A new era for Sherman Hills?

WILKES-BARRE — The prospective new owner of the Sherman Hills apartment complex plans to approach the city about a payment in lieu of taxes when the property is acquired by his non-profit company.

Indelible Housing Inc. of Washington, D.C. is in the process of buying the 344-unit, low-income housing complex and upon completion of the deal, expected later this year, won’t owe property taxes to either the city, the Wilkes-Barre Area School District or Luzerne County.

The WBASD was the first to agree to a PILOT. At its May 10 meeting the school board adopted a resolution accepting Indelible’s proposed payment of $256,188, the amount equal to the 2020 real estate tax.

“The idea of it has been approved,” said Attorney Frank Hoegen of Hoegen & Associates in Wilkes-Barre, who is working with Dick Knapp, director and president of Indelible Housing, on the acquisition.

Hoegen Thursday said the school district was the starting point because it has the most at stake. The city will be the next on the list, followed by the county.

Wilkes-Barre City Administrator Charlie McCormick confirmed Indelible Housing last year discussed its concept for Sherman Hills that provides federally subsidized Section 8 housing.

“We’re engaged in the acquisition and purchase of Section 8 housing,” said Knapp of the non-profit company he created in 2018 after leaving the private sector, where he developed multi-family housing projects.

But specifics about a PILOT were not provided, McCormick said. The city annually includes PILOT contributions from nonprofits as revenues to balance it’s general fund budget.

“We’re waiting to get a proposal,” McCormick said.

The city has its own property assessment and stands alone among the 75 other municipalities that use the county’s assessed values.

The Wilkes-Barre 2020 assessment for Sherman Hills, owned by Sherman Hills Holdings LLC, part of New Jersey-based Treetop Development real estate investment firm, was $451,900 with a corresponding tax of $63,867.

In contrast, the assessed value was $13,896,200 for the school district and county tax calculations.

The commitment of a PILOT is one of the steps Indelible was taking in the overall makeover of the complex that has a history as a trouble spot.

The company has lined up financing and expects to spend between $20 million and $30 million to rehabilitate the property, installing new windows, doors and kitchens among other things.

“It’s a complete transformation,” Hoegen said.

The new owner could decide to pay nothing. But, Hoegen said, “It would just not be a community thing to do.”

The compromise Indelible Housing worked out with the WBASD benefits both of them. The company receives tax credit components that can be used as source of equity for the project, and the taxing authorities, including WBASD, have predictable revenue sources, Hoegen and Knapp explained.

Knapp added that Arco Management Corp. of Suffern, N.Y. will be the full-time property manager for the complex.

Indelible Housing also plans to include the city’s public safety services — fire, police and ambulance — as partners, Hoegen said. They’ll be equipped with fobs to have immediate access the property and will be tied in directly to the complex’s security system of alarms and cameras, he said.

Besides the financial and physical improvements, Indelible Housing proposed a host of budgeted social programs, from providing social services, tutorial services through the WBASD, food distribution through the Commission on Economic Opportunity, to a library program with the Osterhout Free Library.

“It’s generally required and expected the nonprofit bring with it that third leg,” Knapp said.