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 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, 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, 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, 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, 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, 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, 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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A change to the FEMA flood maps is highlighted in Appel’s letter as a crucial factor in the inability of the project to move forward. The new maps, adopted in 2012, show an expanded floodway, which cuts across the corner of the parcel. That mean that federal funds – part of the project’s financing – could not be used. [1992 FEMA floodway map] [2012 FEMA floodway map]

At the Ann Arbor city council’s Aug. 9, 2012 meeting, city staff indicated that seven existing houses on the proposed building site will be demolished. A fund had been established previously to pay the upfront costs for demolition of nuisance properties, and on Aug. 9 the council authorized contracts with a set of demolition companies to handle such work. Also at the Aug. 9 meeting, community services area administrator Sumedh Bahl said that in 45-60 days from that meeting, the houses would be down – so as soon as Sept. 23.

Appel had addressed the council on Aug. 9 and had already pointed out the FEMA floodmap issue as a major challenge.

The project’s demise will have an (positive) impact on the finances of the Ann Arbor Downtown Development Authority, which had pledged $500,000 to support the project when completed. Of that amount, $100,000 was contingent on the project meeting LEED certification. The DDA board had extended the grant about a year ago at its Sept. 7, 2011 meeting.

It’s now not clear what the future of the site will be. However, Appel’s letter indicates the development team “… will continue to work with local and state government and other partners to explore alternative development options for the site.” The property is owned by Near North Limited Dividend Housing. Avalon Housing had partnered with Three Oaks Group on the project.

Russ Collins (left) shakes hands with former board member Gary Boren, who was recognized for his service at the DDA's Sept. 7, 2011 board meeting. (Photos by the writer.)

The Near North decision came over the objection of three board members, who expressed concern over unanswered questions about the project’s timeline. Avalon had also requested that the intent of the resolution be expressed in the form of a contractual agreement and that the period of the grant be two and a half years, instead of the maximum two years normally attached to DDA grants. The additional time is needed in order to cover a sufficient period to achieve LEED certification.

Representatives of the construction trades, who objected to the selection of the Grand Rapids-based Rockford Construction as the general contractor for the Near North project, as well as a resident spoke against the DDA’s grant award during the time allowed for public participation.

The three votes against the grant renewal came from Newcombe Clark, Roger Hewitt and Russ Collins. With the absence of board members Keith Orr and Bob Guenzel, the 12-member board still achieved the minimum seven votes it needed for approval of the grant.

Despite his absence from Wednesday’s meeting, Guenzel was voted as the new chair of the DDA board, filling a vacancy in that position left when the recently elected chair, Gary Boren, was not nominated for reappointment to the board when his term expired on July 31. Boren was on hand to accept a resolution of appreciation for his service on the board.

In connection to the officer election timing issue, Clark asked for a review of the board’s bylaws by the board’s executive committee. Clark has raised the issue during the July officer elections for the last two years. Because the mayor has been reticent about his intended appointments, DDA board members have elected their officers for the coming year without knowing if all board members with expiring terms will be reappointed. Clark asked that the bylaws possibly be changed so that board officers are elected after appointments are made, so that it’s clear who will be serving on the board.

In other business, the board unanimously passed a resolution of support for the RiverUp! program amid some discussion of the appropriateness of the resolution – in light of the fact that the Huron River does not flow through the DDA tax district.

The board also passed a resolution encouraging the Washtenaw County board of commissioners to enact an economic development tax on county residents. About half of the tax proceeds would go to Ann Arbor SPARK. The resolution came at the request of DDA board member Leah Gunn, who also serves on the Washtenaw County board. The Ann Arbor city council had previously passed a resolution encouraging the county board to enact the tax. The county board gave initial approval to the tax later that evening.

As part of the reports from various board committees, Roger Hewitt stressed that the parking rates and hours of enforcement discussed at the previous week’s operations committee meeting were merely the start of the discussion. The DDA is currently discussing what kind of proposal it will present to the city council at a November joint work session on parking. Under its new contract with the city to manage the public parking system, the DDA’s authority to set rates and hours of enforcement comes with specific requirements on public input.

The city council also has directed the DDA to explore alternate uses for some of the city-owned surface parking lots in the downtown. Board members got an update on the status of the DDA’s effort to plan how to implement that directive. 

Near North Housing Grant

The board was asked to consider renewal of a grant to Avalon Housing that board members had originally approved in early 2010 for the Near North affordable housing project on North Main Street.

The grant is for $400,000, with another $100,000 available if the project achieves certification under the Leadership in Energy and Environmental Design (LEED) – a green building certification system. The grant would be paid when the project receives a certificate of occupancy. Avalon must also have an agreement in place with the city/county office of community development to ensure that income eligibility requirements are met for all residents.

A vacant house on North Main Street on the site of the planned Near North housing project.

The income eligibility requirements for the 39 units in Near North are based on affordability as defined for two categories of apartments. For 25 apartments, rents must be affordable to households with incomes at less than 50% of area median income (AMI). The remaining 14 apartments are for supportive housing and will have Section 8 rent subsidies.

The Near North project is outside the DDA tax district boundary, but is within the quarter-mile radius established by DDA board policy for such housing fund expenditures.

The planned unit development (PUD) for the Near North project was given approval by the Ann Arbor city council on Sept. 21, 2009.

Near North Grant: Public Commentary

Michael Appel, Avalon’s associate director, led off public participation time by describing the request for an extension of a previous grant the board had authorized to Avalon for its Near North affordable housing project. He sketched out the basics of the project: There would be 39 units on North Main Street, the main entryway to downtown. The project will meet the city’s housing goals, he said.

Appel ticked through some of the timeline points for the project. He noted that Avalon was awarded the DDA funds early in 2010.

By way of background, it was at the Jan. 6, 2010 meeting that the DDA board took that vote. By board policy, grants automatically expire at the end of the fiscal year following the year they are awarded. That board policy was established by a vote of the board at its March 4, 2009 meeting.

While the DDA grant period has come to be thought of as a two-year period, two years is actually a maximum in calendar terms. That maximum could occur if a grant were awarded in early July, just after the start of the DDA’s fiscal year – the grant would be good through the end of the fiscal year, ending on June 30 two years later. But if a grant is awarded in early June, the end of the next fiscal year would be only 13 months away.

In a followup email to The Chronicle, Appel clarified some of the dates, which he’d inadvertently misstated in addressing the board. The accurate timeframe for Avalon’s application for tax credits was spring 2010. The tax credits were awarded in the summer of 2010. Appel went on to explain that a key piece of funding – brownfield tax credits from the state of Michigan – were eliminated by the legislature during tax reform legislation after the 2010 elections. By the summer of 2011 new legislation had been passed, which preserved the brownfield funding source.

In addressing the board, Appel stressed that the general contractor Avalon had selected [Rockford Construction] had worked hard to solicit a wide range of bids for subcontractors. Around 1,500 solicitations had been sent out, he said.

Appel concluded with two specific requests of the DDA. He noted that the DDA doesn’t typically sign grant contracts, but rather works off of resolutions. Avalon was requesting that the resolution before the DDA staff include authorization of the DDA staff to draw up a formal contract. The four-minute time limit on public speaking time expired before Appel could get to his second request: to extend the grant period beyond the usual timeframe, which would have ended the grant period on June 30, 2013.

The rationale for the extension was based on the need to have the building in operation for some period of time in order to gather sufficient data to achieve LEED certification. The DDA’s grant makes $100,000 contingent on achievement of LEED certification and the other $400,000 contingent on a certificate of occupancy.

Tom Yax spoke on behalf of U.A. (United Association) Local 190, a union of plumbers, pipefitters, service technicians and gas distribution workers. He told the DDA board the local union basically supports the awarding of the grant.

However, Yax described his union’s opposition to the award of the general construction contract to Rockford Construction, because of Rockford’s location in Grand Rapids and concern that, as general contractor, Rockford would award subcontracts to non-local workers. When you give work to outside contractors, Yax said, they make money, then leave the community, and they don’t do any charity work in the community. Yax described a range of community efforts by the union. He encouraged the use of local businesses and contractors. Every dollar spent locally passes through the economy six times, he said.

So Yax explained that the union was against awarding the grant unless assurance could be given that there would be local contractors. Why spend money on contractors who leave? he asked. Near North is a prevailing wage job, so there’s no reason not to hire local contractors with local workers, he said.

During the time for public participation at the end of the meeting, Margaret Schankler introduced herself as a resident who lived behind the Near North property. She called it unfortunate that the board had extended its usual grant period to December 2013, but that they didn’t have four minutes for additional public participation before the vote.

By way of background on public commentary, the DDA board entertains public participation at the start of its meetings by allowing up to four people to speak – it’s possible to sign up in advance. If fewer than four people sign up, people from the audience who have not signed up are invited to address the board. In no case are more than four people allowed to address the board at the start of the meeting.

Later, at the conclusion of the meeting, an unlimited number of people can address the board. The time limit for all speakers is four minutes. Public bodies like the DDA board are required under the state’s Open Meetings Act to allow any member of the public to address them during their meetings.

Schankler told the board that she’d heard the phrase “closing in a few weeks” more times than she could count. She commended board member Newcombe Clark for asking questions. She noted that the neighborhood had worked with developers and negotiated something they thought the whole neighborhood could live with. That had come after the neighborhood had urged Avalon to build a much smaller project – but they’d been told it needed to be that large to make the numbers work. She criticized the fact that only 14 of the 39 units in Near North are for supportive housing.

She said that the still-unbuilt units of Near North are being counted as replacements for the 15 units that Avalon is eliminating in connection with its project at 1500 Pauline. Considering the 1500 Pauline project and Near North, the two projects together result in no net gain for supportive housing in Ann Arbor, she said.

Schankler also contended that the existing houses (now vacant for two years) previously rented for rates that were half what will be charged for the new units. She also pointed to the high cost of construction for the new units – $378 per square foot. She told the board that’s twice as much as it would cost to build a two-bedroom condo.

Schankler criticized the lack of more publicly documentable progress on the project. She also criticized the fact that the existing houses had been allowed to deteriorate beyond repair, which she contended was intentional in order to ensure brownfield funding.

Now, the DDA had a chance to step back from the project and to redirect scare resources more wisely inside the DDA district. [The Near North project is outside the DDA tax district, but within the quarter-mile radius the DDA board has set as the area in which it's willing to invest housing dollars. In this the DDA has relied on advice from its legal counsel that it is legal to take this approach.]

Also at the end of the meeting, during time allotted for public participation, Ron Motsinger of the International Brotherhood of Electrical Workers (IBEW) Local Union 252 told the board that the local union represented hundreds of building contractors in all trades. He pointed to current levels of unemployment in some trades of over 33%. Local workers are hurting for jobs, he said. He had been excited to see the Near North project come in, but was disappointed that Rockford Construction was chosen as the general contractor.

Motsinger contended that Rockford has a track record of not using local contractors. Hutzel, a 150-year-old local company, had not been notified to bid on the project. He had no confidence Rockford would use local labor. Motsinger said the local had done $100,000 worth of charity and community work, citing specifically that it had bought scoreboards for Skyline High School. It really would have been nice to make sure it’s local people who are hired, he said. There are local general contractors who could have done the job. He said it was disappointing to see the resolution rushed through.

Rob Turner who represents District 1 on the county board of commissioners, also addressed the board at the end of the meeting. He is the owner of Turner Electric Service Inc. in Dexter. He said he was excited when the Near North project was approved – it helped poor people and he was happy for that. It could also help the building trades, he said. But when he heard that Rockford Construction had been selected as the general contractor, he was disappointed. As an alternative, he mentioned O’Neal Construction as a local general contractor who has experience with federally-funded projects.

Turner described Rockford as dealing with “non-responsible bidders.” Non-local firms don’t shop and buy locally, he said. He acknowledged that his firm was asked to bid on the Near North project. However, he’d received the invitation to bid just one week before. He’d tried to get a set of plans online but was unable to obtain them that way. They had been available physically in Grand Rapids and Bloomfield Hills, he said. He asked the board if that kind of bid process sounded conducive to local contractors. Given that the grant contract is not done, he said, he thought some language could be added to ensure that local companies had better access to the work.

Near North Grant: Board Deliberations

When the board took up the issue of the grant renewal, Appel was asked to the podium to clarify the nature of Avalon’s request. Appel explained that Avalon anticipated closing on their deal in the next month or so. The other funders will want written assurance that the $400,000 plus the $100,000 (contingent on LEED certification) is committed from the DDA. When Avalon closes, Appel said, the other funders will want to know that the $500,000 commitment is secured. DDA executive director Susan Pollay had told him, Appel said, that it’s not DDA standard practice to create a grant agreement.

DDA board member Newcombe Clark.

The second part of the request was a longer-than-usual grant period. If renewed now, then June 30, 2013 would be the natural expiration, he said. Appel requested that it be extended through Dec. 31, 2013, because by then the building would be operating long enough to achieve LEED certification.

Joan Lowenstein asked what the potential impact would be if the decision were put off until the operations committee could again review it and bring it back to the board. Appel said he was worried that a delay could affect the closing on the deal. Lowenstein invited Appel to talk about the bidding and the local contracts, which had been raised during public participation time at the start of the meeting.

Appel said that Avalon had looked at a number of issues in selecting a general contractor. Among them were the contractor’s experience in Washtenaw County, the experience building this type of housing, and experience with the Michigan State Housing Development Authority (MSHDA). Avalon had selected Rockford Construction because Rockford brought the most to the table, including experience in Washtenaw County. Before issuing bids, Appel said, Avalon had made sure that local subcontractors were well represented. For the early bid packets, only one-quarter came from western Michigan, where Rockford is located.

Appel said that because the project has federal funding, it brings with it various requirements for oversight – that includes prevailing wage requirements. There’s a highly-regulated open bid process. The bids were widely circulated for anyone to download the specifications, Appel said. He said he understood and respected the desire to support local businesses. Federal regulations make sure that everybody has access to the bidding process, he said.

Appel cautioned that a delay at this point would not allow Avalon to bring a document to the closing that showed the funding is secure.

Board member Newcombe Clark indicated that he thought the urgency was generated by the DDA board’s bylaws, not by Avalon’s timetable.

Pollay explained that the Avalon grant had sun-setted on June 30, 2011. The renewal had been discussed at the previous week’s operations committee meeting, Pollay said.

Clark said he had supported the Near North project and that he still supported it. He wanted to see it “come out of the ground,” he said. But Clark he said he also wanted to see his questions answered. He felt the DDA board was being rushed into creating closing documents, and the extension was for longer than the DDA’s usual grant period – it was for a 2.5 year extension. He’d wanted to explore several questions. Clark concluded that he could not support the project, based only on the information he had.

Responding to a question from board member Leah Gunn, Appel explained that the overall Near North project is relying on the DDA grant money – other funders need to know that the DDA’s commitment is there. Clark chimed in, “We’re free equity.”

Appel continued by saying that a copy of a DDA board resolution is not what real estate attorneys are accustomed to seeing at a closing. He said Avalon needed something that third parties would understand in the context of a real estate closing. Board member Roger Hewitt observed that the board was being asked to support the resolution when the document doesn’t exist yet.

Mayor John Hieftje said that the DDA’s offer of a grant was very sincere and he didn’t have a problem putting it in writing. He said he trusted the executive committee of the DDA board to do that. [According to DDA board bylaws, the executive committee consists of the chair, vice chair, treasurer and recording secretary. The last former chair is a non-voting member, and the executive director is a non-voting ex-officio member of the executive committee.]

Hieftje said that Avalon has to balance a lot of different factors with other entities that are larger than the DDA. Timing issues are hard. He said the DDA had committed to the Near North project a long time ago. Board member John Splitt also indicated that he had no problem with voting for the resolution. Board member John Mouat also supported the project. He noted that an incredible amount of time and work has been put in to make the project work. He said the DDA board owed it to the community to support it.

Responding to the concerns raised by representatives of trade unions, Gunn explained that the board doesn’t have the ability to say who gets a contract. She also noted that new state legislation forbids CUB (Construction Unity Board) agreements – it’s not for the DDA to decide. [CUB agreements are negotiated between local trade unions and contractors, and require that contractors who sign the agreement abide by terms of collective bargaining agreements for the duration of the construction project. In return, the trade unions agree that they will not strike, engage in work slow-downs, set up separate work entrances at the job site or take any other adverse action against the contractor.]

Comments from Hieftje and Gunn established that the city of Ann Arbor and Washtenaw County both needed to take action to revise policies to make them conform to the new state legislation on CUB agreements.

Clark asked for information on the site plan and whether it needed to be renewed with the city. Lacking other information, he said, he had to default to his own expertise. Clark said he did not want to go through the winter with vacant houses sitting on the site. He lamented the fact that the board did not have more time to consider the resolution.

Board member Sandi Smith said she’d been trying for seven years since she’d been appointed to the DDA board to spend the housing fund balance. It’s been difficult to add even a single unit of affordable housing, she said. If the DDA were to pull its commitment from the Near North project, it’s not as simple as picking another project that comes along. It would take a lot of time to develop another project. The DDA has been familiar with the Near North project for a long time, Smith said. She echoed Clark’s sentiment, however, that the houses need to come down. There’d been problems with people squatting inside them, she said.

Clark then suggested that out of the $500,000 grant, $100,000 be slated specifically for demolition and be paid upfront, not made contingent on a certificate of occupancy or LEED certification. If the project meets the DDA’s goals and the board is already willing to spend the money, then “Let’s have lots, not squatter places.” Lowenstein, who was chairing the meeting, noted that Clark’s suggestion would need to come in the form of an amendment to the resolution.

Smith seconded Clark’s suggestion that the DDA would front the $100,000 to Avalon to carry out the demolition of the houses. Hewitt said he was supportive of the project, but still had the same concern that the board would simply be trusting that everything will be worked out. The board needs better documentation, he said.

Smith asked if the demolition could be incorporated into the terms of the grant contract. Mouat felt it would further complicate what is already very complicated. He felt the board needs to be supportive of the project and make it happen as soon as possible. Adding a condition on the demolition would be another hindrance, he said.

Board member Russ Collins “called the question” on the amendment earmarking $100,000 for demolition of the existing housing on the Near North site.

Outcome on amendment: Clark’s amendment earmarking $100,000 for Avalon to demolish the houses on North Main received support only from one other board member, Russ Collins.

Almost immediately after the vote on the amendment, Gunn called the question on the main resolution.

Outcome on resolution: The board approved the $500,000 grant extension to Avalon, with dissent from Clark, Collins and Hewitt.

Near North Grant: Coda on Calling the Question

At the conclusion of the board meeting, Hieftje asked that the board bylaws be reviewed with respect to the parliamentary procedure of “calling the question,” to ensure that everyone has a chance to speak twice before the question has been called. He said he’d had his hand raised to speak on the Near North question and didn’t get to say something.

By way of background, under Robert’s Rules, the parliamentary move to close debate is actually called “moving the previous question.” More colloquially it’s referred to as “calling the question.” The motion needs a second, then requires a vote with 2/3 majority. The motion itself is not debatable, however.

At Wednesday’s meeting, the calling of the question on both occasions did not receive a vote. When something like this happens, contrary to the rules of procedure, it’s always in order for someone to raise a point of order to insist on the proper administration of the rules. Had Hieftje done so, it’s possible that his desire to speak might have been recognized at that point.

Parking Rates, Enforcement

At the meeting of the DDA board’s operations committee meeting the week before, on Aug. 30, 2011, the committee meeting packet included a set of items proposed to be included as part of the agenda for a joint city council/DDA board working session scheduled for  Nov. 14. The board did not have an item on its Sept. 7 agenda concerning parking rates.

Parking Rates, Enforcement: Background

A recent report in AnnArbor.com left the impression with some readers that a set of items in the Aug. 30 committee materials was already a recommendation of the DDA board. The article did not include the context of the DDA’s April 2010 Parking Report, which is referenced in the committee meeting materials.

That parking report had been produced by the DDA in response to a city council directive, given in late 2009. The city council directive had stemmed directly from a resolution considered by the city council, but not passed at that time, calling for the extension of parking meter enforcement hours.

The city council’s idea to extend evening enforcement hours was part of a strategy to replace revenue that the city had projected for new parking meters the city had wanted to install in areas near the downtown – against the advice of the DDA. The city wound up not installing most of the meters.

The city council’s revenue replacement strategy was put together by Sandi Smith, who is both a city councilmember (representing Ward 1) and a DDA board member. Included as part of Smith’s revenue replacement strategy was the assignment of revenue from two city-owned lots – 415 W. Washington and Fifth & William – directly to the city of Ann Arbor.

Additional context includes a planned joint working session with the city council. At its Aug. 30 meeting, the operations committee discussed items to be proposed to the council at that joint working session. The session, scheduled for Nov. 14, is contractually required as the result of a new agreement struck in May of 2011 under which the DDA manages the city’s public parking system. From the contract:

Joint Working Session. As part of the annual established calendar for City Council Working Sessions, City Council shall designate one working session in the fall of each calendar year as a joint working session with the DDA. The agenda for the working session shall be prepared by the City Administrator in accordance with Council Rules and in consultation with the Executive Director of the DDA. It is recommended that a portion of such agenda be dedicated to a discussion of operations under this Agreement and the utility of creating a joint study committee to address areas of mutual interest.

The timeline for rate increases stipulated in the contract requires three DDA board meetings, over the span of at least two months. The contract calls for announcing and indicating in writing the intent to increase rates at a DDA board meeting. At the next subsequent board meeting, members of the public must have an opportunity to address the board on that issue. And the board is contractually bound not to vote on the rate increase until the board meeting after that.

Based on the assumption that the DDA would not formally proceed with the contractually-stipulated changes to rates or enforcement hours before the council/DDA joint working session on Nov. 14, the DDA board could not take a vote on those changes until its February board meeting. On that scenario, the announcement of intent would come at the board’s December meeting, the public hearing would take place at the January meeting, and a vote could take place at the February meeting.

Parking Rates, Enforcement: Possible Agenda Items

In broad strokes, on Aug. 30 the operations committee was presented with possible items for the Nov. 14 joint working session that fell into two broad categories: hours of enforcement and parking fees. The note on hours of enforcement indicates that a possible item on the working session agenda could be a recommendation to extend the current on-street meter enforcement hours (currently from 8 a.m. to 6 p.m.) to 10 p.m.

The possible agenda items for parking rate changes include: increases in monthly permit parking for some structures and lots; increases in entrance fees to some structures; and increases in miscellaneous categories like art fair and meter bags.

Possible agenda items for rate changes also include adjustment downward of some parking fees, as part of a proposal to set rates based on demand. On-street spaces in highest demand would have a higher rate ($1.80/hour); on-street spaces in lowest demand would have a lower rate ($1.00/hour); and on-street spaces in the middle of the demand range would not have their rates changed.

Demand is defined in terms of the amount of revenue currently brought in by each meter. The pilot program described in the committee’s packet would be implemented in a rectangle bounded by State Street on the east and First Street on the west. Huron and William streets would be the respective north and south boundaries of the pilot program to set meter rates based on demand.

Parking Rates, Enforcement: Public Commentary

Maura Thomson, executive director of the Main Street Area Association (MSAA), addressed some recent talk about proposed changes to parking rates and enforcement hours. Back in late 2009, a resolution was considered by the city council that contemplated evening enforcement hours. [Chronicle reporting from that timeframe includes "City-DDA Parking Deal Possible" and "Most Aspects of Parking Deal Approved"] Thomson reminded the DDA board that in 2009, merchants were vocal in opposition to evening enforcement. [Within hours of the appearance on the city council's agenda of the resolution calling for evening enforcement, the Ann Arbor Area chamber of commerce had fired off a memo in opposition.]

In the wake of that city council discussion [which ultimately did not result in a formal call for evening enforcement], the DDA was then asked to come up with a plan. Thomson said that the MSAA was involved in that work through participation in focus groups. The MSAA had also surveyed its membership, Thomson said. She indicated that there was overwhelming opposition to extending enforcement hours. There was also a sentiment that some kind of free parking component needs to be included. She said it feels like “we’re back to where we started.” Part of the balance of higher rates and longer enforcement hours outlined in the April 2010 parking report produced by the DDA is a free parking component as part of the demand management strategy, Thomson said.

Thompson was alluding specifically to a passage from the April 2010 report that reads:

Free structure parking is being used in other Michigan cities with mixed use downtowns, as the offer of free is very attractive and easily understood. The DDA believes that every parking space has value, but if used correctly, using this pricing strategy may lessen demand at the meters and extend parking more broadly throughout the system.

Thomson asked the DDA board to consider that aspect of the plan – it allows for a positive communications strategy. She was dismissive of a free parking component based on the hours of enforcement early in the morning [also discussed in the report]. If we’re all being honest, she said, the free component from 8-9 a.m. has no correlation to evening enforcement. She compared that strategy to saying that enforcement of meters from 6-8 a.m. would have a positive impact on parking revenue. So she asked that “truly free” parking be tied into any plan to extend hours of enforcement.

Tom Murray introduced himself as a member of the MSAA and owner of Conor O’Neill’s on Main Street. He warned that if the DDA enacts the plan as currently discussed, people will go elsewhere for entertainment. Addressing the issue of employee parking in the evening, Murray said that the DDA was directed to provide a plan to communicate specific options for evening employees. But the discussion from the last committee meeting the previous week didn’t indicate any specific options, Murray said.

Murray ventured that his staff would continue to find a way to get outside and feed the meters. Customers, on the other hand, won’t go outside and they’ll receive tickets – that will become a problem. Murray said that when we read about employees, we forget that employees are also customers. We need to incentivize employees, not punish them. A truly free parking component needs to be explored, Murray said.

Murray encouraged the DDA to find creative ways to reach out to employees. Employees would take advantage of alternatives if they are safe and affordable, he said. He also suggested that the entire program should be on a pilot basis, not just the meter rate schedule. The plan current under consideration hurts downtown, Murray concluded.

Addressing the board at the time for public commentary at the end of the meeting, Jessica Johnston of Falling Water on Main Street asked the board to reconsider any decision to extend hours of parking enforcement. Based on face-to-face interaction with her customers, she told the board there would be a negative reaction to it. The downtown economy is already fragile, she cautioned, and she ventured that the dinner crowd could be eliminated by the proposal.

As part of his report from the Downtown Citizens Advisory Council, Ray Detter said the advisory council continues to support the DDA’s effort to implement parking/transportation demand management. He said some of the things in the media he’d read were not terribly accurate. He stated that the advisory council had always assumed that the possibility of extending hours would include a free component.

At the start of public commentary, Joan Lowenstein, who was chairing the meeting, had stressed that public commentary is not the occasion for a back-and-forth kind of thing. However, board members do sometimes use their own time at the board table to respond to concerns raised during public commentary.

And in response to the public commentary, board member Roger Hewitt stressed that the operations committee meeting had been the start of a discussion – he appreciated the input from the public. Hewitt said he felt the way the proposal had been characterized in media reports was unfortunate.

Naming Guenzel Chair, Thanking Boren

On the agenda were resolutions to name Bob Guenzel as board chair and Leah Gunn as vice chair, and to thank Gary Boren for his service on the board. [Guenzel did not attend the board's meeting.]

Naming Guenzel, Thanking Boren: Background

The board had been without a chair because board member Gary Boren, who had been elected to that post by his board colleagues at their July 6, 2011 meeting, was not nominated by mayor John Hieftje for reappointment. Boren’s term expired on July 31. Boren was replaced on the board by local attorney Nader Nassif.

Guenzel, who retired last year as Washtenaw County administrator, was elected vice chair of the board at the July meeting. Gunn’s other public service currently includes representing District 9 on the Washtenaw County board of commissioners.

The evening before the DDA’s board meeting, at the Sept. 6 city council meeting, three nominations to the DDA board were on the agenda for confirmation: Joan Lowenstein (reappointment), John Mouat (reappointment), and Nader Nassif (new appointment replacing Boren). The nominations had been announced at the council’s previous meeting, on Aug. 15.

At the council’s Sept. 6 meeting, Stephen Kunselman (Ward 3) made the rare request that the council’s confirmation of the mayoral nominations be done separately on roll call votes for each nominee. The votes on the appointments of Mouat and Nassif were unanimous. However, Kunselman voted against the reappointment of Lowenstein. All other councilmembers present voted for her.

Naming Guenzel, Thanking Boren: Board Deliberations

At the DDA board’s Sept. 7 meeting, Newcombe Clark noted that the board is tasked by its bylaws to elect officers at the July annual meeting. [That has historically come before the mayor has chosen to announce whether he would be reappointing board members whose terms were expiring later in the month.] Clark reminded board members that he’d raised the issue at the last two annual meetings. From The Chronicle’s report of the 2011 annual meeting:

Roger Hewitt nominated current vice chair Gary Boren to serve as chair.

Newcombe Clark asked if Boren’s term was being renewed – that is, would he be reappointed by the mayor to serve on the board? By way of background, outgoing chair Joan Lowenstein’s term on the board ends on July 31, 2011, as do the terms for Gary Boren and John Mouat. Boren has been a vocal proponent of the idea that the DDA is an independent corporate body and not an arm of the city of Ann Arbor.

Last year, Clark had pointedly abstained from voting in the officer elections over the lack of information about reappointments to the board. From Chronicle coverage of the July 7, 2010 DDA annual meeting:

Abstaining from each of the officer votes was board member Newcombe Clark.

Clark explained to The Chronicle after the meeting that there’d been no indication from the mayor whether the two board members whose appointments are expiring July 31 – Jennifer S. Hall and John Splitt – would be reappointed. Clark said he could thus not be certain of the full range of choices for board officers.

Splitt was reappointed; Hall was not. Bob Guenzel was appointed instead of Hall.

In response to Clark’s question this year, Lowenstein said they did not know that yet. Mayor John Hieftje, sitting at the board table, did not offer any statement about whether he planned to nominate Boren for the city council’s approval for reappointment.

At Wednesday’s meeting, Clark stated that he would like to see the bylaws adjusted so that officer elections are not held until after the status of reappointments is known. Otherwise, he said, board members are being asked to vote for chair and vice chair without knowing if they’ll continue on the board. Nothing is lost and a lot is gained by making the change, Clark said. He stated that he wanted formally to ask the executive committee to look into it: “We owe each other more than this.”

Outcome: The board unanimously approved the resolution thanking Gary Boren for his service, as well as the resolution naming Bob Guenzel chair of the board. Boren, who attended the meeting to receive the recognition from his colleagues, made his way around the table and shook hands with the board members.

County Economic Development Tax

The board was asked to consider a resolution urging the Washtenaw County board of commissioners to use Act 88 of 1913 to levy a tax in support of economic development in the county. A public hearing on the tax was scheduled for the county board’s meeting later that evening.

At its Aug. 15 meeting, the Ann Arbor city council passed a similar measure urging county commissioners to levy the tax.

For the last two years, the county board has levied the tax. It has previously used a rate of 0.043 mill. (One mill is $1 for every $1,000 of a property’s taxable value.) This year, the county board is contemplating a millage rate of 0.05 mills. Because Act 88 predates the state’s Headlee legislation, the county board does not need to put the issue before voters in order to levy the tax. The county board could, by the Act 88 statute, levy such a tax up to 0.5 mills, or 10 times the amount it is considering for next year.

The Act 88 tax received initial approval by a 7-3 vote at the county board’s Sept. 7 meeting. The three commissioners voting against it were Alicia Ping (R-District 3), Wes Prater (D-District 4) and Dan Smith (R-District 2). Commissioner Ronnie Peterson was absent. A final vote is expected on Sept. 21.

The anticipated $688,913 in millage proceeds will be allocated to several local entities: Ann Arbor SPARK ($230,000), SPARK East business incubator ($50,000), the county’s dept. of community & economic development ($131,149), Eastern Leaders Group ($100,000), promotion of heritage tourism ($65,264), Food System Economic Partnership (FSEP – $15,000), Washtenaw 4-H, operated by the Michigan State University Extension program ($82,500) and Washtenaw Farm Council 4-H Youth Show ($15,000).

During the brief DDA board deliberations on the resolution, Leah Gunn, who also serves as a county commissioner, indicated that it was “very small millage,” that would cost $5.38/year for the average homeowner. It supports important economic development efforts like Ann Arbor SPARK and agriculture, she said. Gunn told her DDA board colleagues that she would appreciate them voting for it, so that she could take it to the county board of commissioners meeting later that evening.

Outcome: The DDA board voted unanimously in favor of the resolution urging the county board to levy the economic development tax.

RiverUp!

Before the board was a resolution expressing support of RiverUp!, a collaborative effort among several organizations – including the Huron River Watershed Council, the National Wildlife Federation, and the Michigan League of Conservation Voters – to improve the Huron River corridor.

The resolution states that the DDA will assist in wayfinding efforts that would help connect the river with visitors to the downtown, but it does not specify a budget for that effort. [For background on the RiverUp! initiative, see Chronicle coverage: "RiverUp! Focuses on Revitalizing Huron River"]

During board deliberations, mayor John Hieftje stressed that he’s been involved with the RiverUp! project since the beginning and expressed his support for the resolution.

John Mouat questioned the project’s relevance to the DDA. He said as much as he wished it did, the Huron River doesn’t flow through Ann Arbor’s DDA district. What caused him concern, he said, is when something becomes “a bit of a stretch” and he wanted to voice that as a general concern. He wanted to know specifically how support of the DDA board adds to the project.

Sandi Smith pointed out the focus on wayfinding in the DDA’s resolution. She said her thought in bringing forward the resolution is that a University of Michigan freshman might be standing on campus and not know about the recreation amenity just 3/4 mile to the north. She allowed that the DDA can’t relocate the downtown to the river, but it’s also important not to forget that it’s there.

Outcome: The DDA board voted unanimously in favor of the resolution expressing support of RiverUp!

Communications, Committee Reports

The board’s meeting included the usual range of reports from its standing committees and the downtown citizens advisory council.

Comm/Comm: The Varsity, Alleys

Ray Detter reported out from the Downtown Citizens Advisory Council, which meets monthly on the evening just before the DDA board meetings. He noted that The Varsity at Ann Arbor would be coming before the planning commission on Sept. 20. [The Varsity is a proposed 13-story, 173-unit, 178,380-square-foot apartment building for approximately 418 students. It would include 77 parking spaces, and would replace the two-story office building and parking lot currently on the site, located on Washington Street, just west of the First Baptist Church.]

Detter said that the advisory council would continue to support the city’s newly enacted downtown design guidelines – the advisory council doesn’t oppose The Varsity. He reported that members of the advisory council had attended the design board review meeting for The Varsity, as well as the citizen participation meeting, and offered their suggestions. Detter said that in response to feedback, the developer had made some changes, but had not really addressed the issue of the view from East Huron Street.

Detter praised the work that the developer had done with the First Baptist Church, which had resulted in plans for a walkway connecting East Huron and Washington Street.

Detter said the hope was that the south entrance to that walkway on Washington would connect to the alley that runs between Washington and Liberty. That alley, Detter said, has been allowed to turn into a place for smelly dumpsters and urinating panhandlers. Detter reported that the advisory council had met with DDA executive director Susan Pollay, assistant city attorney Kevin McDonald, interim city administrator Tom Crawford and mayor John Hieftje.

As a result, Detter reported, that group has moved ahead to form a committee to develop a plan for the alley. Some of the goals are to get better placement of the dumpsters, add awnings, and install better lighting. He expressed the hope that it could be turned from a dangerous, dirty, disgraceful alley into an asset.

Comm/Comm: Downtown Parcels

As part of the report from the board’s partnerships committee, Sandi Smith reported that the committee continues to discuss how the DDA will implement a city council directive to explore alternate uses of some city-owned parcels in the downtown. Smith stressed that the idea is to build on all the work that’s come before, not to recreate everything.

Amber Miller, the DDA’s planning and research specialist, had sketched out a draft of a process, to which committee members had responded favorably. It involved two parallel tracks – a technical component and a community outreach component. Doug Kelbaugh, former dean of the University of Michigan’s college of architecture and urban planning, and Kit McCullough, who teaches at the college, attended the partnerships committee meeting. They’d previously pitched their services to the DDA to facilitate a public engagement process.

The two UM architecture faculty were receptive to Miller’s sketch and suggested that they could develop a “road show” as a presentation that could be delivered by DDA staff or some other person on multiple occasions to different community groups. The conversation about the alternative use of downtown parcels was to continue at the committee’s next meeting on Sept. 14.

Comm/Comm: Regular Parking Report

Roger Hewitt delivered highlights from the monthly parking report from July: hourly patrons were down 5%, revenues up 2%. Art fair revenue was down about $5,000 (2%) compared to last year. Hewitt said the weather had an impact, but the horrible, hot temperatures had put a smaller dent in revenues than he’d been anticipating. Responding to a question from John Mouat, Hewitt said the revenue from art fair parking is not budgeted separately. Russ Collins called the $5,000 variance not significant. Hewitt agreed that it’s “a drop in the bucket.”

Comm/Comm: Unaudited FY 2011 Budget Numbers

Roger Hewitt pointed to the unaudited financial statements from the end of the 2011 fiscal year. He noted that by state law the DDA has to amend its budget every year to reflect the best estimate of where the organization stands financially. The audit is in process now, and the DDA expects that the numbers will be the same at the end of the audit.

Of the items that Hewitt ticked through, the scaling back of expenditures on parking maintenance drew scrutiny from board member Newcombe Clark. He wanted to know if the amount reflected an additional revised downward expenditure on maintenance. Yes, answered Hewitt, but the reduced maintenance activity was still within the DDA’s engineering consultant’s recommendations.

Clark noted that painting is cosmetic unless you don’t do it for several years – then it becomes structural. Hewitt assured Clark that over a 10-year period, the DDA would spend the same amount it had originally planned. Hewitt described the DDA’s approach to maintenance as “fanatical,” so felt like the DDA was in very good shape with respect to the maintenance issue.

Hewitt noted that the fund balance had decreased considerably from a high of around $20 million several years ago and the DDA had spent down a good deal of it. Those numbers would continue to go down, he said.

Comm/Comm: go!pass

John Mouat reported that the getDowntown advisory board had advised increasing the cost of go!passes to employers from $5 to $10. With the popularity of the program, all of the funds had been expended, he said. However, the Ann Arbor Transportation Authority (AATA) had passed a resolution at its last meeting adjusting the price it charges for go!pass rides over the next two years to calibrate it to the amount already pledged by the DDA for that period. That led Mouat to conclude that: “We’re covered for go!passes.” [For detailed Chronicle coverage of the go!pass AATA funding decision, see "AATA Reduces Charge for go!pass Rides"]

Comm/Comm: Bicycle Parking

John Mouat gave an update on information about bicycle parking downtown, provided by a DDA summer intern. Highlights included: 1,000 bike parking spaces downtown; 83% of bikes parked are locked to hoops instead of lampposts; the bicycle map has been updated; the last of new vegetable-shaped hoops have been installed at the farmers market.

Comm/Comm: Construction Updates

John Splitt reported that the Fifth and Division streetscape improvement project is mostly complete, except for the 300 block of South Fifth Avenue – that section will need to wait until construction of the underground parking structure on South Fifth is further along. On the 200 block of South Fifth, just some lampposts remain to be installed.

The underground parking structure site along Fifth Avenue is now is getting very busy, Splitt reported. Waterproofing work is being done on the east dog-leg side of the project. Columns and slabs are getting poured in the other two phases – the middle and the Fifth Avenue side. [The project is being built from east to west.]

Comm/Comm: State of the Downtown Report

At the board meeting, the previous release of the DDA’s State of the Downtown Report was acknowledged. The report features a raft of statistical information about the DDA district, including acreage, building square footage by category, population trends, real estate occupancy rates, crime trends, and the like. Interspersed through the text are photos, including a cover photo by Seth McCubbin.

Present: Nader Nassif, Newcombe Clark, Roger Hewitt, John Hieftje, John Splitt, Sandi Smith, Leah Gunn, Russ Collins, Joan Lowenstein, John Mouat

Absent: Keith Orr, Bob Guenzel

Next board meeting: Noon on Wednesday, Oct. 5, at the DDA offices, 150 S. Fifth Ave., Suite 301. [confirm date]

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At its Feb. 22, 2011 meeting the city council approved a site plan for the 1500 Pauline property, allowing Avalon to construct 32 dwelling units and 39 surface parking spaces. The plan includes demolition of four existing apartment buildings – known as the Parkhurst Apartment complex – containing 48 units. The new construction would include six new buildings totaling 53,185 square feet. Five of the buildings would include one-, two- and three-bedroom apartments and three-bedroom townhomes. The sixth building would be a community center with a playground. The project won a recommendation from the city’s planning commission at that body’s Jan. 20, 2011 meeting.

This brief was filed from the boardroom in the Washtenaw County administration building, where the council is meeting due to renovations in the city hall building. A more detailed report will follow: [link]

Mary Jo Callan, director of the Washtenaw County/city of Ann Arbor office of community development, at Tuesday's meeting of the Washtenaw Urban County. (Photo by the writer.)

“I am bringing you some troubling news,” said Mary Jo Callan, director of the Washtenaw County/city of Ann Arbor office of community development. “Do you want to start with the bad news, or the worst news?”

Callan reported that the two major programs that fund projects for low-income neighborhoods – the Community Development Block Grant and HOME Investment Partnership programs, both operated by the U.S. Dept. of Housing and Urban Development (HUD) – have been targeted by Congress and President Obama for significant cuts in both the current fiscal year and in 2012. Washtenaw County communities receive about $2.4 million annually from the CDBG program alone.

Though at this point it’s unclear exactly what the final federal budget will include, Callan said it’s nearly certain that some funding cuts will occur – her staff is planning for a 10% reduction in grants from those two programs for fiscal 2012. “It’s pretty bleak,” she said.

Federal Funding Outlook

The Urban County is a consortium of 11 local municipalities that receive federal funding for low-income neighborhoods. Members include Washtenaw County, the cities of Ann Arbor and Ypsilanti, and the townships of Ann Arbor, Ypsilanti, Pittsfield, Scio, Superior, Northfield, Salem, and Bridgewater. “Urban County” is a designation of the U.S. Dept. of Housing and Urban Development (HUD), identifying a county with more than 200,000 people. With that designation, individual governments within the Urban County can become members, making them entitled to an allotment of funding through a variety of HUD programs.

Two HUD programs – the Community Development Block Grant and HOME Investment Partnership – are the primary funding sources for Urban County projects. Based on a quarterly report presented to Urban County members at their January 2011 meeting, since July 2009 roughly $5.6 million in CDBG and HOME projects have been completed or are underway in Urban County jurisdictions, ranging from housing rehab or acquisition to road improvements and sidewalk repair. [.pdf file of Urban County quarterly project report]

At Tuesday’s monthly meeting of the group’s executive committee, Callan updated members on both the funding status for the current fiscal year 2011, as well as the upcoming 2012 fiscal year.

President Barack Obama recently released his 2012 federal budget, which proposed a 7.5% cut to Community Development Block Grant funds and a 10% cut to HOME funds. The budget provides for increases in some other HUD programs, she said, but the funds coming to the Urban County will almost certainly be decreased.

For the remainder of the current 2011 fiscal year, the U.S. House of Representatives recently passed a continuing resolution – a bill that calls for 65% cuts to the CDBG program, from about $4 billion to $1.5 billion nationwide. A less dramatic decrease is proposed for HOME funds, from $1.85 billion to $1.65 billion. That bill is expected to be modified in the Senate – but the final version will still likely contain cuts, Callan said.

There are a lot of advocates for CDBG and HOME funding, she said, and supporters managed to kill an amendment that would have eliminated the CDBG program entirely. Callan urged Urban County members to contact their federal representatives to let Congress know how important the funding is for the community.

Dramatic decreases have also been proposed for the Community Services Block Grants (CSBG), Callan noted. Obama’s budget calls for a 50% cut to that program, which provides job training and other services for low-income workers. The other 50% will be available only through competitive grants – currently, the funds are allocated through entitlement programs. [Locally, the Washtenaw County Employment Training & Community Services (ETCS) department is designated to receive all CSBG funds for this county. In a follow-up email to The Chronicle, ETCS interim director Patricia Denig said CSBG funds account for about 6% of the department's annual budget, or nearly $600,000.]

At Tuesday’s meeting, several members of the Urban County executive committee had questions about the funding. Bill McFarlane, Superior Township supervisor, observed that it looked like funding for 2011 was uncertain, and wondered what that might mean for projects that had already been approved but that hadn’t yet started. Callan said they should keep moving ahead with their planned projects. Her staff is getting regular updates about the situation, and they’ll reach out to Urban County members to keep them updated as well, as things change.

For the 2011 CDBG and HOME funding, Callan said they hope to know by April what changes will occur. It’s less clear when they’ll learn about cuts for 2012 – Callan said her staff is planning for a 10% drop in funding, though it could be more than that.

She noted that another complicating factor is that they’re dealing with differently defined fiscal years. For example, HUD operates on a fiscal year that begins July 1, as do many local entities like the city of Ann Arbor. The fiscal year for the overall federal government, however, begins Oct. 1 – that’s also the start of the state of Michigan’s fiscal year. Washtenaw County’s fiscal year mirrors the calendar year.

Leah Gunn, a Washtenaw County commissioner who chairs the Urban County executive committee, clarified with Callan that in the event of cuts, all jurisdictions that are members of the Urban County would see funding cut proportionately, based on population size.

After the meeting, Callan told The Chronicle that they’ll need to explore all options in response to the decrease in federal funding, including possible staff cuts to her office, which employs 13 full-time workers. While they’ll try to keep as many of the projects, programs and services as possible, at some point funding cuts will inevitably affect the people who deliver those programs and services, she said.

Public Hearing: 2011 Needs Assessment

The office of community development is putting together an annual plan for the U.S. Dept. of Housing & Urban Development (HUD), which provides funding for low-income housing and neighborhood projects in the county. The plan will include a list of proposed projects located within the Urban County area that would be eligible for HUD funding.

As part of that process, Tuesday’s meeting included a public hearing to gather input from residents about community needs. Lily Au was the only speaker. As she has in the past at meetings for many different public bodies, Au criticized the amount of administrative fees that are used by the office of community development staff to administer their grant-funded programs.

Saying she was worried about those who live in poverty, Au also objected to the demolition of Parkhurst Apartments at 1500 Pauline in Ann Arbor, a low-income housing project spearheaded by the nonprofit Avalon Housing. [The project's site plan was recommended for approval at the Jan. 20, 2011 Ann Arbor planning commission meeting and approved at the Feb. 22, 2011 city council meeting.] Au criticized Avalon’s plan to demolish the existing apartment complex, which is located west of Fritz Park, between Seventh and West Stadium and has 48 apartment units that house federally subsidized low-income residents. The plan calls for constructing a new five-building complex with 32 units, a playground and community center, at an estimated cost of $8 million. Au showed photos of the exterior of the current complex, saying it had been renovated just a few years ago and was in good shape. She also criticized another Avalon housing project – Near North, on North Main Street. She said that developers made Avalon pay too much to acquire the property for its project.

Public Commentary: Staff Response

Later in the meeting, Jennifer L. Hall, housing manager for the office of community development, responded to some of Au’s comments. The exterior of the Parkhurst complex – which Au had shown in photos – tells you nothing about the condition of the buildings, Hall said. The buildings are constructed on land that slopes, she said, and for years water has been infiltrating the structures, causing walls to bow and support beams to rust. Emergency repairs had been undertaken to keep the buildings from being condemned.

Neither Avalon nor the Urban County had sufficient funds alone to embark on a major renovation or reconstruction, Hall said – they needed the resources of the Michigan State Housing Development Authority (MSHDA) for the project. However, after MSHDA engineers inspected the complex, the state agency refused to put more money into the housing unless it were torn down and rebuilt, she said. If MSHDA had walked away from the project, she added, they would have lost that housing completely. The new project has fewer units because that’s the number of units that conform to current zoning, she explained.

As for Near North, Hall said that private developers bought the nine parcels at that site in 2003-04, when the local real estate market was still robust. The developers had planned to build market-rate housing, she said, but when the economy tanked, they couldn’t get financing for their project. Hall said that Avalon’s funders required them to get an appraisal for the property, and she guaranteed that they didn’t pay more than market rate at the time. She also said it was misleading to take the cost of the entire Near North project and divide it by the number of units there, to calculate a cost-per-unit. The project also included retail and office space, as well as a greenway – there are multiple funding sources that involve non-housing portions of the project, she said.

Misc. Updates

Staff of the office of community development gave brief updates on several housing-related projects at Tuesday’s meeting.

Deals have been negotiated on two apartment complexes – Parkside, at 701 Miller in Ann Arbor, and Gateway on West Michigan Avenue in Ypsilanti Township. Both were formerly owned by the Washtenaw Affordable Housing Corp., now an all-but-defunct nonprofit. Gateway in particular has been a problem for well over a year – Jennifer L. Hall, OCD’s housing manager, had briefed the Urban County in detail at its March 2010 meeting:

It was the first and largest rental project undertaken by the Urban County, which allocated $310,000 in 2002-03 to the Washtenaw Affordable Housing Corp. WAHC, which owns Gateway Apartments, had used the Urban County money to rehab the 43-unit property.

WAHC had taken out a $1 million loan to buy the property, but now the nonprofit is “essentially out of business,” Hall told the Urban County executive committee. Avalon Housing, an Ann Arbor nonprofit, has taken over WAHC’s operations, including management of Gateway. WAHC’s board will be deciding how to dispose of its properties, Hall said. And if Avalon isn’t interested in buying Gateway or continuing to manage it, another buyer or property manager will need to be found.

The loan to WAHC is held by three banks: National City, Michigan Commerce Bank and the Bank of Ann Arbor. If a sale is made, the bank loan would be paid first. And if the sale to a party other than Avalon isn’t sufficient to cover the remaining loan balance plus the $310,000 Urban County grant, then the county would be on the hook for repaying that amount to HUD.

Why would HUD need to be repaid? Because the HUD funding stipulates that all of the apartments must be offered at affordable housing rates through December 2012. If not, the Urban County would be considered out of compliance, and would have repay the entire $310,000 to HUD, according to Hall.

On Tuesday, Hall said the three lenders that held liens on both Gateway and Parkside agreed to renegotiate terms. That allowed the nonprofit Avalon Housing to acquire Parkside, she said, and Gateway has been listed for sale. The banks were willing to lower the Gateway mortgage and give them another six months to find a buyer, Hall said – she hopes they’ll be able to sell the property for a price that will cover the debt. Leah Gunn described Gateway as a “big bugaboo,” and hoped they found a buyer quickly.

Hall also reported that the homeownership assistance program managed by the OCD has used up all its Neighborhood Stabilization Program (NSP) funding, which was part of the federal stimulus package. OCD staff is now talking with its partners to see how they can fund future homebuyer education programs. As part of that effort, they’re meeting with local lenders who might be interested in participating in order to receive Community Reinvestment Act credits.

In Ypsilanti Township, OCD is working with township staff and Habitat for Humanity of Huron Valley to deal with the township’s long-term abandoned residential properties. There might be funds available from the Michigan State Housing Development Authority (MSHDA) and Federal Home Loan Bank, Hall said.

Damon Thompson, OCD operations manager, said their office continued to get calls from low-income residents in need of emergency furnace repair or replacement. Last week they’d received a call from a man who was taking care of two small children and was heating their home with his stove, Thompson said. He urged Urban County members to refer residents to the OCD if they need help. In a follow-up phone conversation with The Chronicle, Thompson said that grants are provided – generally in amounts up to $3,000 – through an emergency repair program that’s paid for with CDBG funds. Residents who need this assistance can call 734-622-9025.

Next meeting: Tuesday, March. 22, 2011 at 1 p.m. at the Washtenaw County Learning Resource Center, 4135 Washtenaw Ave. [confirm date]

Estimated cost of the project is $8 million. That cost includes an upfront developer’s fee of 15% – typical for nonprofit projects like this – as well as costs associated with relocating current residents and paying for their housing at an alternative site for up to five years, as mandated by federal law under the Uniform Relocation Assistance and Real Property Acquisition Policies Act.

Avalon expects to fund the project through a combination of sources, including Low Income Housing Tax Credits, HOME program subsidy (HUD funds allocated through the Michigan State Housing Development Authority and the Washtenaw Urban County), the Federal Home Loan Bank, and private loan funds.

The proposal complies with the site’s R4B zoning. The city’s planning commission approved the site plan at its Jan. 20, 2011 meeting on a 7-0 vote.

This brief was filed from the boardroom in the Washtenaw County administration building, where the council is meeting due to renovations in the city hall building. A more detailed report will follow: [link]

This painting of blue houses is not in Avalon Housing's site plan for its affordable housing proposal at 1500 Pauline. It's part of a display by fifth grade students in the lower level of the downtown Ann Arbor District Library, where the Jan. 20 planning commission meeting was held.

The project will include demolishing the existing structure and constructing five one- and two-story buildings and a community center. Though commissioners supported the project, some raised concerns over the relocation of current residents and the fact that the new complex, when completed, will have fewer units – 32, compared to the current 47 apartments. Of those, there will also be far fewer one-bedroom units – six, compared to the current 21.

Representatives from Avalon told commissioners that the lower number was sustainable – 35% of the units will be set aside for residents who’ll receive supportive services. They also said the location was more suited for families, and that there’s more need for two- and three-bedroom affordable housing units in the city.

Another project on the agenda – a site plan and special exception use for 630 Oxford – was postponed, as recommended by city planning staff. The Phi Kappa Psi fraternity wants to turn an existing rental duplex into their chapter’s permanent home, housing up to 24 residents. The housing director and some board members for the neighboring Delta Gamma sorority came to Thursday’s meeting to object to the plan, saying they did not want fraternity culture to disrupt their quiet neighborhood.

Commissioners also unanimously recommended approval of the annexation of 1575 Alexandra Blvd., a vacant 0.82-acre lot now in Ann Arbor Township. The lot is surrounded by the city’s Riverwood Nature Area – its owner plans to build a single-family home on the site.

Also at Thursday’s meeting, Wendy Rampson of the city’s planning staff reminded commissioners of a public meeting on Wednesday, Jan. 26 to get community feedback on draft recommendations for R4C and R2A residential zoning district ordinance revisions. The meeting runs from 6-8 p.m. at the lower level of the downtown Ann Arbor District Library, 343 S. Fifth Ave.

1500 Pauline Redevelopment

The nonprofit Avalon Housing submitted its site plan for the 1500 Pauline project in December. Now called Parkhurst Apartments, the complex – located west of Fritz Park, between Seventh and West Stadium – includes 48 apartment units housing federally subsidized low-income residents. Of those units, one is used for community space, 21 are one-bedroom units, and the rest are two- and three-bedroom apartments.

The plan is to tear down the existing building and construct a new five-building complex with 32 units, a playground and community center, at an estimated cost of $8 million. That cost includes an upfront developer’s fee – typical for nonprofit projects like this – as well as costs associated with relocating current residents and paying for their housing at an alternative site for up to five years, as mandated by federal law under the Uniform Relocation Assistance and Real Property Acquisition Policies Act.

Avalon expects to fund the project through a combination of sources, including Low Income Housing Tax Credits, HOME program subsidy (HUD funds allocated through the Michigan State Housing Development Authority and the Washtenaw Urban County), the Federal Home Loan Bank, and private loan funds.

The city’s planning staff recommended approval of the project’s site plan.

1500 Pauline: Public Hearing

Saying that he lived at 1500 Pauline, Gladwin McGee wondered why the apartments were in such disrepair, when they had been renovated relatively recently – in the late 1990s. He also questioned why the number of units were being reduced, given that there’s a lack of affordable housing in Ann Arbor.

Jim Mogensen noted that he was speaking for himself, but that he’s past president of the nonprofit Religious Action for Affordable Housing. It’s important that this site remain a place for affordable housing, he said. It’s also important that there are as many two- and three-bedroom apartments as possible – those units are harder to find than one-bedroom apartments, he observed. He also spoke about the cost of the project, saying that in nonprofit projects like this, most of the money is paid upfront for the development costs – unlike for-profit projects, which recoup their costs over time.

Michael Appel, associate director of Avalon Housing, told commissioners about the history of the complex. It’s owned by Washtenaw Affordable Housing Corp., which renovated it in 1999. It had been managed by a series of private management companies, he said, until Avalon took over operations in 2009. The complex has suffered from operating losses and deferred maintenance – that’s why they need to tear it down and rebuild. The architect who inspected the complex found hundreds of immediate and short-term issues that needed to be addressed to keep the property up to code.

In previous years, it has only met code after “substantial” subsidies by the city, Appel said. Another factor: The Michigan State Housing Development Authority (MSHDA) determined that because of the significant infrastructure problems, they weren’t willing to invest in the project unless it were rebuit – “leaving us with a very tough choice,” Appel said. They’re working with tenants on relocation – it’s a process that’s tightly regulated by federal law, he said, and the joint city/county office of community development is involved. He wrapped up by saying if they gain approval that night from the planning commission, they could be on the city council’s Feb. 21 agenda and meet a March deadline to apply for state tax credits through MSHDA. The end result, he said, is that tenants will have a much nicer place to live.

Wendy Carty-Saxon, Avalon Housing's director of housing development, speaks to the planning commission during a public hearing on the 1500 Pauline site plan.

Wendy Carty-Saxon, Avalon’s director of housing development, reported that they’d held two community meetings and two meetings for residents – both had elicited positive responses, she said. [.pdf file of summary from those meetings] The design of the new site will open it up to the neighborhood, she said, providing more “eyes on the street” which will help with security issues. The question of density – how many new units to build – was a difficult one, she said. But they tried to look at what would be sustainable to operate in the future. The 32 units they’re proposing fit with the site’s current zoning, she said. It’s also similar in size to Carrot Way, another Avalon supportive housing project. They wanted to preserve the number of two- and three-bedroom units, she said, and add a modest community center. The site will also have improved barrier-free access.

Lekendrick “Levi” Murphy told commissioners that this is his third year living at 1500 Pauline, and that he likes the neighborhood. As a single male, he said the reduction in one-bedroom units was pressing on his mind. It’s important to be aware of how people are treated as they’re relocated, he said, and to look at who will be allowed to move back in. By and large, the residents there now are “fine people,” he said, adding that he likes the proposed site plan.

John Milroy has lived for 10 years in a house on Northwood, neighboring the complex. He attended one of the community meetings held by Avalon, and said that they seem like they want to do the right thing. He said he had no reason to object to the project, and looked forward to not having to look at a crumbling parking lot anymore. He said he supported the project.

1500 Pauline: Commissioner Deliberations

Wendy Woods began by asking for clarification of the types of units that are currently available at the complex. There are 21 one-bedroom units, with the remaining units divided between two-bedroom and three-bedroom apartments, Avalon’s Wendy Carty-Saxon said. One of the three-bedroom apartments is used for community space.

Woods noted that in another Avalon project being built on North Main – called Near North – the nonprofit had argued that there was a shortage of one-bedroom apartments, and that’s why Near North needed to have more one-bedroom units. Woods asked for Avalon staff to help the commission understand how they can rationalize a reduction in one-bedroom units for the 1500 Pauline project, which will include only six one-bedroom apartments.

Michael Appel said it was largely an issue of location. Near North is closer to downtown, opening onto Main Street. It didn’t seem ideal for larger family-sized units. In contrast, 1500 Pauline is in a neighborhood setting, on a less-busy street, next to a park. They also were working with the city/county office of community development, and OCD staff felt that more two- and three-bedroom units were needed. One reason why there are fewer overall units is that they felt the higher density in the past led to some of the problems at the complex, he said.

Woods asked what kind of problems they’ve experienced. Appel explained that in the two years they’ve been managing the complex, the issues of stability, safety and turnover related to higher density. If you compare on a bedroom-per-acre basis, 1500 Pauline has higher density than Carrot Way or many other public housing units.

They’re trying to preserve low-income housing on that site, he said, and were given the option of redeveloping it or losing it – without reinvestment, it would go bankrupt. That drove the decision to redevelop, and they then tried to determine the appropriate mix of units, he said.

Michael Appel and Carole McCabe of Avalon Housing answer questions from Ann Arbor planning commissioners about the 1500 Pauline project at their Jan. 20 meeting.

Carole McCabe, Avalon’s executive director, stepped up to the podium to address Woods’ question. There’s no one more committed than Avalon to expanding affordable housing in this community, she said. But the issues of density are real, and they struggle with them. They have a full wait-list for both single residents and families, McCabe said, but they had limited options at this location.

Jean Carlberg said that one troubling aspect is the relocation of residents in one-bedroom apartments – only six of the 21 tenants will be able to move back in, she noted. She asked for more details on the relocation effort, and whether for some tenants, their relocation would be into permanent housing.

Because the project is federally funded, they are bound by the Uniform Relocation Act, Appel said. They have to work with tenants to find new housing, pay for their moving expenses, and provide a subsidy for the new housing for up to five years. [These costs are built in to the project's estimated $8 million budget.] The office of community development is helping with that process, he said. They anticipate that many of the current tenants will apply to return when the 1500 Pauline is rebuilt, about 18 months from now.

McCabe added that they have a team offering support services, and they’ll be very involved in the relocation process. Within the affordable housing stock that Avalon oversees, they have more one-bedroom units than two- or three-bedroom units, she said.

Evan Pratt clarified with planning staff that the current complex is non-conforming to zoning on that site – that is, it has more units now than the existing zoning allows. In contrast, the number of proposed units does conform to zoning there. [The site is zoned R4B, for multi-family dwellings.] He also pointed out that the Near North project was a planned unit development (PUD), which allows for greater density.

Kirk Westphal said he hoped everyone would agree that the site should be redeveloped, rather than lose available funding – that perspective caps his comments a bit, he said. In general, given the context of the site and the city’s master plan, the commission would be amenable to PUDs, especially for affordable housing projects.

Westphal took issue with the link between density and safety problems, noting that in many cities there are neighborhoods with higher density that are quite safe. His understanding was that for this site, the issue was more related to a staff-resident ratio.

He said he liked the new design – the old building layout was outmoded. He clarified that the proposed playground is technically a public one, then questioned how the public would know that, given that there’s no sidewalk planned from Pauline to the playground. Would there be signs?

Planning commissioner Erica Briggs, left, talks with Chris Cheng of the Ann Arbor planning staff before the commission's Jan. 20 meeting started.

Chris Cheng of the city’s planning staff said they expected the playground to be used mostly by residents, and that they hadn’t discussed signs or a sidewalk. Erica Briggs concurred with Westphal that it would be more inviting to the general public if a sidewalk were installed from Pauline. Carlberg observed that people would end up creating a path themselves, so Avalon might as well put one in where they wanted it.

Briggs also asked about the neighboring park, noting that in the summary of comments from the community/resident meetings that Avalon held, some people had noted that they didn’t find it safe, and that there are flooding problems there. Cheng said they’ve talked with parks staff about improving the paths in Fritz Park, but it’s not connected with the site plan.

Briggs then asked Avalon to clarify the difference between affordable housing and supportive housing. Wendy Carty-Saxon explained that 35% of the units in the new project would be set aside for supportive housing, with Avalon providing services to tenants, depending on their needs. Often they end up reaching out to other tenants as well, she said. When Briggs began to pursue that line of questioning, Eric Mahler – the planning commission chair – cut her off, noting that they needed to focus their deliberations on issues related to the site plan.

Diane Giannola said she supported the project, and that it would be a benefit to the neighborhood.

Mahler also expressed support, but said the proposal seemed short on details about the design. David Esau of Cornerstone Design, the project’s architect, said they wanted to keep it in scale with the neighborhood, with one- and two-story buildings. They haven’t signed off on all the materials, but it would be largely brick and siding – standard residential construction, he said – and would meet the city’s new energy code.

Outcome: The planning commission unanimously recommended approval of the 1500 Pauline site plan. It will now be forwarded to city council for approval.

Phi Kappa Psi on Oxford

The University of Michigan chapter of Phi Kappa Psi is requesting site plan approval and a special exception use for a property at 630 Oxford, between South University and Hill. The house is now a rental duplex, allowing for up to eight occupants. The special exception use would allow for a fraternity to occupy the building, with a maximum of 47 occupants, based on the size of the lot. The fraternity is requesting permission for up to 24 occupants, including a resident director.

The site plan calls for 10 parking spaces in the rear of the lot, though that number may be revised. Planning staff has asked for more information and changes to the plan, and recommended postponement.

Phi Kappa Psi: Public Hearing

Six people spoke during the project’s public hearing, including two people representing Delta Gamma, whose sorority house is adjacent to the site and who oppose the project.

Allan Lutes of Alpha Management Group spoke on behalf of the owners. [The owners are listed in the site plan application as BH630Ox LLC, at 2112 Vinewood in Ann Arbor, where Big House Rentals is located.] This isn’t a project that was prompted by seeing a For Sale sign, he said – they carefully selected this site, considering the neighborhood and the city’s master plan, he said. They feel the site plan is consistent with the area’s zoning, and they won’t need variances.

It’s in a neighborhood that already includes many sororities, fraternities and University of Michigan housing, Lutes said. The plan is to preserve the building’s outside architecture, and to add additional screening to buffer it from neighbors. They plan to use the basement as their “gathering space,” Lutes said, for minimum impact to the surrounding houses, adding that it “at times may get a little loud.” He noted that they have letters of support from five neighbors.

Saying he’d been on the fraternity’s alumni board for 15 years, David Frayne told commissioners that Phi Kappa Psi had the simple goal of obtaining permanent housing. Though the fraternity had been at the University of Michigan since 1876, they are currently leasing a house on South State from another fraternity, he said – it’s an older building, and not adequately maintained. They look forward to having a house that members can be proud to live in, Frayne said, adding that the project has support from the local alumni network. They’re making provisions to have a resident director on site, and intend to maintain the character of the house and the integrity of the neighborhood, he said.

Mary Higgins identified herself as the house director for the Delta Gamma sorority, a position she’s held for 12 years. The sorority’s house is located just north of 630 Oxford. They are opposed to the project, she said, though they don’t oppose the fraternity itself. It’s a quiet neighborhood, and what they object to is the fraternity culture, Higgins explained, adding that she was also speaking on behalf of the Knight-Wallace Fellows, a journalism program housed at 620 Oxford. The street is narrow and can’t accommodate more cars, she said. Higgins also cited concerns about garbage, noise and “loud and unruly parties,” adding “we do not look forward to this move.”

Phelps Connell said he was a board member of a fraternity in the neighborhood, and that they welcomed the arrival of Phi Kappa Psi. His board supports the site plan, Phelps said. He didn’t identify which fraternity he represented, but said the chapter had been in its location in the Oxford neighborhood for about 100 years – though “I haven’t been on the board that whole time,” he quipped.

Saying he was there representing the undergraduates at Phi Kappa Psi, John Gray – a senior majoring in business – defended the character of the fraternity. He cited a list of honors that the chapter had received. Members strive for excellence in themselves and their community, Gray said. He noted that they had been paired up with Delta Gamma for a social event last year, “and got along with them quite fine” – a comment that elicited laughs from others in the room.

Carol Makowski, chair of the alumni board for the Delta Gamma sorority, told commissioners that they should find out whether Phi Kapp Psi was planning to have an on-site resident director. That could change the character of the house, she said.

Phi Kappa Psi: Commissioner Deliberations

Eric Mahler, the commission’s chair, began by noting that if the project is postponed, anyone who spoke at the public hearing could speak again at the project’s next public hearing.

From left: Planning commissioners Wendy Woods, Diane Giannola and Erica Briggs, and Wendy Rampson, head of the city's planning staff.

Jean Carlberg commented that one of the standards for granting a special exception use was that the project “will not be detrimental to the use, peaceful enjoyment, economic value or development of neighboring property, or the neighborhood area in general.” She hoped that a resident director would be a “bonifide adult” who would be on site at all times.

Allan Lutes of Alpha Management Group responded, saying that the alumni group has every intention of having a live-in advisor who’s not an undergraduate. They plan on building a private two-room suite at the back of the house for that person. As for concerns about fraternity culture, he conceded that there have been some stupid and foolish acts at fraternities, and it’s hard to counter a cultural conception based on “Animal House.”

He noted that this fraternity employs his professional management group to oversee the facility, and his staff would be at the house several times each week. In addition, unlike some fraternities, Phi Kappa Psi is a member of UM’s Interfraternity Council. The IFC has standards of behavior that, if not adhered to, result in sanctions, Lutes said, like social probation.

Carlberg raised another issue: Did they have sufficient parking spaces for 24 residents? Lutes said that zoning requires even fewer spaces than the eight they’re proposing. At their current location, he said, there are 31 residents and 10 spaces, so they’re estimating that eight should be sufficient.

Evan Pratt noted that having a resident director wasn’t written into the special exception use – Wendy Rampson, head of the city’s planning staff, said it wouldn’t hurt to make that explicit. Pratt then asked whether there would be any bedrooms in the basement, in addition to the common area. They might put in two bedrooms there, Lutes said. When Pratt observed that the house was relatively small for 24 residents, Lutes said the “occupant load” reflected how students preferred to live – in singles and doubles – and was lower than what was permitted by city code.

Wendy Woods said she was glad they planned to postpone action, because there was additional information needed. It would be helpful to see the proposed floor plan, for example, and to find out what maximum occupancy was allowed for parties. Occupancy is dictated by the fire code – Rampson said they could get that information for commissioners.

Woods also asked whether residents had been notified about the proposal, and what kind of input they’d given. Lutes reported that they had distributed letters to residents within 500 feet of the parcel, providing the full site plan and contact information. They hadn’t been contacted by any neighbors, and only one person had attended the meeting, representing the Oxbridge Neighborhood Association. Lutes characterized her opinion of the plan as neutral.

The representatives from Delta Gamma told commissioners that they hadn’t received the mailing.

Outcome: The planning commission voted unanimously to postpone action on the 630 Oxford site plan and special exception use.

Present: Erica Briggs, Jean Carlberg, Diane Giannola, Eric Mahler, Evan Pratt, Kirk Westphal, Wendy Woods. Also: Wendy Rampson, head of the city’s planning staff.

Absent: Bonnie Bona, Tony Derezinski.

Next regular meeting: The planning commission next meets on Tuesday, Feb. 1 at 7 p.m. in the Washtenaw County administration building’s boardroom, 220 N. Main St. [confirm date]

Entrance to the apartment complex at 1500 Pauline in Ann Arbor. (Photos by the writer.)

The project is being proposed by the Ann Arbor nonprofit Avalon Housing, though the property is still owned by the Washtenaw Affordable Housing Corp. Avalon took over operations of several WAHC properties, including 1500 Pauline, in 2009.

Also filing with the city on Monday was the Michigan Alpha Chapter of the Sigma Phi Epsilon fraternity, which is seeking a special exception use to transform the Memorial Christian Church building at the corner of Tappan and Hill into a fraternity house.

Avalon Housing: 1500 Pauline

In 2009, the nonprofit Avalon Housing took over operations for properties owned by the Washtenaw Affordable Housing Corp., including 1500 Pauline. The original intent was to rehab the four apartment buildings on the property, which is located on the north side of Pauline, between Seventh and West Stadium, next to Fritz Park. There are 47 apartments there, rented to federally subsidized low-income residents.

Financing for the originally planned rehab hinged on getting state tax credits from the Michigan State Housing Development Authority (MSHDA). But a MSHDA official toured the facility earlier this year and determined that several issues – including structural problems caused by deferred maintenance, drainage problems, poor barrier-free access and outdated layouts – made it unlikely that tax credits would be granted. The feeling was that it wasn’t worth additional investment, said Jennifer L. Hall, housing manager for the city of Ann Arbor/Washtenaw County office of community development, which has been working with Avalon on the project.

MSHDA indicated that they’d be more likely to provide tax credits to a newly constructed project. So Avalon now plans to tear down the existing buildings and redevelop the site into 32 units, including three-bedroom townhomes and one-, two- and three-bedroom apartments. The plan also calls for a community center on the site.

David Esau of Ann Arbor-based Cornerstone Design is the project’s architect. Cornerstone has worked on other projects with Avalon, including a renovation of Arbordale Apartments, a 39-unit complex that’s near the 1500 Pauline site.

Financing for the project is still being worked out, said Michael Appel, Avalon’s executive associate director, in a phone interview with The Chronicle on Monday. If the project gains approval from the city’s planning commission and city council, they hope to apply for a March 2011 round of state tax credits, he said, with the goal of starting construction in 2012. [Projects submitted on Monday will be reviewed by city staff over the next few weeks and would likely be scheduled for a vote by the city's planning commission at its Jan. 20, 2011 meeting.]

Hall said that Avalon also could apply for funding from the Washtenaw Urban County, which receives staff support from Hall and others in the office of community development. The Urban County is a consortium of 11 local governments, including Ann Arbor, that receives and allocates funding through a variety of U.S. Housing and Urban Development (HUD) programs, including the Community Development Block Grant (CDBG) and HOME Investment Partnerships. Those two programs provide funding for projects to benefit low- and moderate-income residents, focused on housing, human services and other community development efforts.

The Urban County has already committed funds to other Avalon projects, including the Near North housing project to be built on North Main between Kingsley and Summit. The Urban County has also been involved in the struggling Gateway Apartments, a low-income complex that – like 1500 Pauline – is owned by WAHC and now managed by Avalon.

Sigma Phi Epsilon Fraternity

The building at 730 Tappan – at the intersection of Tappan and Hill, across the street from the University of Michigan Ross School of Business – is home to the Memorial Christian Church (Disciples of Christ). The church is planning to sell the property to the Michigan Alpha Chapter of the Sigma Phi Epsilon fraternity. On Monday, the fraternity filed for a special exception use with the city – if granted, it would allow the building to be converted into a residence for the fraternity. The chapter is currently located nearby at 704 Hill St., on the southeast corner of Hill and State.

Memorial Christian Church (Disciples of Christ) at 730 Tappan in Ann Arbor, on the northwest corner of Hill and Tappan.

The application to the city for a special exception use states that no significant changes are planned for the building’s exterior. The site includes 19 parking spaces – the plan calls for adding 11 bike spaces in the basement of the building as well as 11 bike spaces outside. The interior of the three-level building would be remodeled into a residence with a maximum of 44 beds. (The chapter has over 100 members, but more than half live off-site.) The property is currently zoned R2B, a zoning category that allows for fraternities. The neighborhood includes many fraternities, sororities and student rental properties.

Jerry Mangona, president of the chapter’s alumni association, told The Chronicle they’ve been trying to find an appropriate site for the past five years – the current location was never intended to be permanent, he said.

The church site is ideal for two reasons, Mangona said. First is its location – next to the business school and a sorority (Delta Delta Delta, at 718 Tappan), and near Michigan Stadium. There’s also ample parking, he said, which is not the case at their current house. Secondly, the church structure itself is impressive, he said, both in terms of its history and architecture. The historic church was originally built on State Street – where the UM law quad is now located – and was moved to its current location in 1923. The renovation would include common areas, such as a formal dining room and possibly a lecture room. The chapter would be unique on campus, Mangona said – their goal is to be designated a residential learning community, dedicated to leadership development and continuing education for members and alumni.

Mangona declined to provide information regarding the purchase price or cost of renovations, saying only that renovations could reach the 7-figure range. Reached on Tuesday, Dr. Rev. Irwin Green, the church’s pastor, said he preferred not to comment on the sale at this time.

According to its summer 2010 newsletter, the church was negotiating a sale of the property for $1.4 million. Mangona confirmed that this was the church’s asking price at the time, but indicated it was not the final price. He said the closing of the deal will depend in part on whether they are granted a special exception use by the city, and on whether their architect determines that the interior renovations they’d like to make are feasible.

The church’s December 2010 newsletter indicates that plans for an upcoming move to a leased facility in Pittsfield Township – as well as a name change – are underway:

The work of gathering appropriate information for an appearance at the Pittsfield Township Board to request a property use permit, for the leased facility as a church, should be completed soon. We should be ready to announce our plans on storage and how the logics of storing some of our “stuff” will happen in the very near future. A celebration of who we have been and who we hope to be is being planned for January. We will take the leap toward a new name for the church. That will be a time for us to begin gathering our ancestors – the saints who over a span of 119 years have been part of building up and deepening this small faith community on Hill St and Tappan. We want to carry them with us as we wait and plan for our new church and to pray for their help.

And yet, a true community contains the living and the dead. God’s community of the faithful isn’t limited to only those we can see and share geography. The living have gifts to give too — looking back lacks the dimension and relevant context that leaning forward can bring. Both the living and the dead have something to say about the kind of church we want to be known as and for. Breathe deeply and rest assured that is as it should be too. God is with us on this extraordinary journey toward a new home.

The Memorial Christian Church is located across Tappan from the University of Michigan Ross School of Business.

A van for Avalon Housing, parked at the nonprofit's headquarters in the Northern Brewery building on Jones Drive. Avalon recently received a $250,000 federal "green" grant for its Near North affordable housing development on North Main.

In addition to the grant for Near North – a proposed 39-unit affordable housing development on Main Street just north of downtown – the Urban County also received nearly $180,000 more than anticipated in federal funding through the Community Development Block Grant program for the coming fiscal year.

The board voted to divvy up those additional funds to projects in the Urban County’s three largest jurisdictions – Ann Arbor, Ypsilanti and Ypsilanti Township. They also approved setting aside nearly $27,000 for as-yet-unspecified human services support, in light of possible cuts in city of Ann Arbor funding to local nonprofits.

The focus on allocations at Tuesday’s meeting prompted this comment from Ypsilanti mayor Paul Schreiber: “It’s a pleasure to sit on a board that has money to spend!”

Revising the Urban County Annual Plan

The Urban County is a consortium of Washtenaw County, Ann Arbor, Ypsilanti and 9 townships, responsible for allocating federal funding for low-income housing and other community development projects. The funds are managed by staff of the joint county/city of Ann Arbor office of community development. [For background on the Urban County, see Chronicle coverage: "Urban County Allocates Housing Funds"]

Damon Thompson, OCD’s operations manager, began Tuesday’s meeting by noting that May 3 would be the final public hearing for the Urban County’s annual plan. The hearing will be held during the Ann Arbor city council meeting.

Leah Gunn, a Washtenaw County commissioner who chairs the Urban County board, reported that the county board had held a public hearing on the annual plan at its April 21 meeting. No one spoke at the hearing, she said. When asked by a fellow board member whether that was a surprise, Gunn replied, “No, it’s not.”

Thompson said that the deadline for public comments on the plan is May 10. The plan – for the fiscal year beginning July 1, 2010 – must be submitted to the U.S. Dept. of Housing and Urban Development (HUD), in order to secure federal funding. [.pdf of annual plan draft]

At its March 23 meeting, the Urban County board had approved proposed projects included in the plan and funded by the federal HOME Investment Partnerships and the Community Development Block Grant (CDBG) programs. At the time, they weren’t yet sure how much CDBG funding they would receive, and based the plan on an anticipated $2.22 million.

On Tuesday, staff informed the board that the actual CDBG funding for fiscal 2010 is $2.4 million. [The HOME funding allocation remained as expected, at $1.665 million.]

Much of the meeting was spent sorting through exactly how the extra CDBG dollars would be allocated. Board members found the staff report confusing, and Leah Gunn asked whether they could table it until next month, when staff would have a chance to clarify the proposed changes. Thompson said that wasn’t possible – he needed to submit the allocations as part of the annual plan for HUD, which was due before the board’s next meeting. So they thrashed through the numbers – and concluded that it was the presentation that was confusing, not a mistake in calculations. Apologizing, OCD director Mary Jo Callan at one point declared, “I’m on the verge of a stroke.”

Ultimately, the allocation changes were approved unanimously, and included:

• $26,978 for human services, with specific projects to be determined. Callan noted that the proposed city of Ann Arbor budget calls for a $260,000 cut to human services funding – it’s up to city council to determine the final amount, she said, but there will almost surely be cuts of some kind. The $26,978 won’t cover the cuts, she added, but it will help.
• An additional $20,000 to Ypsilanti Township for road improvement projects, bringing the total for that line item to $205,000.
• An additional $25,000 to Pittsfield Township for sidewalk repair, for a total of $125,000.
• $20,000 to the city of Ypsilanti, for projects to be determined.
• An additional $51,906 to Ann Arbor for public facilities projects, for a total of $101,905.
• Administrative costs account for 20% of the total amount awarded, or $480,019 – an increase of $35,971.

[.pdf file of final CDBG allocation for FY10]

During the discussion, Paul Schreiber reminded his fellow board members that they are a policy-making body, and that staff are responsible for managing the funds. If staff needs to make changes, he said, the board can vote to amend the plan at a later date.

Other Changes to Funding Allocations: Near North

At their March 23, 2010 meeting, the Urban County board had approved $500,000 in funding for the Near North affordable housing project, to be built on North Main between Kingsley and Summit. The original amount came from three funding sources: $315,536 from the federal HOME program; $154,464 from Ann Arbor’s sewer funds; and $30,000 from Neighborhood Stabilization Program (NSP) awarded to Ann Arbor.

Then earlier this month, the office of community development learned that a grant it had applied for two years ago on behalf of Avalon’s Near North project had been awarded, Callan said. The $250,000 is a HUD community housing development organization (CHDO) grant aimed at increasing the supply of energy efficient and environmentally-friendly housing.

Near North qualifies because it will be built to LEED standards, Callan said.

The original $500,000 funding level for Near North will remain unchanged, but the new grant allowed the board to shift $250,000 previously earmarked for Near North to other projects. A large chunk was allocated for rehab and refinancing of existing properties owned by Avalon, with other funding going to Community Housing Alternatives and Habitat for Humanity Huron Valley.

The funding sources for Near North are now: $250,000 from HUD’s “green” grant; $96,389 from the federal HOME program, and $153,611 from Ann Arbor’s sewer funds.

In addition to the Near North funding, at its March meeting the Urban County board had also granted Avalon a total of $695,467 in funds for the rehabilitation and refinancing of existing properties owned by the nonprofit . Sources for that were $617,404 from the federal HOME program; and $78,063 from the federal Community Development Block Grant (CDBG) funds.

Avalon had originally requested $814,800 for rehab and refinancing of existing properties. With funds freed up because of the “green” grant, staff of the office of community development recommended that Avalon now be funded to the full amount of its request. At its April 27 meeting, the board agreed – funding from the federal HOME program was raised to $736,737, with the $78,063 from CDBG funds unchanged.

In addition, funding for Community Housing Alternatives was bumped up from $420,000 to $480,000, and Habitat for Humanity Huron Valley’s homebuyer education program, which wasn’t previously funded, is now receiving $22,528.

Board members had few questions regarding the staff recommendations to the funding changes. Mike Moran, supervisor for Ann Arbor Township, asked whether the city of Ann Arbor’s sewer fund contributions were cash or a reduction in connection fees. “Why? Are they increasing yours,” asked Bill McFarlane, Superior Township’s supervisor. Moran laughed: “I don’t know – that’s why I asked.”

After the meeting, Callan clarified for The Chronicle that the sewer funds are specifically from the Walnut Ridge fund, managed by City of Ann Arbor public services unit. In 2000, the city reached an agreement with the developer of the Walnut Ridge residential development in Scio Township – in exchange for hooking up to the city’s sanitary sewer system, the developer agreed to pay $350,000 for use in affordable housing projects. Callan said that Carrot Way – another affordable housing project developed by Avalon Housing – has used some of these funds. When architectural drawings and engineering estimates are completed for Near North, Callan said, the office of community development will send a request to city council to approve the use of the sewer funds for that project.

At Tuesday’s meeting, Moran also asked whether the funded projects required compliance with the Davis Bacon Act, which mandates that public works projects pay prevailing wages. Thompson said that they were compliant. And any projects that received federal stimulus dollars were also required to comply with the “Buy American” clause of the American Recovery and Reinvestment Act, he said. So materials like drywall and cement would need to be purchased from American firms.

Administrative Costs: An Analysis

At the board’s March meeting, Barb Fuller – deputy supervisor of Pittsfield Township – had asked for more details about costs related to administering federal grants received by the Urban County. On Tuesday, Callan gave board members an analysis for administrative costs in the calendar years 2008 and 2009.

Different federal programs have different caps on the amount that can be used for administration, she said. CDBG allows for 20% of a grant to be used for administration, for example, while the HOME program allows for 10%. In 2008, administrative costs of $784,861 accounted for 12.03% of the total $6.357 million in funding managed by the office of community development. Last year, administrative costs totaled $1.007 million, or 14.82% of the $6.796 million in total project funding.

The increase in administrative costs in 2009 was due to ramping up projects funded by the federal Neighborhood Stabilization Act, Callan said. Other major efforts for the year included bringing the city of Ann Arbor into the Urban County – the city previously managed its own CDGB and HOME funds – and developing the model for integrated human services funding between Washtenaw County and city of Ann Arbor. The office also manages the county’s Barrier Busters program, which helps coordinate efforts of human services agencies.

“We’re working hard to manage these funds,” Callan told the board. “We don’t have a lot of fluff.”

After the meeting, developer Bill Godfrey told The Chronicle that he intended to bring the project forward to the city council despite the technical denial, pointing out that two of the commission’s members had been absent for that evening’s vote – Craig Borum and Tony Derezinski. Derezinski (Ward 2) is the city council’s representative on the planning commission.

The meeting marked the final planning commission meeting for Ethel Potts, who has served two 3-year terms on the body. 

[Previous Chronicle coverage of Near North] The project, which is a collaboration between Avalon Housing and Three Oaks Group, proposes 40 units (44 bedrooms total) to be built in a five-story apartment building with 2,950 square feet of commercial space and 1,645 square feet of  office space attached to the building. Forty parking spaces would be provided below the building, with an additional 10 spaces not under the building.

All of the units are proposed to be affordable under Michigan State Housing Development Authority standards, which targets rents for income levels at or below 50% of annual median income. In addition, 14 of the units are designated as “supportive housing” for individuals having no more than 30% of AMI.

The project would require demolition of  eight existing single-family houses, two of which stand in the floodway. The removal of the houses in the floodway is counted by the city as a benefit.

Consideration of Near North had been postponed from the commission’s May 5, 2009 meeting. Although a public hearing was conducted at that meeting, a new public hearing was held last night, because the developer had made revisions to the plans, based on city planning staff feedback. Chief among the revisions were (i) the modification of the building shape from a U-shape to an L-shape to increase the setback of the structure from Fourth Avenue houses, and (ii) removal of the two houses at the north end of the parcel – they’d been previously proposed to be left in place.

At  both public hearings there was thorough and voluminous participation on the part of the public. Supporters of the project typically focused on the benefit of the affordable housing component. Detractors focused on the large scale of the building that is proposed.

After they had voted on the Near North project, as the hour drew near to midnight, planning commissioners went around the table expressing their appreciation for Ethel Potts’ service on the body. Jean Carlberg called her friend, with whom she’d disagreed on many planning issues over the years, a “faithful warrior” for protection of neighborhood character. Carlberg concluded: “I will miss you greatly.”