Former City Commissioner Bob Schumm has filed plans to build a five-story building on a pair of vacant lots in the 800 block of Vermont Street.

After economic incentives for the project were denied, former City Commissioner Bob Schumm is scaling down his plans to build a five-story condominium, commercial and office building on a vacant portion of Vermont Street.

“It’s kind of a lengthy redo, but I’m committed to the fact that there will be a project there someday,” Schumm said.

In the meantime, there will be an orchard on the property that may lead to thousands of dollars per year in tax breaks for Schumm and the property. In recent weeks, Schumm has planted fruit trees on the property as part of a plan to use the property as an orchard. If tax officials agree that the property is a functioning piece of agricultural ground, taxes on the prime downtown lots will drop significantly.

Because agricultural land is taxed differently than non-agricultural property, taxes on the two vacant lots could drop from about $7,000 per year currently to less than $100 per year. Schumm — a former city commissioner — had used a similar agriculture exemption for the land in the past. The practice has drawn questions from some members of the public, but the process is legal as long as the land is legitimately being used for agricultural production.

“It’s the law,” Schumm said. “It’s what happens all over the city when there’s development waiting to take place. You’ve got lots of tracts of land around the city that are in that same kind of status that are awaiting development, and they’re classified as agricultural.”

Schumm’s first choice for the property, however, is a multistory commercial and residential project. Though plans are still preliminary, Schumm said the scaled-down project would eliminate one floor of condos and the underground parking garage for the building’s residents. There will be about five condos instead of 12, and, as before, one unit will be designated as an affordable housing unit.

The modifications substantially reduce the price of the project, with costs dropping from $9.3 million to about $5 million, according to Schumm. Incentives for the project were denied on a mixed vote, and Schumm is hoping the modifications will allow it to pass. He plans to seek an incentive package for the project.

“The project I’m working on would be smaller,” Schumm said. “It would eliminate the underground parking, it would eliminate one floor of the condominiums, and it would be a smaller tax base, but maybe this will more accommodating to the likings of the City Commission.”

The commission passed new guidelines for economic incentives in December, and Schumm said he thought his proposal was in line with those parameters, which include a preference for projects with infill development as well as public benefits such as affordable housing.

As before, Schumm said he plans to apply for two forms of incentives: Neighborhood Revitalization Act and Industrial Revenue Bonds. He said the components of the affordable housing unit will also remain the same, with a one-bedroom, 600 square-foot unit to be set aside in perpetuity as affordable according to the city’s standards. The first two floors of the building will still house commercial and office space, though Schumm said square footage would be less to account for approximately eight parking spaces in the adjoining alley.

Schumm said as architects work on the new design, those details could shift.

“The whole project has to be redrawn, and that’s when we’ll know if this will all work,” Schumm said. “We’re basically operating on the back of a napkin right now trying to figure all this out.”

With fewer condos in the revised project, the percent of units designated as affordable housing increases from 8 percent to 20 percent. The revised project would exceed set-aside guidelines for a project of that size — not finalized at the time of Schumm’s original request — that require 10 percent of units to be designated as affordable for residential projects seeking incentives.

The commissioners who voted against incentives for Schumm’s original proposal — Lisa Larsen, Matthew Herbert and Leslie Soden — said the development didn’t provide enough public benefit to warrant incentives. However, the outside consultant hired by the city to evaluate the request recommended it for approval.

The cost-benefit analysis showed a 1.78 ratio for the city, meaning for every $1 in public incentives, $1.78 of benefit value would be returned. City Manager Tom Markus told commissioners at the time that he supported the project and that he thought incentives decisions should be made based on the metrics.

Some commissioners, though, took issue with part of those metrics. Schumm plans to live in one of the condos, one aspect that Soden brought up when explaining her dissent. Schumm said it is still possible he will live in one of the units, but that the new incentives application will factor out incentives for that unit.

Revised plans are in the works for a condominium, commercial and office building on a vacant portion of Vermont Street.

In the interim, the property will function as an orchard. The property, located in the 800 block of Vermont Street, is composed of two lots left vacant after a fire. Schumm has owned one of the lots since the 1980s and finalized the purchase of the second last year.

Both lots are currently classified as “vacant urban” by the Douglas County appraiser’s office, but Schumm has recently added 24 fruit trees to two mature fruit trees on the property. He said he has an application in to change the classification of the lots to agricultural use, though he noted that may not come to be if the proposal for the scaled-down project is approved.

“It may be a moot point if things move forward, but if it doesn’t, then it’s under a different classification,” Schumm said, adding that he wanted to put the land to some use.

If the application for agricultural use designation is approved, Schumm expects the appraised value of the land would change significantly — from about $450,000 total to less than $100 — which would bring the annual tax bill down from about $7,000 to a matter of dollars.

Schumm said he expects to have the scaled-down plans for the project finalized in early spring, after which he will begin the incentives application process anew.