Two adjacent properties in Newton — known colloquially as the hatchery site at 1117 N. Third Ave. E. and 211 E. 12th St. N. — have been purchased for $1 by a developer who has proposed to turn the lots into an apartment complex with at least 40 workforce housing units.
Newton City Council on March 20 amended an existing agreement between the city and MVAH Holding LLC, which has since changed its name to Pivotal Housing Partners. City of Newton formed the original agreement with MVAH in 2022 with the expectation the developer would acquire state tax credits.
Although the application for the tax credits was unsuccessful, the developer is not giving up and will be re-applying to the Iowa Finance Authority in April. But the developer needs council approval to reinstate and amend the previously amended purchase and redevelopment agreement to move forward.
Charlie Johnson, development director of Pivotal Housing Partners, told council members that, in addition to a name change, the development company has taken steps to improve its scoring by focusing its efforts on one area of development and partnering with a local housing nonprofit organization.
As part of the newly amended agreement, the properties at 124 E. Fourth St. N. and 411 N. Second Ave. E. have been excluded from the project.
However, the new agreement did have its scrutiny. Mark Vickroy, a resident of Newton, shared his concerns with council members during a public hearing regarding the agreement. Vickroy criticized the amount of money the city had already spent to acquire and demolish the properties, which exceeded $300,000.
When the city purchased the property at 1117 N. Third Ave. E. in 2007, it was part of a 10-property purchase package for $207,000. Erin Chambers, director of community development for the City of Newton, said there was no specific cost to that particular property, but determined $20,700 made sense.
The abutting property at 211 E. 12th St. N. was purchased by the city for $90,000. The demolition costs for both properties cost the city $98,000 and $21,000, respectively. Chambers said Newton Housing Development Corporation also pledged $135,000 for the North Third Avenue East property.
Which means the total amount of money dedicated to the redevelopment of the hatchery site is $364,700, Chambers said.
Pivotal Housing Partners is not a new development group in town either. According to city documents, it is the owner and developer of Newton Place Apartments at 222 N. Fourth Ave. W. Chambers said the arrangement of both owner and developer would continue with this new housing project, too.
The net assessed value of Newton Place Apartments is more than $1.1 million and has an annual tax bill of $43,000. If TIF was not involved, the city would get about $17,000 property tax. Chambers expects the new housing project at the former hatchery site to be comparable.
Constructing a new development would not only eliminate ongoing maintenance costs for the city, it would return the long-term D&D property to the tax base.
“It sure feels like the city owned that property longer than 16 years,” council member Evelyn George said. “It’s just been empty and for sale for so long.”
Council member Randy Ervin, who served as mayor pro-tem at the meeting, asked city staff how much money the property had been receiving from 2007 to 2022. Chambers said no property taxes were collected in those 15 years. The city would get about $20,000 in property taxes every year when the project is completed.
In addition to his concerns about the costs, Vickroy questioned the name change of the development group and cited articles highlighting past lawsuits regarding MVAH, also known as Miller-Valentine. Johnson addressed the suits, saying Pivotal Housing Partners is a new company with no ties to Miller-Valentine.
More important, there are no lawsuits against Pivotal Housing Partners, Johnson said before addressing the ADA concerns also brought up by Vickroy. While the issues were attributed to Miller-Valentine, Johnson acknowledged it is something that Pivotal Housing Partners has taken steps to correct.
“When we purchased all the properties from Miller-Valentine, all the properties we purchased since then on every project we hire an ADA consultant who will review the plans when they’re being designed,” Johnson said. “They come out two or three times during construction to measure everything.”
Chambers said the project meets two strategic objectives laid out in the city’s comprehensive plan, Envision Newton 2042:
• Focus economic development efforts on population and business growth by simultaneously supporting existing employers while attracting new employers and supporting citizens working remotely.
• Elevate Newton’s curb appeal, with a focus on primary corridors, through improvements to both public and private spaces.
“This project would specifically support workforce housing and provide a much needed product in our community,” Chambers said to council members. “Of course, over the past 10 years or so housing has been an important part of this city council’s desired outcomes for our community.”
Other developers have shown little to no interest in this particular site, which is only a few blocks away from First Avenue. The land had typography issues and has an awkward arrangement. Chambers said these factors have been a challenge when talking with developers.
“The current offering developer has been one of the first ones who really has put together a clean and solid plan,” she said.