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Even before the Warsaw Common Council meeting on Monday, there were questions on Facebook about the renovations planned for the Courts of Colfax, how they will affect the senior residents who live there and the PILOT program the council will be asked to approve for those improvements.
“What you have in your packet is a PILOT (payment in lieu of taxes) agreement. We are not voting on this tonight. This is just an educational session. They have requested us to review and look at agreeing to a PILOT, but before doing that they wanted the opportunity to present it to you and then, as well, give you some background and education on what a PILOT is,” said Warsaw Community and Economic Development Director Jeremy Skinner.
House Investments LLP CEO Matt Gadus said House Investments is an Indianapolis-based developer, owner and manager of affordable housing and multi-family housing throughout Indiana. He said what they’re proposing to Courts of Colfax, 600 N. Colfax St., is a substantial renovation and extension of the affordability for the community.
“This community was originally built in 1993 by Partnership for Affordable Housing (PAH). PAH still owns it today as 100% owner. It’s 78 units serving individuals that are 55 and older, and it was originally part of Section 42 ... and it’s got income and rent restrictions where 16 of the 78 units are at 50% AMI (area median income) and the rest of the units, 62 units, are at 60% AMI. So that’s how it is today,” Gadus said.
When it was originally developed, it had a 30-year affordability restriction. Given that PAH is a not-for-profit with a mission of providing affordable housing, Gadus said they’ve kept those restrictions in place even though the affordability deed restriction has lifted because it hit the 30-year mark.
“So we will be co-developers to partner with PAH to resyndicate, take this back through the program, and as part of that, we are requesting a PILOT (agreement),” he said.
Gadus said they were issued a 4% tax bonds and credits earlier this year from Indiana Housing and Community Development Authority (IHCDA).
“But the nice thing about this is the income and rent restrictions stay the same. We’re going to keep it the exact same as it is today - so no changes, no impacts to the existing tenants there,” Gadus said. “And as part of this, so as I mentioned, the property already went through a 30-year affordability component. PAH is committed to 40 years this round. So once construction starts, there will be a 40-year affordability restriction to where these AMI and income levels will stay in place for another 40 years.”
The tax credits and tax-exempt bond volume will allow the property to be substantially renovated. Gadus said Courts of Colfax is in good shape and has good bones but needs a refresh. Most of the systems are at the end of their useful life, so “this will allow us to basically replace all of those major systems. So, essentially, it’ll be a brand new property.”
It’ll get a new roof, asphalt, concrete repairs, new windows and exterior doors and siding. Gadus said they’ll leave the brick, but everything else will be replaced.
“On the interior, a complete renovation of the entire project units - new flooring, doors, kitchen cabinets, countertops, appliances, everything. It’s not down to the studs, but it’s pretty much everything else,” he said, including HVAC systems.
“So it’s $45K-plus per unit in hard costs that will go into this project,” Gadus said, and it’ll be a quick turnaround of about six to 10 days per unit.
Existing tenant relocation during the work was one concern expressed on Facebook Monday as the population living at Courts of Colfax is an elderly population.
“As part of this, and we’ve done these projects before, one thing we do is we hire third-party HUD relocation specialists. So this is what they do, around the country, around the state. They follow HUD guidelines to a t, so we’ve engaged that same group for this and they’re starting to send out surveys and do things to understand what is needed of the tenants,” Gadus said.
Of the 78 units, 73 are occupied currently. The five vacant units are the first ones that will be renovated. The HUD relocation specialists asked a lot of questions on the surveys, including if the tenants would need help packing, moving, if they have any special needs, etc.
“The goal is to come up with a game plan for each individual resident to assist in that process, and part of that is, they bring in movers. Everything’s moved. No cost whatsoever to any of the tenants. Will it be a headache through the process? It won’t be painless, but the goal is to make it as seamless as possible, so that we can get the residents out, renovate the unit and get them back in as quickly as possible,” Gadus stated.
Existing tenants would either be moved to an open unit in the building, a hotel or have them stay with family or friends. All of that is at no cost to the resident, he stated. When the renovations are done to their unit, the tenant moves back in.
In the fourth quarter of 2026, financing would be secured, PILOT approved, and construction contracts and permitting completed. Gadus said the goal is to close this year, but construction wouldn’t start until the first quarter of 2027. Per HUD guidelines, they have to give residents a certain amount of days’ notice before the process begins.
“In total, we’re nine months from start to finish because they’ll be able to do the exterior work while the units are occupied and then we’ll break up the building - do five, six, seven units at a time,” he said.
Councilwoman Cindy Dobbins asked if provisions would be made if a resident needs to store their furniture. Gadus said all of that will be handled at no cost to the residents as everything will have to come out of the apartments. There’ll be insurance and professional movers hired.
On the PILOT in general, Gadus said it’s based on Indiana statute and it’s a voluntary agreement requiring approval of the property owner and local government through ordinance adoption. The council will be presented that ordinance at their Nov. 2 meeting.
“So, basically, the property itself becomes exempt from normal property taxes and then owner makes voluntary PILOT payments to local government instead. And in this instance ... currently the property pays $23,000 worth of real estate taxes. What we’re proposing in the PILOT is $23,000. What this does is, it just keeps it so it goes up at 1% a year. It basically steadies the underwriting, makes it so that our partners, there’s no risk of real estate taxes ebbing and flowing, from both sides,” Gadus said. “... It provides a predictable stream of payments for both the property owner and municipality.”
The benefit to Warsaw, he said, is fixed annual payments that go directly to the city, preserves 78 affordable units for seniors with a long-term commitment and makes the building viable for another 40 years.
Skinner said, instead of asking the council to approve the agreement for a 40-year term, if and when the council requests the PILOT request, they will be asked to approve it for 20 years, with a renewable 20-year term.
He said the city submitted a letter in support of the project as it has other housing projects, but did not guarantee anything.
“It doesn’t necessarily mean that you can’t not approve this, but then if you don’t, we’ll be back in front of you with a tax abatement. So at the end of day, you’re going to see one of two different options,” Skinner said.
City attorney Scott Reust said, “So also what it does is, they’re committing to a $10 million investment in improvements to the property. So when that $10 million is invested in the property, they won’t see the property tax value go up that they would be taxed on as a property tax. That’s probably one of the disincentives of fixing up a property, is you raise the value of the property.”
He said the PILOT would lock in the $23,000 at today’s assessment, but when they put the $10 million investment into the property, they’re not going to be assessed after the investment is made.
Skinner said that’s correct.
“To your point, we’ve had two affordable housing projects come to the end of their terms. This is the only one that re-upped. The other one did not re-up, and I can tell you why they didn’t, is because they didn’t want to make the investment,” he explained. “So you have somebody who wants to make the investment to keep the units in the shape that is necessary to provide good housing for our community members.”
