Novi City Council members will decide Monday whether to give conditional approval to a tax deal for a 267-unit affordable housing development on Grand River Avenue.

The council meets at 7 p.m. Monday, Sept. 28, at the Novi Civic Center, 45175 Ten Mile Road. The agenda also includes a progress update on the city-owned Novi Ice Arena.

Lincoln Avenue Communities is proposing the mixed-income apartment complex at 45500 Grand River Ave., the former DeMaria Construction site at the northwest corner of Taft Road and Grand River. The 10.7-acre parcel is currently used for open-air storage of construction materials and machinery.

All 267 units would be income-restricted to households earning no more than 80% of Area Median Income (AMI), with a weighted average not exceeding 60% AMI. Projected rents would range from about $1,110 for a one-bedroom to $1,710 for a four-bedroom, according to a city staff memo. Comparable market rents in Novi run $1,384 to $2,760.

The developer first presented the project at the council's Aug. 10 meeting, then revised its request. The proposed Payment in Lieu of Taxes (PILOT) term dropped from 40 years to 30. Under the revised structure, total annual payments would equal 3% of shelter rents for years one through 15 and 10% for years 16 through 30.

Two-thirds of each payment would flow to the city through a Municipal Services Agreement (MSA). The city attorney's office has advised that the city lacks legal authority to redirect MSA revenue to the school district, so Novi would retain 100% of the MSA share. Novi Community Schools would still receive its statutory PILOT share and per-pupil funding.

Over 30 years, the PILOT-plus-MSA structure would generate an estimated $12.7 million for all taxing entities, compared with $5.1 million under a Tax Increment Financing (TIF) alternative and $36.4 million under full property taxes. The city's projected 30-year share would be about $9.3 million under the PILOT deal versus roughly $509,000 under TIF.

The project hinges on federal Low-Income Housing Tax Credits, Michigan State Housing Development Authority funding, up to $3 million from Oakland County and either the PILOT/MSA or a TIF from Novi. Without one of those local tools, the project is not financially feasible, according to August council minutes.

The vote would not be final. Monday's action would amount to conditional approval only, and it would not limit the city's authority to deny land-use approvals later. The conditional approval would expire by Dec. 31, 2028, or when the final agreement is executed, whichever comes first. A separate ordinance would still be required.

Councilmember Aaron Martinez voiced support for the tool at the Aug. 10 meeting. "PILOTs are one of the underused tools that communities have where they can actually put some parameters on how they can get actual, true affordable housing in Novi," Martinez said.

The developer's market study found the weighted average age of Novi's roughly 5,900 rental units across 19 properties is nearly 35 years. About 40% of Novi renter households spend more than 30% of their income on rent and utilities, according to Lincoln Avenue Communities.

The project would also dedicate roughly one-quarter of the site to a public park with a playground and walking trails.