A version of a proposal by Sandi Smith (Ward 1) to re-establish a formal policy on how to use the proceeds from the sale of city-owned land was approved by the Ann Arbor city council at its Oct. 15, 2012 meeting. However, the approved policy was far more restricted than Smith’s original proposal, which the council had considered but postponed on Sept. 17.
Smith’s initial proposal would have directed 85% of the net proceeds from the sale of any city-owned land in the Ann Arbor Downtown Development Authority district to be deposited in the city’s affordable housing trust fund. During the month-long postponement, the council’s budget committee discussed the proposal and made a recommendation that for only one city property – the Fifth & William lot, where the former YMCA building previously stood – the net proceeds from any future sale would be deposited into the city’s affordable housing trust fund.
The budget committee also recommended that any other properties be considered on a case-by-case basis, considering all the needs of the city. And that’s essentially the recommendation that the council’s approved resolution adopted. A nod to affordable housing was included in an amendment added at the council meeting in the form of a statement that all needs of the city would be considered in deciding the use of land sale proceeds – but “especially the need for affordable housing.”
From a parliamentary point of view, Smith’s resolution and the budget committee’s recommendation were two separate agenda items – so the council first voted down Smith’s resolution and then later in the meeting approved the budget committee’s version.
The wording of the approved resolution stipulates that for the Fifth & William site, the net proceeds of any sale “first be utilized to repay the various funds that expended resources on the property, including but not limited to due diligence, closing of the site and relocation and support of its previous tenants, after which any remaining proceeds be allocated and distributed to the Affordable Housing Trust Fund … ”
The relocation costs for previous Y tenants are estimated at around $1.3 million. The property’s purchase price in 2003 was $3.5 million. The council voted in 2008 to extend the five-year loan with the Bank of Ann Arbor for another five years, through the end of 2013. The interest rate is 3.89%. The interest-only payments work out to roughly $140,000 a year, of which the city has paid half. The Ann Arbor DDA has paid the other half of the interest payments. And when the YMCA building was condemned, the DDA also paid for the cost of demolishing it and abating asbestos – around $1.5 million. The total amount of local governmental costs associated with the property since 2003 is $7.7 million.
The kind of city policy approved by the council on Oct. 15 has a long history, dating back to 1996. And a previous policy of directing proceeds of city-owned land sales to the affordable housing trust fund was rescinded by the council in 2007. More detailed background is provided in previous Chronicle coverage: “City Council to Focus on Land Sale Policy.”
During initial deliberations at the council’s Sept. 17 meeting, Smith’s resolution appeared to have only mixed support on the council. Stephen Kunselman (Ward 3) indicated he would only support the resolution if the proceeds from land sales were put toward the Ann Arbor Housing Commission specifically. Jane Lumm (Ward 2) said she could not support a percentage as high as 85%. Other councilmembers expressed skepticism at the value of a non-binding council resolution that future councils would not need to honor.
Another concern heard at the council’s budget committee meeting was that groups with other interests besides affordable housing – like greenway advocates – were also interested in “getting a bite at the apple” of city-owned land sale proceeds.
There are no imminent sales of city-owned land, but a current planning process could eventually result in one or more such sales. The DDA has undertaken a study at the previous direction of the city council, under the moniker of Connecting William Street. That process focuses on five city-owned parcels in the area bounded by Ashley, Liberty, Division and William streets. For Chronicle coverage of a recent presentation on the project to the city’s planning commission, see “Planning Group Briefed on William Street Project.
This brief was filed from the city council’s chambers on the second floor of city hall, located at 301 E. Huron. A more detailed report will follow: [link]