The builder of Akron’s first housing subdivision in decades is getting another $85,000 discount from the city, which views new homes as so critical to its population growth strategy that city land is being sold and developed for what amounts to an initial loss for taxpayers.
In 2018, Akron's economic development staff negotiated the sale of 6.6 acres of public land on Diagonal Road for up to $206,000. The city council approved the deal last July. Knez Homes, headquartered in Painesville, plans to build 51 homes on the $12 million private housing development called the Crossings at Auld Farms.
But the developer soon said it could not keep construction costs low enough to sell the 1½- to two-story homes, ranging from 1,200 to 2,600 square feet, at a target price of $179,500 to $279,900. So Knez Homes came back to the city administration, which convinced the council to drop the sale price for the land from $206,000 to $1 in March.
Now the city is waiving $85,000 in inspection fees after the developer has run into drainage issues on the property. Ellen Lander Nischt, press secretary for Mayor Dan Horrigan, said the private development of sidewalks, roads, sewers and more will go forward after the city waived the fees.
The council approved the latest discount Monday. Only At-Large Councilwoman Veronica Sims publicly questioned the use of $85,000 from a land sale fund, which will supplement $1.31 million committed by Triban Investment LLC, to perform the infrastructure work for the developer.
“It was my understanding that we sold the property for $1 to defray the cost for homebuyers,” Sims said.
She said she had never heard of a "land sale fund" in her four years on the council.
Nischt said the land sale fund is a separate account in the all-encompassing general revenue fund. The city deposits money into the account when land is sold.
Sims questioned the cost of the project. With the $85,000 discount, which is what city engineers would have charged the developer, the property has been sold, in effect, for a $84,999 loss. That’s on top of the developer getting a 15-year, 100% property tax abatement on the value of the new homes. The savings on future tax bills can be passed along to homebuyers to keep prices low enough to meet market demand.
“What more can we give?” Sims asked.
However, city administrators defended the concessions in the price, inspection fees and property taxes as a way to keep the city's first housing development in recent years from falling apart.
“It’s critical that new housing growth occur equitably in all neighborhoods of the city,” Chief of Staff James Hardy said. “Some new construction is happening on its own without assistance from the city because the market is driving it. Other projects, like Auld Farms, present opportunities to provide new housing in neighborhoods where access to construction capital is hard.
“In an effort to ensure each part of town sees opportunities for growth, it's necessary for us to assist these projects as much as we can.”
Reach Doug Livingston at email@example.com or 330-996-3792.