Housing Commission Selects Co-Developer

Norstar picked for public/private partnership to renovate Ann Arbor public housing; Avalon Housing also hired as consultant for project

Ann Arbor housing commission special board meeting (Jan. 10, 2013): Taking another step toward a public/private partnership, Ann Arbor housing commissioners unanimously voted to choose Norstar Development USA as co-developer for a major new public housing initiative. The action took place at a special board meeting on Jan. 10 called solely to hear presentations from two finalists: Norstar and MHT Housing Inc.

Tim OBrien, Rick Higgins, Norstar Development, OBrien Construction, Ann Arbor housing commission, public housing, The Ann Arbor Chronicle

From left: Tim O’Brien, president of O’Brien Construction, and Norstar Development USA president Rick Higgins, at the Jan. 10 special board meeting for the Ann Arbor housing commission. (Photos by the writer.)

Norstar – based in Buffalo, N.Y. – will help AAHC convert about 275 of Ann Arbor’s 360 public housing units into public/private developments. Residents in those units will receive rental assistance through long-term Section 8 subsidy vouchers that are tied to the buildings. It’s part of a new rental assistance demonstration program, known as RAD, offered by the U.S. Dept. of Housing and Urban Development (HUD). AAHC was accepted into the program late last year, and faced a Jan. 30 deadline to submit its selection of a co-developer to HUD.

The process eventually will entail that ownership of some Ann Arbor public housing properties – to which the city of Ann Arbor holds deed – would be transferred to a new entity. The city, via the AAHC, would retain a small ownership stake in the new entity – likely 1% or less. The arrangement would give AAHC access to private financing to renovate the current public housing properties, using tax credit financing, loans, equity or grants that are not otherwise available to the housing commission.

Executive director of the Ann Arbor Housing Commission Jennifer L. Hall will be making a presentation on this process to the Ann Arbor city council at its Feb. 11 working session.

AAHC also faces a Feb. 15 deadline for the next round of the state’s low-income housing tax credit (LIHTC) program, in the category of permanent supportive housing. AAHC officials hope that tax credit financing will provide the bulk of investment for this RAD initiative, but much work is needed to complete the application in time. “You can’t even imagine how much work it will take for us to get into that Feb. 15 round,” Hall told commissioners. They need to hire an appraiser, do a fiscal needs assessment and environmental review, and take a range of other actions.

The goal of this complex set of transactions is not at this point to increase the number of public housing units in Ann Arbor. Instead the goal is to enable AAHC to tap private financing for capital improvements in its existing housing stock, which is aging. Many properties were built in the 1960s and 1970s.

Norstar will be one of at least four entities working with AAHC on this project. The AAHC also has hired Avalon Housing, an Ann Arbor nonprofit, as a consultant to help seek low-income housing tax credits from the state. Avalon’s contract runs through Dec. 31, 2013 for an amount up to $32,000, to be invoiced hourly at $180 per hour.

Two others who are working on the effort are: (1) Tom Davis, a senior vice president of advisory services at Recap Real Estate Advisors, based in Boston; and (2) Rochelle Lento, a real estate attorney with Dykema’s Detroit office. The cost of Dykema’s service is estimated at no more than $40,000. Recap’s compensation could include more than $70,000 for helping AAHC complete the RAD transactions.

Both Davis and Lento attended the Jan. 10 meeting. Also attending his first meeting as the newest housing commissioner was Christopher Geer, an accountant and finance director with PricewaterhouseCoopers. Geer was appointed by city council to replace Andy LaBarre, who resigned last year after being elected to the Washtenaw County board of commissioners.

Background for RAD Process

Since Jennifer L. Hall was hired as executive director of the Ann Arbor housing commission in October of 2011, one of her top priorities has been to identify new revenue sources in the wake of decreased federal funding for public housing. Public housing is supported with government funding – primarily at the federal level – and owned by local government entities. Another kind of government-subsidized housing – Section 8 vouchers – supports individuals who qualify based on their household income. Residents use those vouchers to help pay for private rental housing of their choice. Locally, AAHC manages the Section 8 voucher program for Washtenaw, Monroe, and western Wayne counties. AAHC also manages public housing units in Ann Arbor.

Jennifer Hall

Jennifer L. Hall, executive director of the Ann Arbor housing commission.

To a more limited degree, HUD also provides project-based vouchers. For example, the Ann Arbor housing commission has an allocation of 37 vouchers that are tied to specific projects, including 20 for Avalon Housing’s Pear Street apartment complex and 12 for assisted living in units managed by Area Agency on Aging 1-B.

The RAD program uses the project-based-voucher approach, but also allows entities like the AAHC to partner with private-sector developers on housing projects – something the AAHC currently can’t do. The approach allows public housing entities to tap private investment for new developments or rehab of existing public housing, by converting current public housing units into units that are owned by the public/private partnership.

Hall has estimated that Ann Arbor’s public housing stock would need about $40,000 per unit in repairs and renovations over the next 15 years. But based on current funding levels, HUD would provide only about $18,000 per unit over that period – or possibly less.

The plan is to seek a range of financing, but the main source is likely to be low-income housing tax credits (LIHTC), awarded through the Michigan State Housing Development Authority (MSHDA). Tax credits are awarded for projects, and are in turn sold to investors who provide funding for construction or renovation. Depending on market conditions and other factors, pricing for those credits could range from roughly 85-95 cents on the dollar.

These are the Ann Arbor public housing properties being considered for conversion, that were included in the RAD application:

  • Baker Commons: 64 one-bedroom units
  • Green Baxter Court: 24 townhomes with a total of 65 bedrooms
  • Hikone: 30 townhomes with a total of 82 bedrooms
  • Lower Platt: 4 houses, each with 5 bedrooms
  • Miller Manor: 104 units with a total of 108 bedrooms
  • Evelyn Court: one single-family home with three bedrooms
  • Garden Circle: one single-family home with three bedrooms
  • Maple Meadows: 30 townhomes with a total of 82 bedrooms
  • North Maple Estates: 20 single-family homes with a total of 85 bedrooms
  • North Maple duplexes: Two three-bedroom duplexes, for a total of 12 bedrooms

In addition to choosing a co-developer, AAHC has already completed several other steps needed for the RAD initiative. Three entities have been hired as consultants to help handle various aspects of the process. Avalon Housing, a local nonprofit that focuses on supportive services for affordable housing, was hired as consultant to take the lead in applying for low-income housing tax credits (LIHTC). [.pdf of Avalon Housing contract]

Also acting as a consultant is Tom Davis of Recap Real Estate Advisors. [.pdf of Recap Real Estate Advisors contract] Davis will provide advice about compliance with HUD regulations as well as financial transactions that AAHC might pursue, including the application for low-income housing tax credits.

AAHC will also be getting help with this transition from Rochelle Lento, an attorney with Dykema who specializes in LIHTC deals. [.pdf of Dykema contract] Lento has already been working with AAHC on a pro bono basis, and assisted with changes to bylaws and articles of incorporation for an AAHC nonprofit subsidiary – the Ann Arbor Housing Development Corp. – which will serve as the entity that enters into partnerships for these RAD projects. Those changes were approved by the AAHC board in November of 2012.

For more background on the AAHC’s efforts to prepare for the RAD program, see Chronicle coverage: “Housing Commission Eyes Major Transition.”

Co-Developer Finalists: MHT and Norstar

Much of the Jan. 10 special meeting was devoted to presentations by two finalists for co-developer: MHT Housing Inc. and Norstar Development USA. The presentations included a review of information provided in the RFP responses and eight written follow-up questions, as well as answers to 11 additional questions that both finalists had been asked to address during the meeting.

A wide range of topics were covered, including financial and project management background, experience with “green” construction techniques, strategies for dealing with special-needs housing units, strategies for securing the best financing terms from investors, integrating minority and women-owned businesses into the projects, and relationships with local government and the Detroit HUD office.

Van Fox, president of MHT Housing, led the presentation for his organization. Other MHT staff also participated, including Christopher Bric, executive vice president; Chad Joseph, director of development; and Aimee Vito, project coordinator. [.pdf of MHT response to RFP] [.pdf of MHT responses to AAHC follow-up questions]

Van Fox, MHT Housing Inc., Ann Arbor housing commission, The Ann Arbor Chronicle

Van Fox, president of MHT Housing Inc.

Fox stressed that his team was looking for a long-term relationship with the housing commission – MHT wouldn’t “dine and dash.” He noted that MHT is one of the largest affordable housing developers in Michigan, in both new construction and rehab.

Fox highlighted that Michigan is their home – the nonprofit is based in the Detroit suburb of Bingham Farms. None of their properties have gone into foreclosure, he said, nor have they ever been removed as a general partner during the more than 20 years they’ve been operating.

Three people spoke to the AAHC board for Norstar: Norstar Development USA president Rick Higgins; Lori Harris, senior project manager; and Tim O’Brien, president of O’Brien Construction. [.pdf of Norstar response to RFP] [.pdf of Norstar responses to AAHC follow-up questions]

Higgins pointed out Norstar’s previous work with public housing authorities, including the Detroit housing commission. The firm, based in Buffalo, N.Y., has completed over 5,000 units of public housing, including 180 units in Detroit. Its work primarily has been located in other states, however.

For Norstar’s Detroit projects, they work with O’Brien Construction. Part of Norstar’s presentation included a focus on that Troy-based firm, and Higgins indicated the intent to use O’Brien as general contractor for the Ann Arbor initiative, too.

Co-Developer Finalists: Scoring

The AAHC board also factored in a scoring sheet for both entities. It had been completed by a technical committee that had reviewed all nine applications submitted in response to last year’s co-developer RFP. Norstar achieved a higher score – 92, compared to 84 for MHT. [.pdf of rankings for co-developer finalists]

Norstar scored higher in five of the six categories: previous experience, organizational structure, low-income housing tax credit (LIHTC) application score, financial capacity, and construction/procurement. It only scored lower in the category of fee proposal. [.pdf of fee proposals]

The fee proposals will be negotiated as part of a master development agreement between AAHC and its co-developer. The split will depend on which responsibilities and guarantees – such as an operating deficit guarantee – are taken on by the co-developer. Norstar proposed taking a 75% share of development fees on the RAD projects with AAHC getting 25%. MHT proposed a 50/50 split with AAHC.

AAHC Board Deliberations

After the presentations, AAHC board president Ron Woods began by pointing out that the commissioners had received several reports related to the overall RAD project, including contracts with Dykema, Recap and Avalon Housing. Those were items of information, and don’t require action, he said, adding that the central purpose of their meeting was to decide who’ll be the co-developer for the RAD project.

Leigh Greden, Ann Arbor housing commission, The Ann Arbor Chronicle

Leigh Greden, vice president of the Ann Arbor housing commission board.

Woods noted that the meeting packet included a report of rankings for both Norstar and MHT.  The rankings were made by an evaluation team that scored all co-developer applications, and it’s advisory in nature, he said. Woods characterized the scores for the two finalists as very close. [Norstar achieved a score of 92 compared to MHT's score of 84.]

Leigh Greden said he knew that the AAHC staff had conducted reference checks using references that were provided by the applicants. He asked if any additional research had been done to check on the credibility, viability, and success of these two finalists. “What I’m getting at is: Are there any skeletons out there that we know of, and what are we doing to see what skeletons are out there?”

AAHC executive director Jennifer Hall replied that both finalists provided references, and in some cases those references were identical. The references were primarily funders, but Norstar also had provided a reference at the Detroit housing commission, she said. Hall said she didn’t call other people for references beyond those that were provided by Norstar and MHT. She also reviewed the financial statements that both entities had provided, and consulted with Rochelle Lento of Dykema and Tom Davis of Recap Real Estate Advisors.

All of the references were excellent, Hall said. “These are the people who provide [the finalists] with millions of dollars and need to make sure that the projects are done on time and done appropriately. There were no issues at all.”

Greden then asked if both Norstar and MHT were proposing an operating deficit guarantee. Yes, Hall replied, both entities are proposing that. If AAHC decides to be the property manager, the commission should consider providing that operating guarantee itself, she said. That’s especially the case if AAHC chooses Norstar as its co-developer, since that would likely lower the fee that Norstar is proposing. These issues will be negotiated in a master agreement after the co-developer is selected, she said. “There’s a hundred things like this that we have to decide who’s responsible for.”

Greden observed that one of the developers had made a good point during the presentations: A big part of the money to be made is potentially from the upfront sale of properties. There’s obviously the fee to be paid to the co-developer, he said. But for him, the more that AAHC can protect itself in a future, ongoing operating basis, the better. “That’s key, for me,” he said. So even if it means that AAHC has to give up a little bit more upfront, it’s worth it to protect itself years down the road, he said.

Greden said it was nice that AAHC is now more stable in its finances, vacancy rates, maintenance and other areas – “and I want to keep it that way.”

Gloria Black expressed concern about voting on the co-developer at that meeting, saying that commissioners haven’t seen a report on the references. She said she’d done some investigating of her own, and found that some residents of public/private developments in other states are extremely unhappy, especially with older projects. The pictures that Norstar and MHT showed the commissioners are nice, she said, but the pictures are of newer projects.

What’s promising to her is that AAHC will retain day-to-day management of the properties, Black said. But she still had concerns about how the buildings would be maintained.

Gloria Black, Ann Arbor housing commission, The Ann Arbor Chronicle

Gloria Black, the resident representative on the Ann Arbor housing commission board.

Hall replied that the co-developer would be hiring a general contractor to do the construction, but it will be AAHC’s responsibility to keep up the maintenance. The proposed relationship between AAHC and the co-developer does not require the co-developer to own and manage the properties, she said. When Norstar or MHT talked about asset management, they were talking about “paperwork compliance,” Hall explained, to make sure that AAHC knows how to manage the forms needed to comply with tax credit regulations.

Marta Manildi confirmed with Hall that it’s very important for AAHC to deliver the tax credits on a time schedule – that’s why investors are funding these projects, she noted.

Greden told Black that he appreciated her doing additional investigation, and asked whether she found problems with Norstar or MHT specifically – or whether the problems she discovered were more generic to this type of development in general. Black reported that she didn’t get information specifically on Norstar or MHT, and indicated that she had hoped to get more background on them at the meeting.

Hall noted that based on her reference checks, neither of the two finalists came out stronger or weaker than the other. Both of them had provided four references. MHT’s reference at the Michigan State Housing Development Authority (MSHDA) told her that MHT is often called in as a new general partner to save properties that have failed. That had been one of the differences between MHT and Norstar, she said.

Hall again stressed that she hadn’t heard anything negative about either Norstar or MHT from their references. She reviewed the names of people she’d spoken to at MSHDA, HUD and other references, and noted that both Norstar and MHT had been referred to AAHC as possible co-developers by Great Lakes Capital Fund, a large investor “syndicator” in Michigan. Manildi confirmed with Hall that Marge Novak, the former AAHC executive director, now works for Great Lakes Cap Fund. [Novak serves as its vice president of investor relations.]

Black said she trusted Hall, but pointed out that applicants will always give their best references, and won’t provide references that might raise negative issues. Hall agreed, but said that the references for both finalists were for people who actually put money into these deals – like MSHDA, HUD, and the Great Lakes Capital Fund. She said she was glad to talk another housing authority as a reference for Norstar, and wished she had a similar reference for MHT.

Black then noted that listening to MHT, she’d been reminded of a term her grandmother used to use – snake oil salesmen. She thought they promised too much. “You can not promise me everything and expect me to believe you,” she said.

At this point, Greden moved a resolution to approve Norstar as co-developer, with the terms of a master agreement to be negotiated by the AAHC executive director. Black seconded the motion. [.pdf of AAHC co-developer resolution]

Ron Woods, Ann Arbor housing commission, The Ann Arbor Chronicle

Ron Woods, president of the Ann Arbor housing commission board.

Woods described the process as continuing to do due diligence regarding Norstar.

Greden offered some comments to justify his decision. He pointed to the scoring of both finalists by the technical committee, describing them as a team of experts – individuals who collectively have decades of experience with these kinds of deals, he said. Although there were several categories where the two finalists were close, the final score was a 10% difference favoring Norstar.

Secondly, Norstar has documented experience with public housing authorities, Greden said, and MHT did not document such experience. Third, he was more impressed with Norstar’s proposal on a variety of fronts. As examples, he cited the work done to develop a working capital loan pool for small subcontractors in the HUD category of minority and women-owned businesses. Greden also mentioned the apprentice and YouthBuild programs that O’Brien Construction has developed in Detroit.

Manildi asked Hall to review the timeframe required by the RAD process. It would help remind commissioners why they need to vote on this item tonight, she said. [.pdf of RAD timeline]

Hall noted that by Jan. 30, AAHC must send HUD details about who will be part of the development team. More importantly, she said, AAHC wants to apply for the Feb. 15 round of the low-income housing tax credit (LIHTC) program, at a rate of 9% and in the category of permanent supportive housing. That particular category has a significant amount of funding in it for this February round, Hall said, because all of the funding wasn’t used in the previous round. That means AAHC has a better chance of getting funded. [According to the MSHDA website on the February LIHTC round, there is a total of $4.176 million available statewide in the category of permanent supportive housing.]

In addition, Hall said, if AAHC doesn’t apply for LIHTC in February, its last chance to do so will be in August. If AAHC isn’t awarded funding in August, HUD requires a “backup plan” – that is, AAHC would have to come up with some alternative funding, other than LIHTC. “Whatever backup plan we come up with will have a lot less funding than doing a 9% LIHTC deal,” she said.

“You can’t even imagine how much work it will take for us to get into that Feb. 15 round,” Hall told commissioners. They need to hire an appraiser, do a fiscal needs assessment and environmental review, and take a range of other actions. “To even start today, it’s going to be very tight to get all that done,” she said.

Manildi wondered what would happen if AAHC selects a co-developer now, then loses confidence in that co-developer or is unable to negotiate an agreement that’s satisfactory – an agreement that has the appropriate balance of risk and guarantees assumed by the co-developer, versus the money that AAHC can expect to get from the project. If that happens and AAHC has to withdraw its application, what are the downside consequences in that worst-case scenario? she asked.

Hall said it depends on how far along in the process they are. She couldn’t imagine that AAHC could drop one developer and bring another one on board while still meeting the Feb. 15 deadline for the LIHTC round. “So it would give us less of an opportunity to secure a significant amount of funding,” Hall said. “But frankly, we might not be able to get the full application in now. I’m really pushing the envelope right now, no matter who we select.”

Hall said that negotiating a master agreement with a co-developer is a long process. Both Norstar and MHT had indicated that if they were chosen, they’d be available to meet the following morning to start immediately hashing out the agreement, Hall said. Tom Davis of Recap Real Estate Advisors had suggested that at a minimum, AAHC should sign a short-term memorandum of understanding (MOU) with the co-developer. That MOU would be sufficient to meet the Feb. 15 deadline, with continued negotiations beyond that for the final agreement.

Marta Manildi, Ann Arbor housing commission, Hooper Hathaway, The Ann Arbor Chronicle

Marta Manildi, a member of the Ann Arbor housing commission board and attorney with Hooper Hathaway.

Manildi said her point is that if the board doesn’t select a co-developer that night, they’ll lose the opportunity for the February round of LIHTC funding. On the other hand, if the board selects a co-developer and moves forward, but subsequently for whatever reason becomes disappointed in the co-developer, AAHC would essentially be in the same position, she said. In that latter case, would AAHC face any penalties or fines?

Davis responded, saying that if the scenario Manildi described were to happen, it could be a fairly straightforward explanation to HUD about why AAHC would need a new co-developer. It’s true that HUD requires the development team to be in place by Jan. 30, he said, but that’s mainly because HUD wants to make sure that housing authorities “aren’t overestimating their own capacities,” he said – because many housing authorities that have applied for the RAD program are getting into tax credits for the first time. Davis believed that if AAHC needed to switch co-developers, HUD would appreciate the fact that AAHC had taken action and been straightforward about it.

Manildi observed that she was grateful AAHC would be working with a co-developer, given the complexity of the process.

Black seemed skeptical that HUD would appreciate a change in co-developers. “I think they’d be ticked off,” she said. Davis replied that HUD would appreciate the fact that AAHC was continuing to look into the co-developer and trying to find out as much as possible about their work before moving too far along in the process.

Black confirmed with Hall that the AAHC board would be getting regular updates on this process.

Rochelle Lento of Dykema also weighed in. Beyond the Jan. 30 deadline for identifying a development team, she also noted that the next critical deadline is Feb. 15 for the LIHTC program. She thought there was sufficient time between now and then to negotiate a development agreement with the germane points in it. For the development agreement, it’s not necessary to start from scratch, she said. There are model agreements that can be used as a starting point. Norstar, if that’s who AAHC selects, could also email their model development agreement the following day, she said.

Lento noted that for the past 24 years, she has negotiated development agreements on LIHTC deals. She has never done them in the context of a housing commission and a co-developer, but she has done them for private for-profit developers working with nonprofit co-developers, as well as with two nonprofit co-developers. “There are similarities,” she said.

Her point was that the AAHC will be working from a good starting point on the development agreement, “so I think you need to be optimistic about this.” She said she’s already been looking at model agreements and preparing for negotiations. The challenge in negotiating will be to make sure that the interests and position of AAHC is safeguarded, and that the agreement clearly identifies each party’s roles and responsibilities in this RAD process.

The other really big issue is the development fee split, she said, and that will be a key negotiating point.

Finally, Lento clarified the issue of the operating deficit guarantee. This isn’t something that Norstar would require, she said. It’s something that will be required by the investors or syndicator that purchases the tax credits. The question is whether AAHC or the co-developer would be responsible for providing the guarantee.

Manildi asked whether Tom Davis of Recap Real Estate Advisors had any thoughts on the relative merits of Norstar and MHT, especially in terms of this issue of an operating deficit guarantee.

Davis said he knew Norstar by general reputation and wasn’t intimately familiar with MHT, but felt that both entities could reasonably be chosen by AAHC as a co-developer. The fact that Norstar has worked with other public housing authorities gives them a familiarity with the process, he said. However, Davis said he was reluctant to make a recommendation on the selection unless the board asked him to do that.

Christopher Geer gave his opinion, saying he’d be comfortable voting that night because of the process that had led up to this point. He described the process – putting out an RFP and getting bids from several potential co-developers, then going through a technical review of those responses with the city’s legal, financial and building staff and key members of the AAHC to whittle the group down to the top two candidates. Both Norstar and MHT are viable, great candidates, he said. The board has seen their presentation and reviewed their materials, and whoever they select will be a viable candidate going forward, he said.

Christopher Geer, Ann Arbor housing commission, PricewaterhouseCooper, The Ann Arbor Chronicle

Christopher Geer, the newest member of the Ann Arbor housing commission board and a finance director with PricewaterhouseCooper.

Geer felt that Norstar came across as better, and seem to offer a more turnkey solution, having been through this process with a housing authority before. Because Norstar has done this kind of deal before and the AAHC project is relatively small for them, and because Norstar has a turnkey solution, the firm is coming across as more expensive in its fee proposal, he noted – a 75%/25% split as opposed to MHT’s proposed 50%/50% split. Working in the professional services industry, Geer said he understands paying for value, “and there seems to be real value in that – having someone who’s been there and done it.”

His only other comment was that MHT seemed to have a better relationship with MSHDA. He asked if that was critical to this process?

Hall replied that both MHT and Norstar have positive references and good relationships with MSHDA. If that were the one thing that differed and everything else were equal, it would be worth considering, she said. But it wouldn’t be the main consideration – because they both have good relationships.

In that case, Geer said, he’d vote for Norstar. He also offered some advice on negotiating the development agreement. He felt that because Norstar has worked with housing authorities in the past, they’ll know exactly what they want in a development agreement – in contrast to the AAHC, which is still learning. So any templates of agreements that Norstar provides will already be weighted 100% in Norstar’s favor. He urged that AAHC work from a standard agreement, with both sides coming to conclusions together. “Wherever we can find middle ground, versus starting from their perspective, will in the long run protect our financial interests a little bit more,” Geer said. “I have a feeling that they’ll be very aggressive in their negotiating.”

Lento responded: “We can be equally aggressive.”

Black was concerned that Norstar might come up with special clauses in the agreement that might somehow put AAHC at risk. Hall noted that the agreements would be vetted by Lento and Davis, who is also an attorney. Both of them have done many of these kinds of deals, Hall said, and that’s why it was important for AAHC to hire them as consultants.

Davis added that before joining Recap, he worked for 10 years at a firm that did the same kind of development that Norstar does. “So I’m very familiar with their perspective, and know exactly where I would have been trying to negotiate – and now I’m on your side trying to identify those things.” He noted that Lento has also done extensive work on this type of deal.

Greden, who is also an attorney, quipped, “You’ve done a nice job lawyering up, Jennifer.”

Woods wrapped up the discussion by saying he also supported Norstar, citing its experience with public housing authorities, its work with HUD’s Section 3 requirement (regarding minority and women-owned businesses) and other experience. He appreciated Geer’s observations about the negotiating process, but said he was confident with Lento’s experience and felt the outcome would be positive for AAHC.

Outcome: On a 5-0 vote, Norstar was approved as a co-developer for the RAD process.

Next Steps

AAHC has until Jan. 30 to inform HUD about the selection of its development team, and negotiations have already begun with Norstar on a master development agreement with AAHC. [.pdf of RAD timeline]

More critically, AAHC faces a Feb. 15 deadline to apply for the Michigan State Housing Development Authority’s 9% low-income housing tax credit program. If AAHC is unable to secure those credits, it would need to apply again in August. These tax credits are crucial in securing investors that would provide funding for the housing projects, in exchange for the credits.

In addition, Hall will be making a presentation on this process to the Ann Arbor city council at their Feb. 11 working session. Because the city holds the deed to AAHC properties, councilmembers would need to approve these transactions that would transfer ownership to the public/private partnerships created through the RAD process.

Housing commissioners present: Gloria Black, Christopher Geer, Leigh Greden, Marta Manildi, Ron Woods (president).

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One Comment

  1. January 17, 2013 at 2:54 am | permalink

    So it is indicated here that AAHC is going to apply for LIHTC in the category of permanent supportive housing. That is the type of housing provided by Avalon, and to my understanding it requires of tenants that they have some established disability. A brief glance at the MSHDA link provided here mentions targeted supportive housing populations and requirements for service delivery. This appears to be the type of housing that Avalon provides. By definition, supportive housing implies that other services are provided. Who will be responsible for this additional service delivery? The AAHC?

    I had the impression that Ann Arbor public housing did not have the restrictions that supportive housing does. Will merely very low-income tenants qualify for Ann Arbor public housing under this shift? I hope that we are not proposing to make public housing unavailable to a wide group of tenants who are currently served by this program.