The purchase price of the land is $3,200,000, the bulk of which ($2,500,000 plus $500,000 previously borrowed from the risk fund to cover construction costs) is earmarked for the city’s new municipal building fund. The city has previously received $103,000 in earnest money. The city is covering $5,000 in closing costs – that puts net proceeds of the transaction at $3,092,000. The remaining $92,000 (after appropriating the $3 million total for the municipal center) and the earnest money will be appropriated to the general fund, designated as “non-departmental” (as non-recurring revenue), where it will add to the general fund reserve.

The Ann Arbor Downtown Development Authority has pledged around $9 million of support for bonds to pay for the parking deck component of City Apartments – the city will own that part of the project. Payment is not owed to Village Green for the parking deck construction until a certificate of occupancy is issued for the parking deck, which is expected to open for business in about a year (late 2012), before the residential portion of the project is complete.

The deal had a five-year trajectory after the city council first approved the recommendation of the First and Washington RFP Review Committee, and the city started negotiations with Village Green for the sale and redevelopment of the site. The goals of the deal were: to increase downtown residential density; replace public parking spaces; maximize the sale price; and maximize future tax revenue, captured by the Ann Arbor Downtown Development Authority TIF (tax increment finance) district.

The vote by the council required an 8-vote majority on the 11-member body, because the city charter stipulates that “The City shall not purchase, sell, or lease any real estate or any interest therein except by resolution concurred in by at least eight members of the Council.”

Also at the meeting, the council approved the affordable housing component of the project. Under those terms, 16 of the units must be permanently affordable to households earning no more than 80% of the area median income (AMI).

The Ann Arbor DDA has also agreed to support the project with $400,000 from its housing fund, if four of the 80% AMI rental units are made affordable at the 60% AMI level. The affordable units will be of the same appearance and finish as other units and would be distributed throughout the project.

This brief was filed from the city council’s chambers on the second floor of city hall, located at 301 E. Huron. A more detailed report will follow: [link]