Monroe County is expanding tax incentives for new rental housing construction after a study concluded the market is stuck — lacking sufficient inventory at every price point.
The expansion initiative is moving forward on an interim basis, allowing staffers to qualify projects as leadership works toward a final framework and formal changes.
This is part of a larger push by the county to address the housing crisis — seeing it also as an economic development concern.
"Site selectors are looking at housing inventory when they're scoping out geographies for projects like fairlife (a milk processing plant in Webster),” said Ana Liss, executive director for the County of Monroe Industrial Development Agency, or COMIDA.
“The 300 people that I want to hire to man this plant, where are they going to be able to afford to live?” she continued. “That's a real consideration.”
COMIDA has provided housing incentives like tax breaks for decades. Those efforts ramped up in recent years, focused on affordability for lower-income renters. But this was at a time when little if anything was coming online for those earning an average or median income.
This latest effort is somewhat of a return to previous practice, Liss said, removing requirements that a percentage of units be affordable to lower-income renters. COMIDA also could increase how many years those tax breaks are applied, and front-load incentives.
The county land bank also is working to put up modular homes on blighted residential lots in Gates and Greece.
“I think that we have to look at it from (a perspective of) all housing is good housing,” said developer Matt Drouin.
Drouin is with OakGrove Development, which recently bought the Talman Building downtown, completing a set of three adjoining and historic structures including the red brick Wilder Building at East Main Street and Exchange Boulevard.
“It was originally our intent to essentially reprogram the buildings and just offer affordable business-use space,” Drouin said. “We weren't expecting COVID to happen.”
That brought a dramatic market shift as hybrid or work-from-home practices became widespread, emptying office buildings nationwide, including downtown — particularly in the Four Corners area, which Drouin alternately described as a “blank canvas,” and a “ghost town.”
Plans now are to add housing that’s affordable to people like teachers, nurses and firefighters — up to 92 units, in all — while also updating existing offices, some of which have wood paneling dating to the 1970s.
Government assistance is "mission critical” to make housing development of any type financially viable, Drouin said, given the rise in housing construction costs. He put projects costs at $250 to $275 per square foot — which for a market-rate development would be $300,000 a unit. That is almost double what it cost when he started in real estate 20 years ago, he said, far outpacing inflation.
“The more flexible we can be on evaluating projects on a case-by-case basis, the better off our community will be in terms of options for housing,” Drouin said, “whether they be middle market, affordable or even luxury, because we need more housing — full stop.”
A recent Bloomberg report found rents decreased in several major cities this year that saw an influx in the opening of luxury apartment buildings, drawing people who moved out of their older homes. In some places, older, market-rate units are now cheaper than newly built affordable units.
At the Four Corners downtown, the city is again seeking state funding to help revitalize the properties — including those now owned by OakGrove. And the area has been designated as an historic district, opening up additional funding assistance.
But housing is an integral piece of the economic development puzzle, and IDAs across the state have begun to integrate housing into policies and practices.
"We're certainly not alone here in having that existential paradigm shift around, ‘Well, we’re an industrial development agency, not a housing development agency,’” Liss said.
COMIDA assistance in recent years has focused on rental housing with at least 20% of units earmarked as affordable to renters who make no more than 60% to 80% of area median income.
“Before we make these changes, it's going to impact the taxing jurisdictions. We have (to have) a discussion with them,” said COMIDA board member Norm Jones said during a recent meeting.
“The purpose of the incentive is to actually incentivize investment in underserved areas,” said board chairperson Truman Tolefree. “And so from that standpoint, the focus really should be on crafting, I think, an economic benefit that truly spurs economic development."
