Mill Town Capital CEO Details New Pittsfield Housing Developments
This week, private investment group Mill Town Capital announced two new market-rate housing developments on Tyler Street in Pittsfield, Massachusetts. The multimillion dollar project, which municipal leaders have praised, will see almost 40 new units built by 2022 in a city with an aging housing stock. WAMC Mill Town Capital CEO and Managing Director Tim Burke about the undertaking, and how it might impact a community which housing advocates say is in dire need of affordable, not market-rate, housing.
BURKE: In total, we're going to be bringing 36 new apartment units online. These will be a mix of mostly one and two bedroom apartments. There’ll also be a couple commercial spaces available for small businesses or office rentals. They'll be in two different locations. One location we have 20 units of new construction, and the other location we have 16 units of a fully gut renovated brick building on the corner of Tyler Street and Dalton Ave.
WAMC: How does this tie into other efforts to develop housing in the Tyler Street area?
Well, Mill Town has been investing in Tyler Street for the last couple of years. Now we're an investor in the St. Mary Morningstar housing development project, which is right about a block or two away from these two new projects. That project will- Is nearing completion this year, we'll have 29 new housing units there. We've also acquired about 80 other units in the Tyler Street area of mixed-use property, mostly residential, everything from single family to, you know, one to two and three unit multifamily to up to a 16-unit apartment building. So we've really seen the potential of Tyler Street as a key thoroughfare in Pittsfield that connects the city's two largest employers. And we also recognize that there's a lack of new housing in the city of Pittsfield, and a pent up demand for good quality housing for the area. So that's really where we feel like we can move the needle and then hope that this is the first of several future housing projects that we can get off the ground in the region.
I've spoken with housing advocates have described the situation in the county as in crisis. As far as affordability, what considerations are at play for these new units?
I think we want to have a diverse tenant base as to the extent that we can and that's how we approach all of our housing inventory and investments. These units will be market-rate housing, so they will, you know, rents will be in line with what the market can bear from a, you know, income and market-rate standpoint. Like we do with all of our housing inventory, we work closely with Berkshire Housing and Pittsfield Housing Authority to make sure that we have a diverse pool of tenants and applicants, and, you know, we expect to do that with these new projects as well. And I think we'll have a wide spectrum of tenants like we do with our current portfolio. We're certainly hopeful that we can, you know, provide some much needed inventory to some of the employers in the area that are growing and in need of housing for their employee retention and recruitment strategies, places like General Dynamics, and Berkshire Health Systems and Bitmob and some of the other smaller companies in the region that are bringing jobs to the area. Housing is a huge part of the equation to be able to help them retain those jobs. And we've heard that loud and clear from those employers, and this is really part of the strategy to help those businesses grow.
From an investment standpoint, how much money is going into this, and what kind of support is Mill Town getting through federal grants or state grants to work on a project like this?
So in total, the projects are, you know, depending on how everything shakes out, probably in the $9 million to $10 million range when it's all said and done. And, you know, construction costs are expensive in Massachusetts, in New England, and they're not that much different in Western Mass than they are in Eastern Mass, but our rent profiles are significantly different. So certainly, from an investment standpoint, the returns on these projects are extremely tight. And that's why they don't get done that often, is most investors are not willing to take the risk on a very lean return project with all the uncertainty involved. You know, we've worked for the City of Pittsfield to secure a tax increment exemption agreement for these two projects, which means our- We’ll still pay property taxes, but the acceleration of the property tax basis based on our investment will be blended in over time as opposed to coming in all at once. And we've also applied for State Housing Development tax credits which you know, we hope to receive but we don't know yet and I think we'll kind of see what happens there, but we're willing to take on the project at risk whether we get those or not, which is another, I think, you know, certainly financial risk but one we're comfortable with based on our overall view that, one, we just really need new housing for the area and two, you know, we feel like with everything that's going on the Tyler Street area that over time, you know, things will work out.
Mill Town is also continuing its investment in the Tyler Street Lab. Tell me about that, Tim.
We've been working with the Lab for a little while now. This is a group that came out of a Better Block project and the Tyler Street Development Initiative. And we've been providing space to the Lab at, you know, low or no cost for the past year or so. And, you know, since they've been kind of growing and evolving their business plan, we agreed to renovate another one of our vacant buildings to help provide them a more permanent and suitable location. And that's at 741 Tyler Street, which will be right next door to one of these new projects. And the Lab I think has taken a few different iterations over time, but it's just really made up of a group of passionate community members who want to create a place for community building and a lot of different niches for the Tyler Street area. And we feel like it's critical to have organizations like that in a successful and thriving neighborhood. So we really like the vision of the people involved and really hope that there'll be a long-term tenant in one of our spaces.