one in five homes vacant. The comprehensive plan calls for a wide variety of housing options, from duplexes and apartments, to senior housing and barrier-free designs.
At the Mayors’ Conference, Mayor Garcia-Snyder also learned how Sault Ste. Marie supplements its PILOT with an MSA, also in partnership with Community Housing Network. The City of Albion’s charter does not currently allow the same approach, but Terry, City Attorney Cullen Harkness, and Felton agreed it might be worth exploring in the future.
Public comments captured the tension of the choice before the council. Alex Harris warned that locking in a PILOT until 2070 could deprive the City of future tax revenue on property near I-94. “Take your time and make a wise decision,” he urged. The property has always been used for education and never generated income taxes.
Rick Lang countered that without action Washington Gardner School could be lost altogether. “The bottom line for me is… a small percent of something is better than 100% of nothing,” he said.
Renee Miller recalled her grandparents’ move from Arkansas to Albion and said, “We need all types of housing… There has to be room for everyone.”
Pastor Tim Kurtz said he appreciated the camaraderie and respectful tone of the evening, noting it stood in contrast to some recent contentious meetings. He encouraged the council to keep moving forward together.
The City Council first handled another financial matter under Approve – Transfer of Funds from the sale of Maple Grove housing. City Treasurer and Finance Director David Clark reported that one of the City’s trust fund bonds paying 6.2 percent interest will be called on Aug. 31. “The timing would be good,” he said, since the favorable rate will expire and the $1.2 million in the trust fund will then be available for transfer. Terry emphasized that the funds would remain restricted until the council decides how to use them, adding that spending would be done “under a microscope.” Council voted unanimously to approve the transfer, noting that the money is needed for infrastructure, particularly to finish roads that need extensive rebuilding after the discovery of century-old sewers uncovered for the new water main.
When the PILOT item came up, Garcia-Snyder reminded everyone that approval did not guarantee redevelopment. “This is just giving Community Housing Network a tool to apply for grants and tax credits… This may or may not happen. It’s a very competitive process,” she said.
Mayor Pro-Tem Andy French emphasized the unusual costs of renovating Washington Gardner School: “There is no market plan for market-rate housing that doesn’t involve some sort of government assistance.”
Councilmember Williams added that dividing the $20+ million project cost by the number of units meant more than $400,000 investment per one-bedroom apartment. The going market rate of 1% rent would be expensive for an apartment. “Who here can afford $4,000 a month?” he asked.
Councilmember Stuart explained his “no” vote, saying that a 40-year PILOT would yield only a fraction of expected revenue for schools and city services. “At the end of 40 years, the City would have realized about a third of the revenue… these are projections, not hard numbers, but that means our public schools and others won’t be getting their share,” he said. While he supported housing, he could not support this PILOT as written.
The discussion ended with the vote, the result being a 5–2 vote to approve the ordinance on its second reading, with Councilmembers Stuart and Frost opposed. Some members of the public applauded after the vote.
For Albion College, which currently owns Washington Gardner School, the decision marked good news. The building has been a financial responsibility of the college for years, costing it hundreds of thousands of dollars for utilities and insurance. The PILOT improves the chances of outside funding for redevelopment. The actual transfer of ownership to the developers – Zero Day, working with Community Housing Network – will depend on final construction planning and financing. The timeline for the transfer of ownership is not yet determined. Albion College confirmed that the President’s House next door will not change its purpose. It also recently announced that it has been awarded a $1.36 million TRIO Student Support Services grant to help low-income and first-generation students succeed.
The meeting closed with updates on public infrastructure.
Terry reported that epoxy sealing of Superior Street’s brick section will begin in the first week of September, requiring a three- to four-day closure of the roads while the material cures. “The bricks are beautiful, but they have to be maintained,” he said.
Garcia-Snyder reminded residents to continue supporting downtown businesses during the disruption. More roadwork, some of it tied to the new water tower east of town, will follow next year.
Stuart reminded residents about Walk the Beat, the downtown music festival scheduled for Saturday, Aug. 23, from 1-5 p.m. at 10 venues, with The War and Treaty performing on the main stage at 6 p.m.
The council’s decisions cannot be separated from the bigger picture of the City of Albion’s finances. Neighborhoods just beyond the city limits, like Villa Nova and Mercury, do not pay Albion property taxes but still drive the city streets and draw on city services. Some pay the half-percent nonresident income tax if they work in town; many do not. The City of Albion’s largest revenue streams are income taxes, state revenue sharing based on population, water bills, sales taxes, and property taxes. The City’s income tax brings in 20 percent more than its property tax. By contrast, nearby Marshall has no income tax but has higher property tax rates. Adding residents within city limits, whether homeowners or renters, strengthens Albion’s budget through taxes, utilities, and state revenue sharing. The City’s needs are sharpened by population decline – from its highest population of 12,749 in 1960 to an estimated 7,085 today.
The timing of Albion’s PILOT decision coincides with a statewide change that may help historic preservation efforts. On Tuesday, the Michigan Legislature approved an expansion of the State Historic Tax Credit program, raising the annual statewide cap to $100 million starting in 2026, with a large portion earmarked for big projects. For Washington Gardner School, that could mean more generous tax offsets than were available just months ago. Advocates for the project say the combination of federal housing credits, state historic credits, and the City’s PILOT approval could finally make the numbers work.
Albion’s story is one of challenges and resilience. Factories have closed, schools have been annexed, and the hospital is gone. Yet residents and leaders have found ways to regroup, polish gems, and make them shine brighter: the brick-paved main street, the Coca-Cola mural, the Washington Gardner School poised for new life, and the city’s parks.
As Frank Passic said during public comments: “My vision of Washington Gardner – it can be a showpiece. When people come to town, it’s right on the main highway. They’re going to say, What is that? And we could show them what that is. It can be a tourist place.”
