At 33 years of age, Vineyard Place is looking at $4.8 million in improvements to retain its vitality for another 30 years.

The apartment complex applied for permission to renovate the property inside and out with tax credits from the Michigan State Housing Development Authority (MSHDA).

As part of the MSHDA financing process, a payment in lieu of taxes (PILOT) needs to be developed instead of keeping the property on the tax roll, City Manager Kevin Anderson advised Dowagiac City Council Monday night.

To make sure the city is made whole in this process, two agreements will be put in place.

One agreement in the form of a PILOT amounts to 8 percent of annual shelter rent collected, which is defined as total collections of rent or occupancy charges exclusive of charges for gas, electricity, heat or other utilities furnished to occupants.

Based on the previous year’s experience, Anderson anticipates about $80,000 will be paid in lieu of tax, with PILOT payments increasing as rents increase.

PILOT payments need to be allocated among all taxing entities.

Council gave first reading to the proposed PILOT ordinance, with final action expected Dec. 10.

In addition to PILOT, the city will contract with First Housing Corp. for a municipal emergency services agreement.

“The purpose of this agreement is to make sure that funding for police and fire services remains in place for the foreseeable future,” Anderson said.

The emergency services agreement in the amount of $34,650 will increase at a rate of 2.5 percent per year.

“The municipal emergency services agreement, combined with the PILOT, will keep the city’s general fund reviews whole in the coming years,” the city manager said.