The 100 Units of Affordable Housing

Ann Arbor City Council Working Session (Dec. 8, 2008) At a council working session on Monday evening, attended by all councilmembers including the mayor, one option (consisting of three different sites) was presented for how to replace the 100 units of affordable housing previously provided by the YMCA building at Fifth and William streets.

The three sites that were offered by city staff to council for consideration have some different constraints, but the proposed construction on each site is similar. All three sites are located along a roughly one-block long stretch of Fourth Avenue from the south side of Ann Street to the north side of Catherine Street.

Based on official council action to date, this set of three sites can be fairly seen as one option of three still under conceptual consideration for a replacement location for the 100 affordable units: (i) the old YMCA site, (ii) an alternate downtown location, and (iii) a location outside of downtown.

We begin with some brief background of the history of these 100 units before December 2007, trace the interaction between council and the Housing and Human Services Advisory Board between December 2007 and May 2008, and finally summarize the presentation and council discussion from the council’s working session on Monday in customary Chronicle meeting-watch style.

Brief background

In connection with the construction of the new YMCA building located at 2nd and Washington streets, the city acquired the old YMCA building in 2003 in order to preserve the 100 units of affordable housing that the building offered. The YMCA had no plans to incorporate residential units at its new site, and neither did the Ann Arbor Transportation Authority, which had contemplated redeveloping the old building as a transit center and office headquarters.

In 2005 mechanical systems in the old YMCA building failed to such an extent that residents needed to be moved out of the building. City staff led by Jayne Miller, community services area administrator, worked over the following few years to find alternate accommodations for them, which they did. The city maintained a stated commitment to eventually replacing the 100 units, but not necessarily at the site of the old YMCA. A private development at that site, William Street Station, was to include some affordable units, but city council pulled the plug on that project, when the developer failed to meet various deadlines.

Seeing no immediate prospects for re-development of the property, the city (in coordination with the DDA) took the first step that any re-development would require: demolition of the building. Since summer 2008 the site has served as a surface parking lot. At its last meeting on Dec. 1, city council refinanced the property at the site of the old YMCA, which it purchased for $3.5 million dollars.

December 2007 to May 2008

At its Dec. 3, 2007 meeting a little over a year ago, city council passed a resolution directing the Housing and Human Services Advisory Board (HHSAB) to research and study the question of where to develop 100 units of affordable housing to replace those at the former YMCA site at Fifth and William streets and to report back to council no later than May 31, 2008 with a recommendation. The directive from council was specific with the issues to be addressed. From the language of the resolution (in which “the Site” means the old YMCA site):

RESOLVED, That the HHSAB’s Report shall address, at a minimum, the following issues:

• Whether the 100 units of affordable housing should be located on the Site or elsewhere;
• Whether the 100 units of affordable housing should be developed on one site or dispersed in a variety of locations;
• Whether the 100 units of affordable housing should be located in the downtown area, outside the downtown area, or dispersed both inside and outside the downtown area;
• Likely requirements and possible sources of funding for development of the 100 units of affordable housing, including provisions of social services for the housing residents;
• Whether non-profit developers, for-profit developers, and social service providers in the community have sufficient capacity to develop and provide services for 100 units of affordable housing within the next four (4) years; and
• Any other challenges or opportunities related to the development of 100 units of affordable housing for low-income residents.

HHSAB returned its recommendation on May 1, 2008 in a memo to council that identified the old YMCA site as the best location for development of the 100 units of affordable housing, and recommended that city council direct the city administrator to issue an RFP (request for proposals) for the site:

Recommendation: Based on the information provided above, the HHSAB recommends that City Council charge the City Administrator with re-issuing an RFP to develop 100 units of permanent supportive housing on the former YMCA site.

However, in the same memo, HHSAB provided alternatives to that recommendation for city council to consider as well.

The HHSAB recognizes that Council’s decision to accept, reject, or amend this recommendation will be based on a complex array of issues that includes financial and neighborhood considerations. Alternative options are presented below for Council’s reference and consideration.
Alternatives:

1. Council directs the City Administrator to research and recommend an alternative downtown or near downtown location (within ½ mile of the DDA district) for 100 units of permanent supportive housing by October 2008.
   a. PROS
   i. Accessibility to public transportation and many support services
   ii. The City and County both own surface parking lots that could be developed as affordable housing, with underground public parking
   iii. A stand-alone facility would make the financing less complicated than a mixed-use development
   iv. Proceeds, after paying off debts, from the sale of the YMCA site could be used to provide support service to these units
   b. CONS
   i. Potential neighborhood opposition
   ii. The City will need to secure the site if it is not currently owned by the City
2. Council directs the City Administrator to issue a Request for Qualification to select a developer to work with the Office of Community Development to develop 100 units of permanent supportive housing on one or two sites anywhere in the City, including the downtown. Council directs the OCD to work with the HHSAB to draft an RFQ for Council by October 2008.

City council took no formal action based on the recommendation of HHSAB or its alternatives that resulted in the analysis of sites it heard on Monday evening. However, the presentation made by staff is consistent with the first of the two alternatives referenced by HHSAB.

Presentation by Staff to Working Session

[.pdf containing materials provided to council is here.]

Jayne Miller introduced the presentation by saying that she wouldn’t be delving into the history of the 100 units. The focus of the presentation, she said, would be the scenarios associated with constructing units on three different publicly-owned sites. She introduced staff who had been working on the analysis: Mary Jo Callan, community development director; Jennifer L. Hall, housing program analyst for community development; Pete Perala, with systems planning in the city; and Alexis DiLeo with the planning department.

Callan led off with a description of the population that the new units of affordable housing would serve: individuals (as contrasted with families) who have a history of struggling to achieve and maintain housing. It is a very low-income population that struggles to maintain housing, she said, which might have co-occurring challenges related to substance abuse, mental illness, or physical disability. It’s a population that requires intensive services to help them maintain housing. Success in providing housing for this population, Callan said, is contingent on wrapping supports around them, such as social services (including mental health), life skills, and a variety of other supports. To increase the stability and safety of this population, the approach being explored is a “front-desk model” which provides controlled access and a 24-hour desk for check-in.

DiLeo laid out the zoning issues connected with each of the three sites. Site A is at the southwest corner of Fourth Avenue and Ann Street. Site B is on the southwest corner of Fourth and Catherine. Catherine and Ann streets. And site C is at the northwest corner of Fourth and Catherine Fourth Avenue and Ann Street. Two of the sites, A and B, are surface parking facilities owned by the county. Site A includes underground parking as well. Site C is a surface parking lot owned by the city. The existing zoning for site A is PL, public land, which has no maximum or minimum setbacks, maximum or minimum heights, no floor area requirements. Sites B and C are currently zoned C2B/R (commercial business district with residential), which reverts to R4C standards (multiple family dwelling district) if developed for residential use.

Under current zoning, DiLeo said, anyone could build eight dwelling units on those sites. So under current zoning, she said, they would not be suitable for development as housing where economies of scale would be required, as is the case with affordable housing. But sites B and C are already slated to be rezoned as a part of the A2D2 rezoning effort, DiLeo continued, and no additional action would be needed for that rezoning to take place. Under A2D2, the parcels would be zoned as D2, which allows a 200% floor area ratio, with up to 400% with the affordable housing premium.

DiLeo explained that the 55-foot wide building design recommended for each parcel was a function of industry standards for a straightforward plain vanilla development: a double-loaded corridor – a hallway down the center with units on each side. The square footage of the buildings reflect individual unit sizes of around 450 square feet, whether that is a 1-bedroom apartment or an efficiency. All three sites, DiLeo said, could support 100 or more units. Four stories, she explained, is the threshold between stick-built construction (wood construction) and steel frame. Because steel comes from China, and steel is bought by China as well, she said that the initial construction costs for steel frame building would be significantly higher. That meant, she said, that to achieve economy of scale, a steel frame building would need to be built much taller than just five stories.

Their scenarios for the three sites would focus therefore on four-story stick-built options. DiLeo described how site A would really have only three stories of usable space, because the bottom story would be largely open, in order to preserve access to the ramp to the underground parking garage at that site. Sites B and C would have usable space starting from ground level. So all three sites, DiLeo said, could support 60 units on a stick-built scenario. The footprint of the buildings on all three sites would be in the 9,000-square-foot range.

Perala offered a description of the utilities infrastructure for the three sites. He said there were storm water pipes already in place that could move water from the sites. All three sites would require roughly similar investments to address storm water, probably in the $40,000-$50,000 range for onsite detention, and around $120,000 for installation of water quality improvements – swirl concentrators, for example. A green roof on any of the sites would cost in the range of $250,000, he said.

As for drinking water, Perala said that there are a lot of 6-inch and 8-inch pipes in the area, and that they would look to improve the grid system with 12-inch pipes, in order to ensure proper flow for fire protection. As you go from site A to B to C, heading north, the cost goes incrementally up, he said, to establish that grid. On the sanitary sewer side, he described how all three sites could use the following flow route: a southern route starting between B and C and heading east, turning south, then heading back west along Ann Street. On that route, some infrastructure improvement would be required. Site C has a second option, to flow straight north up Fourth Avenue, with no infrastructure improvements required. Footing drain disconnects for the three sites would cost in the range of $90,000-$100,000.

Hall explained why staff had looked at the three sites being presented. They had considered sites all around the city on acquisition and rehab scenarios both inside and outside of downtown. Citing the recommendation of HHSAB, she said that they had focused on downtown sites. There was already community support for a high number of low-income residents in one location downtown. In that environment, she said, they can more easily blend in to the surrounding community. She noted the difference in impact of 100 units of housing on a single-family neighborhood versus the downtown. Availability of services, like the Blake Transit Center, was another factor she cited.

One of the criteria for the land was that it be publicly owned, because the city or county cannot issue an RFP on a property that they do not own. Other sites the city owns (on Washington and Main streets) did not come into consideration because they are in a flood plain and thus did not meet basic environmental requirements. Two types of scenarios were considered: (i) a minimum of 60 units, which is the minimum to achieve the economies of scale for a secured front door and services, and (ii) a 100-unit scenario, which is more expensive from the point of view of construction (steel frame), but is less expensive in terms of the cost per resident to provide supportive services.

Hall contrasted the type of units proposed for any of the three sites with those in the old YMCA, which were 10×10-foot living spaces, with a common bathroom and kitchenette. In addition to not being a best-practice model, Hall said that such a project would result in funding challenges, because investors in tax-credits (the likely funding model) would be looking for a hedge, in case the project did not succeed for its originally intended purpose. Such investors, she said, don’t look at the fact that in the community we intend for the project to serve a low-income population, but rather at whether it’s at least possible to convert the building to market-rate housing. And the dorm-style accommodations of the old YMCA would not be convertible in that way.

Of the costs that were factored into the scenarios for each of the three sites, Hall said that land cost was not one of them. Donated land, she explained, enhanced the application for tax credits. It’s not an eligible cost to be paid by tax-credit funding, so if the land were not donated, the funding for land acquisition would need to come from elsewhere, perhaps federal funds.

The cost scenarios being presented, stressed Hall, were not estimates based on hiring architects and engineers, but rather on conversations with them, in order to get a rough idea. The rent to be charged for each unit would likely be $200-$300 per unit, depending on the person’s income. That means that annual revenue in rent would amount to around $3,000 per unit. Based on projects funded through other nonprofits, the cost of maintaining a facility is closer to $4,500 to $5,500 per unit per year. As a consequence, she said, it would be necessary to find a way to establish project-based vouchers to make up the gap. She’d had conversations with Michigan State Housing Development Authority (MSHDA) and the Ann Arbor Housing Commission to establish project-based vouchers, because otherwise, “it will not work.”

But Hall concluded by pointing to the financial summary in the materials provided to council and saying, “it appears to be do-able.”

Callan concluded the presentation by discussing the operational costs after construction. She said that the per-unit cost for services would be around $2,700 per year on a 100-unit scenario, versus $3,800 on a 60-unit scenario.

Council Discussion

Leigh Greden led off council questions by asking Callan how the $3,800 figure had been achieved, when previously the number $5,000 had been discussed. Callan stressed that the higher number did not include “mainstream” funding sources. Greden followed up with a question about the “city cash” required, an amount that is referenced in the tables provided in the council packet (the lowest amount for any scenario is $141,870 and the highest amount is $368,117). He got clarification that this could include various types of city funds (including HOME funds), not just General Fund dollars. In that light, he characterized the amounts as “reasonable.”

Councilmember Tony Derezinski asked about the percentage of potential clientele that would be veterans, and whether any outreach to veterans organizations had taken place. Callan said that she would be guessing about percentages but could provide that information. Hall also responded to the question by stressing that they tried to not predetermine the population. She said that while the developer is putting the proposal together, they would access various funding as set-asides for VA units, for example, and that the developer would pull funding from a range of sources in order to fund a mix of people. Derezinski also asked whether the population to be served would include families. Hall said that the idea was to serve individuals and not families, citing the individual units that were lost at the old YMCA as the gap that had been created in the housing inventory. Mixing the two populations, she said, would also be more challenging.

Derezinski also inquired about how the possible mix of retail on ground floors of the development would work. Hall clarified that on the 4-story stick-built scenarios (60 units), there would not be room for retail. On the 100-unit scenario, which would mean 8-9 stories, retail on the ground floor would be possible on sites B and C, but not on A, due to the need to keep access open for the underground parking ramp.

Councilmember Carsten Hohnke asked what other units had been created since the original 100 units from the YMCA had been lost. He also asked staff to speak to the overall need for this type of housing in the community. Hall cited the Blueprint to End Homelessness, which calls for creation of 500 units of supportive housing – a step beyond affordable housing. She described a 20-unit development by Avalon Housing, of which six were set aside for chronically homeless people. She also described other projects that would add between 20 to 40 units of supportive housing, which were not under development yet, but which had realistic prospects.

Councilmember Sabra Briere noted that the three locations cited are across the street from the Farmers Market, and across the street from the Fourth Avenue business district, which she described as “burgeoning business districts.” She said that a number of people would be concerned about the impact of construction, in an area that will be affected by other construction projects in the near future (an allusion to Fifth and Division street improvements as well as Farmers Market renovation). She also said that a number of people would be concerned about the population of people who would be coming in. She asked staff how they would address those concerns. Hall and Callan asked Jayne Miller to handle the question. Miller stressed that their intent was to take the presentation to the public and get feedback from the public on it about the three sites and to take feedback into consideration as decisions were made about moving forward.

Councilmember Sandi Smith got clarification that the parking at site A was not secured parking and that there were 85 spaces underground.

Councilmember Mike Anglin characterized the plan as “well-thought-out” and asked for examples of similar operations like the ones proposed, citing one in New York that he had seen, where residents seemed to fit into the community. Hall said that the model of supportive housing was used widely across the country and said she would send along examples by email. (Some of those are now attached to the working session agenda.) Locally, Callan suggested that an example of “fears that didn’t pan out” about the influx of the population into the neighborhood was the former YMCA residents who were relocated to Tuscan Creek.

Councilmember Christopher Taylor followed up on Briere’s question by asking whether there had been participation of the business community to date in connection with the formulation of the project. Hall said that the HHSAB in taking its charge from council (to make a recommendation about where to locate the replacement units) held two public hearings and had input from the business community, citing Jesse Berstein Bernstein, who is the president of the Ann Arbor Area Chamber of Commerce. She said that it was a project on which they would continue to seek input from the public, including the business community.

Taylor then asked whether Hall would characterize it more as “a beginning proposal” than “a semi-formulated” proposal, which Hall said she would.

Greden followed up on comments by Briere and Anglin by saying that council and community needed to approach the issue “without the initial assumption that this population consists of troublemakers.”

With respect to the long-term operating costs, Greden noted that vouchers seemed to be key to making it work and asked how they could be obtained. Hall said that a main source of project-based vouchers was MSHDA, which likes to see the local housing commission match them. Hall said that this would require an administratively intensive effort on the part of the local housing commission, but that they had begun discussion to make sure there was capacity to do that. Greden said that the council’s new liaison to the housing commission, Tony Derezinski, would look forward to working with staff and the commission to help the process.

Clarifications and Reactions

One point that took some time for The Chronicle to clarify was the fact that the presentation heard at their working session was not the result of a council directive. In particular, there was no directive from council as a body to staff to remove the old Y site from consideration for development of replacement units. Thanks to councilmembers Margie Teall, Leigh Greden, Sabra Briere, director of community services Jayne Miller, and Anissa Bowden in the city clerk’s office, who all helped us establish that – either by email or by phone. Thanks also to Jennifer L. Hall for insight into why tax-credit investors care about unit size in a development like this.

After the presentation, Ray Detter (Downtown Citizens Advisory Council) and Christine Crockett (Old Fourth Ward Association) spoke briefly with The Chronicle. They indicated that they still thought of the old YMCA site as “on the table” as far as where to build replacement units for those lost there. They also talked about the fact that the business district along Fourth Avenue was gaining strength but was “still fragile,” a sentiment addressed by Briere during the council discussion.

Speaking by phone with councilmember Briere, she said she saw the sites partly from the historical perspective of a decision-making process regarding location selection for the police-courts facility now to be built on the site of the Larcom building. With respect to the county parking lot, she wondered: “Why is the city willing to house homeless people there but not judges?”

Addendum: After this article was first published, we gained some insight into a natural question that might have arisen in some readers’ minds: if the city is contemplating some scenarios that would require the sale/donation of county properties, has anyone at the county been consulted? Leigh Greden provided this insight: “Roger Fraser organized a meeting of me, [Bob] Guenzel, and [Dick] Soble as a follow-up to the HHSAB report which recommended that alternative sites to the old Y would be OK. At that meeting, we agreed we should look at alternative sites, including County-owned sites. Roger then directed City staff to begin planning, which led to the report.” Guenzel is the Washtenaw County administrator, and Soble is chair of the Washtenaw Housing Alliance.

Editor’s note: The Chronicle did not cover other discussions at Monday’s working session, including discussion of the Community Success plan and the golf course finances.

Present: Sandi Smith, Sabra Briere, Tony Derezinski, Stephen Rapundalo, Leigh Greden, Christopher Taylor, Margie Teall, Marcia Higgins, Carsten Hohnke, Mike Anglin, John Hieftje.

Absent: None