The planning commission had recommended the three rezonings at its May 6, 2014 meeting. Initial city council action came on June 2, 2014. And final action by the council came at its July 7, 2014 meeting.

The current PL (public land) zoning for some of the properties is a vestige of the AAHC properties’ status as city-owned land. The city council approved the transfer of deeds to the AAHC at its June 2, 2013 meeting. The three sites given final rezoning approval on July 7 are part of the housing commission’s major initiative to upgrade the city’s public housing units by seeking private investors through low-income housing tax credits.

Final approval for rezoning was given for the following three sites, two of which are currently zoned as public land:

• Baker Commons: Rezone public land to D2 (downtown interface). The 0.94-acre lot is located at 106 Packard Street, at the intersection with South Main, in Ward 5. It includes a 64-unit apartment building.
• Green/Baxter Court Apartments: Rezone public land to R4A (multi-family dwelling district). The 2-acre site is located at 1701-1747 Green Road and contains 23 apartments in four buildings and a community center. It’s in Ward 2.
• Maple Meadows: Currently zoned R1C (single-family dwelling district), the recommendation is to rezone it as R4B (multi-family dwelling district). The site is 3.4 acres at 800-890 South Maple Road and contains 29 apartments in five buildings and a community center. It’s located in Ward 5.

AAHC director Jennifer Hall has explained that PL zoning doesn’t allow housing to be built on a parcel. As AAHC seeks private funding to rehab its properties, it needs to ensure if a building burns down, for example, it could be rebuilt. In general that’s why the rezoning is being requested. It’s also being requested to align the zoning with the current uses of the property. The highest priority properties to be rezoned are Baker Commons, Green/Baxter and Maple Meadows, because investors have already been found to renovate those sites.

For these three sites, planning commissioners also voted to waive the area plan requirements for the AAHC rezoning petitions, because no new construction is proposed and surveys of the improvements have been provided.

For additional background on the AAHC process of renovating its properties, see Chronicle coverage: “Public Housing Conversion Takes Next Step.”

In a related action on July 7, the council gave initial approval for rezoning an AAHC site on North Maple.

Aerial view of North Maple Estates site, outlined in green.

The rezoning is for a 4.8-acre site at 701 N. Maple Road – from R1C (single-family dwelling district) to R4B (multi-family dwelling district).

The planning commission had recommended the rezoning at its June 17, 2014 meeting after postponing it on June 3, 2014.

The site is on the west side of North Maple, between Dexter Avenue and Hollywood Drive. [.pdf of staff report]

The site plan calls for demolishing 20 existing single-family homes – the public housing complex known as North Maple Estates – and constructing an eight-building, 42-unit apartment complex with a total of 138 bedrooms. The units range in size from one bedroom to five bedrooms. The project would include a playground, community building and 73 parking spaces. According to a staff memo, the buildings would be located along a T-shaped driveway that connects to North Maple Road and Dexter Avenue. The drive extends northward toward Vine Court but does not connect with that street. There would be a new connection to Dexter Avenue through the remaining, undeveloped length of Seybold Drive.

The project will require the city to vacate a portion of the right-of-way for Seybold Drive. The surrounding land is owned by the housing commission, so if the right-of-way vacation is approved, the land would become part of the housing commission property.

The site plan was not in front of the city council on July 7. Only the initial rezoning approval and a resolution of intent to vacate right-of-way for Seybold Drive appeared on the agenda. That resolution of intent set a public hearing for Aug. 18, 2014 – the same council meeting when a vote will be taken on the vacation’s approval. The rezoning will also need a second vote of approval from the council at a future meeting.

Planning staff noted three issues that need to be resolved before the project gets approval from city council:

The parcel containing two duplex buildings also owned by the Ann Arbor Housing Commission in the northeast corner of the site must be combined with the subject site, forming a single parcel as a requirement for issuance of any permits.

The legal description and comparison chart data must be confirmed to include the duplex parcel.

The northern-most parking stall, nearest the connection to Vine Court, must be relocated outside of the minimum front setback area.

According to the staff memo, after the planning commission’s June 3 meeting, the city’s traffic engineer reviewed the proposed new connection from Seybold Drive onto Dexter Avenue, and concluded that sight distances from all approaches are acceptable. He suggested that the pavement markings on Dexter should be refreshed.

The reconstruction of North Maple Estates is also part of the ongoing effort by the housing commission to upgrade the city’s housing stock for low-income residents. At the planning commission’s May 6, 2014 meeting, AAHC executive director Jennifer Hall had made a presentation about the initiative, which includes seeking private investors through low-income housing tax credits.

Also at its July 7 meeting, the council confirmed the appointment of Audrey Wojtkowiak to the board of the Ann Arbor Housing Commission, to fill the vacancy left by Christopher Geer. Wojtkowiak’s nomination was made at the council’s June 16 meeting. She’s controller for the Consolidation Center at Detroit Diesel.

This brief was filed from the city council’s chambers on the second floor of city hall, located at 301 E. Huron.

From left: Ann Arbor housing commission board members Christopher Geer, Ron Woods and Marta Manildi at the AAHC Jan. 15, 2014 meeting, held at Baker Commons. Not pictured here is Tim Colenback, the newest appointment to the AAHC board. Gloria Black, who represents AAHC residents, was absent. (Photos by the writer.)

At their first meeting of the year, commissioners were briefed about the impact and aftermath of a Jan. 8 fire at Green Baxter Court, a public housing complex on Green Road next to Baxter Park on the city’s east side. They heard from Joan Doughty, executive director of Community Action Network, which operates a community center at that complex under contract with the city. CAN staff are helping AAHC provide support for families who were displaced by the fire.

At their Jan. 15 meeting, board members authorized up to $9,000 in extra funds to help pay for that emergency work. CAN is also seeking additional donations from the community.

In separate action, the board amended Chapter 14 of its housing choice voucher administrative plan to include a preference for families that have been involuntarily displaced due to a fire, natural disaster or any other reason. The vouchers would be used to subsidize rental housing, if no units are available in the city’s public housing system.

The Jan. 15 meeting also included an update from Lori Harris, vice president with Norstar Development, on a major initiative to upgrade the city’s public housing units. Specifically, she presented Norstar’s recommendation for an equity partner to purchase low-income housing tax credits awarded by the state to AAHC late last year. The board approved the recommended firm, Red Stone Equity Partners.

Investors had responded positively to Norstar’s request for proposals, Harris said, with higher-than-expected offers. “You have a very, very good story here, and it’s played very, very well in this process,” she told the board. The tax-credit transaction will provide the majority of funding for renovating five public housing complexes: Miller Manor, South Maple, Baker Commons, Hikone and Green Baxter. These properties make up the majority of public housing units in the AAHC portfolio – 248 out of a total 326 units.

However, AAHC executive director Jennifer Hall told the board that additional funding will still be required. As part of that, the AAHC is requesting $600,000 from the Ann Arbor Downtown Development Authority. Hall said she expects the DDA board to make a decision on that by March or April. The DDA previously gave the housing commission a $300,000 grant for capital improvements at Baker Commons, which is located within the DDA district. That approval came in March of 2013. And in October 2012, the DDA had provided a $260,000 grant primarily for replacing the Baker Commons roof.

In other action, the AAHC board approved a 3% cost-of-living adjustment for Hall, in line with other COLA increases given to city employees. The board also authorized changing the way its minutes are kept in order to begin using the city’s online Legistar system. The new approach will be less detailed in reporting deliberations, and will primarily provide a report on the outcome of action items. Currently, AAHC board minutes and board packets aren’t part of Legistar, but are provided on the AAHC page of the city’s website. Minutes from the AAHC board meetings are also attached to the city council agenda as an item of communication.

And near the end of the meeting, commissioner Marta Manildi reported that she is not seeking reappointment. Her term ends this spring, but she has offered to step down early. She was praised for her work in helping lead the AAHC through a difficult transition several years ago. Speaking during public commentary, Doughty said Manildi “really led the charge for a turnaround that’s been amazing to witness.”

A week later, at the Ann Arbor city council’s Jan. 21 meeting, mayor John Hieftje nominated Daniel Lee to serve out the rest of Manildi’s term. A confirmation vote is expected at the council’s Feb. 3 meeting. Hieftje described Manildi’s service on the commission as profound and beneficial.

Aftermath of Green Baxter Court Fire

Commissioners were briefed on aftermath of a fire in the early morning of Jan. 8 at Green Baxter Court, a public housing complex on Green Road next to Baxter Park. They had also received a written update in their board packet for the meeting. [.pdf of Green Baxter fire update]

Jennifer Hall, AAHC’s executive director, reported that it started around 4 a.m. in one unit and spread to all but one of the six units in that building. In some units, almost everything was completely destroyed. Even in other units where some items are salvageable, she said, everything is damaged by smoke and water.

The fire department is investigating the cause of the fire, Hall said, but they haven’t yet indicated what they’ve found. She reported that the buildings are covered by the AAHC insurance policy, and will pay for either demolition and rebuilding or rehabilitation. The city’s building inspector will make a determination about whether the structure needs to be demolished. If it does need to come down, Hall hoped to do that as soon as possible so that it’s not a safety hazard. However, emergency demolition would require approval by the U.S. Dept. of Housing & Urban Development (HUD), which provides funding for AAHC.

None of the residents were seriously injured, Hall said. Almost everyone left the building in bare feet, because it was very early morning, so a couple of people got frostbite on their feet. At least one child had some problems with smoke inhalation. Everyone who needs medical attention is getting it, she said.

Hall noted that AAHC has partnered very closely with the nonprofit Community Action Network, which runs the community center for Green Baxter Court under contract with the city. The staff of CAN have spent many hours working with residents trying to help them rebuild their lives, Hall said, including 14 children – the youngest of whom is two years old. At this point, residents are staying at an extended stay hotel while AAHC works to find more permanent homes for them. That means reaching out to landlords in the area that accept Section 8 vouchers. AAHC hopes to find housing in that same neighborhood, Hall said, but it’s one of the city’s highest-cost areas, so there are very few places that fit within the AAHC budget.

Aftermath of Green Baxter Court Fire: Update from CAN

Joan Doughty, executive director of Community Action Network, attended the AAHC board meeting and gave an update on how CAN and others are helping to deal with the aftermath of the Jan. 8 fire. She had emailed an update earlier in the day to commissioners, the media, and other members of the community, which was later posted on CAN’s website.

Joan Doughty, executive director of the nonprofit Community Action Network, gave an update to Ann Arbor housing commissioners about the response to the Green Baxter Court fire.

“Obviously this was uncharted territory,” she said. Doughty described the initial response, and how one of the first things they did was to contact the traumatic events response network (TERN). Members of that group met that same day, she said, and included the fire marshal and Liz Margolis of the Ann Arbor Public Schools. CAN staff also spent the day getting clothing and footwear for the residents, most of whom had emerged from the building barefoot and in their pajamas. CAN also put together a “what you need to know” handout that was distributed to residents on Jan. 8 – a four-page list of answers to questions.

The Red Cross paid for three days of hotel rooms at the Hampton Inn on Green Road, and the AAHC is paying for extended stay accommodations at the Microtel on Plymouth Road. For residents, getting that information about housing “settled a lot of fears almost immediately,” Doughty said. People were also very concerned about getting their children to school. It was helpful to have Margolis there to assure residents that the schools would provide transportation, Doughty said, and that no matter where they moved, the children would be able to complete the academic year at the same school they’d been attending.

People were affected by the fire to different degrees, Doughty reported, both in terms of their physical possessions, but also in their ability to cope with the situation. Two of the households had renters insurance, she noted, but they didn’t know what it covered or how to deal with making claims. So CAN is helping with that.

Doughty described several other groups that helped with the aftermath. Volunteers came to remove items from the burnt building before things were even further damaged by the elements. The Rotary Club of Ann Arbor North, which she described as a “godparent” to Green Baxter Court, is paying for storage of items that could be salvaged from the apartments. Rotary North also offered to replace one toy per child.

An interior view of the aftermath of a Jan. 8, 2014 fire at Green Baxter Court. (Photo courtesy of Joan Doughty.)

The Kiwanis Club of Ann Arbor, which runs a thrift shop, is helping families replace furniture and household items. Aaron’s Restoration has offered free cleaning for one large trash bag of clothes per household. MLive’s Warm the Children program gave $90 vouchers for every affected child to get clothing at Target, and shoes were purchased with Payless Shoes gift cards that CAN had received.

Other work in the aftermath included replacing eyeglasses, prescription drugs and dealing with other medical needs. Home-cooked meals had been served every night at the Green Baxter community center, which CAN operates. It provides a place where people can come together and support each other, Doughty said. CAN also has tried to be respectful of cultural differences, she noted. For example, one family is from Somalia and eats halal foods, so they were given gift cards to go to restaurants that serve this kind of food.

It’s been amazing to see the generosity between residents, she added, and how much they’re supporting each other. She said that one of CAN’s slogans is that their services start where the ability of the client stops. So the staff will help out based on each resident’s needs. That includes things like helping people turn off their cable TV service and other utilities, and contacting caseworkers from the Dept. of Human Services.

Now, CAN is moving into the next phase, Doughty said, which is to help residents rebuild their lives. She’s been documenting the lessons they’ve learned in this process, so that if something similar happens again, they’ll be better prepared. “Of course I hope these lessons will never have to be used,” she added.

Jennifer Hall, AAHC executive director, praised CAN as well as Beth Yaroch, AAHC residency manager, who oversees the Green Baxter Court complex. Doughty thanked Ron Woods, president of the AAHC board, for coming out to the site and taking an interest in the situation. She also thanked commissioners who had made donations to support CAN’s response to this emergency.

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

Woods in turn praised everyone involved in the response, including the Ann Arbor fire department, the trauma team, and CAN staff for helping people see, even in the midst of trauma, that there is some way forward. He also thanked the residents, who he said have responded with resilience, hope and support for each other.

Woods asked Hall to explain the protocol that AAHC has put in place to deal with this kind of emergency. Hall replied that there is a 24-hour on-call staff member to respond to potential emergencies. Typically the calls are for things like a water pipe or toilet breaking. There’s also 24-hour on-call maintenance, she said. AAHC pays a call center to take calls at any hour from residents, and the call center then contacts the AAHC manager who’s on call. That person then decides how to respond, Hall explained. For the Jan. 8 fire, residency manager Reggie Dalton was on call and was the first to respond for AAHC.

In the case of a fire, which is extremely unusual, Hall said, the fire department is obviously the first emergency responder. In that case, AAHC’s role is to keep people away from the building and out of harm’s way. Red Cross came out to make sure tenants had short-term housing and food, while AAHC staff and CAN staff worked through what needed to happen next.

Christopher Geer asked if there’s ever been an emergency of this magnitude at a housing commission site. Hall replied that there are constant issues and tragedies with tenants – like shootings, medical emergencies or small cooking fires – but those typically just affect one person or household. Geer said he only asked because it seemed like CAN and AAHC staff were veterans at handling this emergency. He praised their professionalism. Hall said the staff is accustomed to responding to crisis every day, but not to such a large degree all at one time.

Marta Manildi said she’d recently read that fires are more common than people think, so Doughty’s efforts to document the response is a good idea.

Aftermath of Green Baxter Court Fire: AAHC Resolution – Emergency Voucher

A resolution added to the agenda at the start of the Jan. 15 meeting was to amend Chapter 14 of the AAHC housing choice voucher administrative plan to include a preference for families who have been involuntarily displaced due to a fire, natural disaster or any other reason. It also would amend the plan to enable the AAHC executive director to suspend the waitlist preference system in cases of a federally declared disaster or other emergencies.

Because AAHC doesn’t have available units of its own for families who are displaced by the Jan. 8 fire, the commission wants to use its housing choice vouchers to find rental units for these residents. However, HUD requires amending AAHC’s voucher administrative plan in order to do that. The amendment also would allow AAHC to use the voucher program for people who aren’t in the public housing system, if there’s an emergency.

Any change to the administrative plan requires a 30-day public comment period. So the changes would take effect on Feb. 15, 2014. [.pdf of resolution]

Hall said that for tenants who find housing before Feb. 15, AAHC would pay the rent until the voucher is in place.

There was no board discussion on this item.

Outcome: Commissioners unanimously approved the amendments to the housing choice voucher administrative plan.

Aftermath of Green Baxter Court Fire: AAHDC Resolution – CAN Funding

AAHC is currently undertaking a process to convert its public housing complexes to a public/private partnership. To facilitate that process, in  2012 a separate entity was created by the housing commission, called the Ann Arbor Housing Development Corp.  The board of the AAHDC consists of the AAHC board members, plus AAHC executive director Jennifer Hall. Its meetings are held immediately after the AAHC board meetings.

Only one resolution appeared on the Jan. 15 AAHDC meeting agenda – for $9,000 in emergency funding to CAN to offset the cost of extra staff time used to deal with the Green Baxter Court fire emergency.

CAN provided a breakdown of estimated expenses:

• $1,000: Assistance with insurance claims (estimated 40 hours at $25/hour)
• $6,000: Assistance in searching for permanent housing, completion of applications, applying for security deposits, arranging for replacement furniture, moving in assistance, completing paperwork related to the move. (estimated 360 hours at $16.50/hour)
• $500: Misc. expenses, including gas for transportation of children to and from hotels to after-school programs, and for residents to new housing and other locations.
• $500: Additional administrative costs, including progress reports, billings, tracking of donations and expenses, etc.

A memo from CAN executive director Joan Doughty indicates that CAN will seek about $5,000 in community donations for “extra psycho-social support and activities to the affected children,” as well as for food and dinners served at community centers for the displaced residents, and other activities.

Before the vote, Hall gave an update on AAHDC finances. [.pdf of AAHDC financial statement] The main expense for AAHDC so far has been to pay the law firm Dykema, which is working to establish 501(c)3 status for the organization. That status will better prepare AAHDC to access funding in the future, Hall said. The application has been submitted to the IRS, she reported, but it could take several months to get approval, and might not happen until 2015.

Hall reported AAHDC has a fund balance of $50,440. She was requesting authorization from the board to pay CAN up to $9,000 for its work with Green Baxter Court tenants, to offset whatever funding isn’t received from the community.

Outcome: The AAHDC board unanimously voted to authorize up to $9,000 for CAN’s work.

Aftermath of Green Baxter Court Fire: Next Steps

An email sent on Jan. 15 by CAN executive director Joan Doughty includes a section that describes how the community can help with additional support for the families displaced by the fire. From the email:

For those who would like to help the families cope with the constraints of hotel residency, gift cards to movie theaters, Jump City, Zapzone and Jungle Java would be very welcome donations.

As the Extended Stay hotel has only microwaves, and to continue to provide a healing place for families to come together, CAN is providing full meals in its community center for the displaced families Monday through Friday evenings. Restaurants or individuals willing to help with this are encouraged to contact CAN directly – at info@canannarbor.org.

Thank you to the Rotary Club North, Kiwanis, Ann Arbor Public Schools, Clague PTSO and King PTO, Payless shoes, MLive/Ann Arbor.com Warm the Children, Ann Arbor Thrift Store, Michigan Municipal League employees, and Java Jungle who have all provided some assistance to these families, and to Frita Batidos and Zingerman’s for promising to donate a meal.

Please spread the word that if people are moved to help, they can make a donation directly on CAN’s website at canannarbor.org and CAN will use the funds to help these families rebuild their lives. Donors should write “GBC Fire” in the memo line. The AAHC and CAN do not have the capacity to store household goods or clothing, please make those types of donations to Kiwanis or the Ann Arbor Thrift Shop so families can select the items they need from organizations that specialize in managing these types of donations.

Public Housing Conversion

Lori Harris, vice president with Norstar Development, attended the Jan. 15 meeting to give an update on a major initiative to upgrade the city’s public housing units. Specifically, she presented Norstar’s recommendation for an equity partner to purchase low-income housing tax credits that the state awarded to AAHC late last year. The recommended firm is Red Stone Equity Partners. The firm is a “syndicator,” managing this kind of investment on behalf of its clients.

Lori Harris, vice president with Norstar Development.

By way of background, in 2012 the city was accepted into a new rental assistance demonstration program, known as RAD, offered by the U.S. Dept. of Housing and Urban Development (HUD). The program allows residents in selected housing units to receive rental assistance through long-term Section 8 subsidy vouchers that are tied to the buildings, rather than individuals. The RAD program also enables entities like the AAHC to partner with private-sector developers on housing projects – something the AAHC couldn’t previously do. The Ann Arbor city council gave necessary approvals in connection with the RAD program at its June 3, 2013 meeting.

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.

The main source of funding to upgrade the housing units is through 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. The pricing on those credits depends on market conditions and other factors, but Norstar originally expected to get roughly 83 cents on the dollar.

The AAHC board took a significant step when it selected Buffalo, N.Y.-based Norstar as a co-developer for this overhaul in January of 2013. The board was briefed on Norstar’s progress at a June 19, 2013 meeting covered by The Chronicle.

Then in August of 2013, AAHC made two applications for the low-income housing tax credits. The credits covered five public housing properties in two groupings: Maple Towers Ann Arbor LLC for one group (the complexes of Miller Manor and South Maple); and River Run Ann Arbor LLC for the other group (the Baker Commons, Hikone and Green/Baxter complexes). These properties make up the majority of public housing units in the AAHC portfolio – 248 out of a total 326 units.

At the AAHC board’s Jan. 15, 2014 meeting, Harris reported that she had “very good news” about the process. Norstar solicited proposals from seven different potential equity partners that had shown some interest in this project. Out of the seven, five proposals were made from the following firms: Great Lakes Capital Fund, Hunt Capital Partners, RBC Capital, Stratford Capital Group, and Red Stone Equity Partners.

Norstar evaluated these proposals based primarily on three factors, Harris explained. First, how much were the entities offering per credit? The offers ranged from 84 cents to 90.5 cents, Harris reported. That’s the amount that the investors would pay for every credit given to AAHC by the state, she explained. Norstar had estimated that the amount would be 83 cents, so the offers were better than expected.

It’s important that they’ll be receiving more than originally projected, Harris said, because the renovation costs are also higher than projected. [AAHC executive director Jennifer Hall had originally estimated that Ann Arbor’s public housing stock would need about $40,000 per unit in repairs and renovations over the next 15 years.]

The second factor used to evaluate these proposals is the “guarantee structure.” This is the amount that the equity partner would require from AAHC to ensure that investors are financially protected. The third factor relates to operating reserves: How much is the equity partner requiring to be set aside during the term of their investment? This would ensure that investors are paid even if operating revenues aren’t as high as projected – for example, if a property isn’t generating enough rental revenue because its units aren’t filled.

Harris provided charts to compare the various elements of the proposals from different potential equity partners. [.pdf of chart for River Run] [.pdf of chart for Maple Towers]

Based on an evaluation of the proposals, Norstar recommended choosing Red Stone Equity Partners for both projects. Red Stone is offering $9,154,455 in total equity for River Run, and $12,168,966 for Maple Towers. That amount is based on 89.5 cents on the dollar for each of the tax credits held by AAHC.

Other aspects of Red Stone’s proposal for River Run includes:

• A pay-in of 8.33% at closing, 35% at completion of the renovations, 51.67% when the properties are converted, and 5% when the IRS issues Form 8609, which finalizes the tax credit cycle.
• A tax credit price of 89.5 cents on the dollar. Harris noted that Red Stone had increased its offer to match a competitive bid. That price will bring in $803,953 more than the amount that Norstar originally estimated, which had been based on 83 cents per dollar.
• Asset management fees of $5,000 per year, increasing 3% annually.
• A requirement to keep an operating reserve of $225,000.

Red Stone’s proposal for Maple Towers includes:

• A pay-in of 7.92% at closing, 35% at completion of the renovations, 52.08% when the properties are converted, and 5% when the IRS issues Form 8609, which finalizes the tax credit cycle.
• A tax credit price of 89.5 cents on the dollar. Harris noted that Red Stone had increased its offer to match a competitive bid. That price will bring in $1,046,071 more than the amount that Norstar originally estimated, which had been based on 83 cents per dollar.
• Asset management fees of $5,000 per year, increasing 3% annually.
• A requirement to keep an operating reserve of $275,000.

Harris said that even though the pricing is great, she thought the best part of Red Stone’s proposal is the guarantee structure. Normally, investors would ask Norstar and the AAHC to provide a significant guarantee – either money set aside in a bank, or a corporate guarantee – over the 15 years of the tax credits. For each of the two projects, Red Stone asked for a $3 million net worth guarantee, which Norstar will provide. That means that Norstar must maintain a corporate net worth of at least $3 million until the project is “stabilized,” she explained, in case something goes wrong before the project is completed. In addition, Red Stone wants a $1 million liquidity requirement, which Norstar will also provide.

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

But after the projects are completed and have shown three months of positive cash flow, the only guarantee for the remainder of the 15 years is the amount of the AAHC developer fee. That means resources will be freed up for additional projects, Harris explained. “It allows you to play another day.”

The other important aspect of the deal is the requirement for operating reserves. Norstar is putting in an operating reserve equal to four months of expenses – which is an underwriting requirement from MSHDA. Red Stone isn’t requiring additional reserves, Harris said. Other proposals asked for additional amounts.

Based on all these factors, Norstar recommended the selection of Red Stone for both the Maple Towers and River Run projects. Harris noted that Norstar closed its last deal with Red Stone about six months ago – a family housing project in Watertown, N.Y. She described Red Stone as having very skilled asset managers. “I hold them in highest regard,” she said.

If the AAHC board approves the selection of Red Stone, then Norstar will update the budgets for these projects. Red Stone would then issue a letter of interest (LOI) that would be submitted to the AAHC board for approval.

AAHC executive director Jennifer Hall reported that the proposals were reviewed by Rochelle Lento, a real estate attorney with Dykema’s Detroit office who is working on this project. Lento agreed with the recommendation, Hall said.

Public Housing Conversion: Board Discussion

Christopher Geer clarified with Harris that Norstar is guaranteeing completion of these projects. The guarantees would cover a shortfall in tax credits or a “recapture event.” He asked about the level of risk involved.

Regarding a tax credit shortfall, Harris explained that MSHDA has committed the tax credits to these projects, but won’t actually provide the tax credits until they are earned through eligible costs that are expended on the projects. A shortfall would occur if the projected eligible costs weren’t as high as anticipated, and therefore the projects didn’t get the amount of tax credits that are in the budget. “I don’t see any risk in these projects,” she told commissioners. “These are very expensive rehabs, and we’ll have plenty of eligible costs.”

Ann Arbor housing commission board member Tim Colenback.

Harris also explained the “recapture event.” For example, if a resident was thought to be at 50% area median income, but was in fact at 120% AMI, then that person would be over-income for living in these complexes. If that mistake isn’t caught, it might result in the IRS taking back some of the tax credits that were awarded. For Maple Towers, the AAHC’s guarantee requirement to cover that possibility is limited to $450,000 over 15 years. For River Run, the amount is $330,000. “It’s that limit that’s making [Red Stone's offer] so attractive,” she said.

Geer clarified that the operating reserve is what needs to be kept on the balance sheet. Harris explained that there will be two operating reserve accounts: $275,000 for Maple Towers, and $225,000 for River Run. It could be used to cover costs if, for example, federal funding is delayed. The next step, Harris said, will be to negotiate the partnership agreement that describes “all the rules we’re going to live by.” That agreement will explicitly state the conditions under which the operating reserves can be tapped.

Geer wondered if the deal with Red Stone affects the existing development agreement between AAHC and Norstar. Harris replied that this new arrangement is consistent with the existing development agreement.

“I can’t stress enough how people have responded so well to your project,” Harris told commissioners.

Outcome: Commissioners voted unanimously to approve Red Stone Equity Partners as an equity partner.

Public Housing Conversion: Next Steps

After the vote, Geer noted that the board has been briefed previously about increased cost estimates. He wondered if the higher-than-anticipated tax credit offer helped offset those costs. “Absolutely,” Hall replied.

At this point, if AAHC had more funding, “we could do more,” Hall said. “We don’t have unlimited resources to do everything we want to do.” For example, it would be great to replace the flooring and cabinetry in every building, she said, but they don’t have the budget for that. Each housing unit is being evaluated to assess what needs to be done, on a ranking of 1 to 5. “We’re trying to be more frugal in figuring out where best to put our funds,” Hall told commissioners.

Ann Arbor housing commission board member Christopher Geer.

All structural deficiencies will definitely be addressed, she said. For example, Miller Manor needs an upgrade to its electrical system. If possible, energy efficiency upgrades will be completed as well. In terms of aesthetic, “quality of life” renovations, Hall acknowledged that residents care a lot about that and as much as possible will be done.

There’s still a gap between the renovation costs and the amount of funding that AAHC will receive through the tax credit investments. Hall said they’ll continue to work with the Federal Home Loan Bank, providing as much information as possible to secure $500,000 for Maple Towers. “That’s still on the table,” she said.

Hall also reported that she’d met with the Ann Arbor Downtown Development Authority staff and the DDA board’s partnerships committee that morning to request $600,000 for the projects. She didn’t think the DDA would make a decision on that until March or April.

If all of that funding comes through, then the gaps in funding would be filled, Hall said, with an anticipated closing for these first two projects in May of 2014. She cautioned that AAHC didn’t want to tap too many community resources for this first phase, because there will be other properties to renovate or rebuild in later phases. She said discussions are happening with the city about what AAHC will need for the next phase, similar to the kind of gap financing that the DDA might do for this first phase.

Marta Manildi asked whether the AAHC properties are located within the DDA district. Baker Commons, at Packard and South Main, is within the DDA boundaries, Hall replied. Miller Manor is within a quarter-mile of the DDA district – within that area, the DDA board allows investments in affordable housing, she said.

Next month, the AAHC board will receive a new revised scope for these two first-phase projects, Hall said.

For the second-phase projects, Hall said she hopes to apply for tax credits in August of 2014. It would be beneficial to have site plan approval from the city by then, so AAHC is working with architects and engineers to get ready for that process. There will be a citizen participation meeting for that soon, likely in early February, she said.

The second phase involves two AAHC complexes: (1) North Maple Estates at 701-739 North Maple – north of Dexter Avenue, on the west side of North Maple; and (2) 3451-3457 Platt – on the east side of Platt Road, north of Belvidere.

In a follow-up phone interview with The Chronicle, Harris said the second phase will result in 71 units, including 46 at North Maple Estates. Regarding the Platt Road properties, four single-family houses on the east side of Platt will be demolished, and replaced with structures totaling 21 units in a slightly different location on that site to avoid flooding issues. There’s also a strip of vacant city-owned land on the west side of Platt, north of Verle and south of Sharon. The land runs from Platt over to Springbrook. In that location, the plan calls for building four single-family homes.

The project’s team includes architect John Mouat of the Ann Arbor firm Mitchell & Mouat, and Scott Betzoldt of Midwestern Consulting. [Mouat serves on the board of the Ann Arbor Downtown Development Authority.] Harris said there’s not yet a firm estimate on the budget for this second phase – that is currently being developed. They hope to start the city’s site plan approval process in February.

A future phase will involved the housing commission’s Broadway Terrace at 504-1506 Broadway, as well as the building along Henry Street, between South State and White Street. The addresses are 1514 and 1520 White St., 1521 S. State St., and 701-719 Henry St.

Administrative Items

Two items on the Jan. 15 agenda related to administrative issues.

Administrative Items: Cost-of-Living Adjustment

One resolution authorized a 3% cost-of-living adjustment for AAHC executive director Jennifer Hall. Labor contracts include this increase for union employees. According to Hall, city administrator Steve Powers gave the same increase to non-union employees at the start of the current fiscal year, on July 1, 2013. Hall reported that she also gave her staff the same increase, but it requires board approval for the increase to apply to her own salary.

According to the city’s human resources staff, Hall’s base salary is $88,000.

Outcome: Commissioners unanimously approved the cost-of-living adjustment for Hall.

Administrative Items: Meeting Minutes

Hall asked for feedback on changing the way AAHC board minutes are kept, in order be consistent with the way minutes of other city commissions are kept in the city’s Legistar system. The approach would be less detailed in reporting deliberations, and primarily provide a report on the outcome of action items.

Margie Teall, a Ward 4 representative on city council, attended the Jan. 15 housing commission meeting. She serves as the council’s liaison to AAHC.

Currently, AAHC minutes and board packets aren’t part of Legistar, but are provided on the AAHC page of the city’s website. Minutes are attached to the city council agenda as an item of communication. Hall said her preference would be for more of a summary approach.

Tim Colenback felt it was important that the minutes are accessible to the public. Marta Manildi said she’d defer to Hall on this issue. But as a citizen, Manildi added, she’s always hated summary minutes, “because I feel like I have no idea what really happened.” So her own personal bias would be for more detailed minutes, Manildi said. Others might have a different view, she added. “I know Leigh Greden would!” [Greden is a former city councilmember who until last year served on the AAHC board.]

Christopher Geer said he came out on the opposite end of the spectrum from Manildi. Despite all the commentary that takes place during deliberations, he said, the impact ultimately comes from the decision that’s made, so that’s what is important. It can be a very subjective process to decide what to put in more detailed minutes, he noted. “That’s why most organizations just stick to the factual stuff that occurs during the meetings.”

Ron Woods felt that more detailed minutes provide a more complete understanding, and as a reader of minutes, he finds it helpful to see how decisions were made. However, he said he’d be quite comfortable to align with the rest of the city.

Outcome: Commissioners voted unanimously to switch the approach for taking minutes to an action-item format.

Changing Commission Membership

Near the end of the Jan. 15 meeting, commissioner Marta Manildi announced that it might be her last meeting before her term ends on the housing commission. Her term is ending, and she is not seeking reappointment. [A city council resolution that appointed her in 2010 states that her term ends on April 30, 2014. The AAHC website indicates that her term ends on May 5, 2014.]

Manildi said she’s told mayor John Hieftje that she’d be willing to step down earlier if he can find someone to fill the seat. Housing commission board members are nominated by the mayor, with a confirmation vote by the full city council. [At the city council's Jan. 21 meeting, Hieftje nominated Daniel Lee to serve the remainder of Manildi's term. Hieftje also said he expects to nominate Lee after that for a full term later this year. A confirmation vote by the city council is expected on Feb. 3.]

Manildi said she wanted to say that she’s felt very privileged to serve on the board. When she joined the board, “the housing commission was in quite serious trouble,” Manildi said. Through a lot of effort by many people, as well as some amount of luck, the commission has come far and that’s wonderful to see, she added.

Marta Manildi, a local attorney and an Ann Arbor housing commissioner whose term ends this spring. She is not seeking reappointment.

The relationship with the city is much stronger now, Manildi said, and that’s better for the housing commission. She’s learned a lot from the staff, from other commissioners, from AAHC partners and residents. The fire at Green Baxter Court was a terrible thing, she noted, but it’s also shown how effective the AAHC staff and partners are in handling a crisis.

Manildi also praised the effort to renovate the AAHC properties, which she said is key to providing better, sustainable housing to low-income residents. “It’s really promising, and everybody involved deserves a tremendous amount of credit.”

She received a round of applause from staff and other commissioners. Ron Woods said they’ll miss her unique skill set and institutional knowledge. She is the longest-serving current commissioner, initially appointed in June of 2009.

Joan Doughty of the nonprofit Community Action Network also praised Manildi during public commentary. “When Marta first started, it was a very difficult place to work and it was a dark day for the housing commission,” Doughty said. “She has been very modest in not taking credit for the turnaround. At some point she was the only member standing. She was incredibly brave and passionate and compassionate in making sure that the housing commission started being much more responsive and responsible. She’s really led the charge for a turnaround that’s been amazing to witness.”

By way of background, at its May 18, 2009 meeting, the Ann Arbor city council approved $117,040 to hire the consulting firm Schumaker & Company to conduct a needs assessment of the housing commission. The outcome of that work was presented to the city council by consultant Kerry Laycock at its Jan. 11, 2010 working session. [See Chronicle coverage: "Housing Commission Reorganizes" – a .pdf file of the Schumaker report is downloadable here.]

The Schumaker report described the housing commission as “an agency that is chronically underfunded, focused on crisis management, offering poorly maintained and outdated housing, and insufficient supportive services for a population with significant life challenges.”

A confidential five-page memo to councilmembers from city administrator Roger Fraser – dated Feb. 27, 2010, and obtained by The Chronicle in response to a FOIA request – maintained that board members at the time had failed to address the commission’s chronic problems, and were mishandling the selection process of a permanent executive director. The memo did not explicitly call for the removal of board members, but it seemed clearly designed to lay the groundwork for that move.

A resolution to remove the board and appoint new members was approved by the city council council at its March 15, 2010 meeting. New members included Jayne Miller, a former senior administrator with the city, and Mark McDonald, a property manager for large multifamily residences. Only two members of the previous board were reappointed: Manildi, who is an attorney with Hooper Hathaway; and Deborah Gibson, a resident of the city’s public housing who was reappointed only to a one-month term. Gibson resigned the following day.

Soon after, the council appointed two additional board members: Ron Woods, an Eastern Michigan University professor, and Sasha Womble, a resident commissioner to replace Gibson. Woods and Manildi are the only remaining board members from 2010. Others who have been appointed but are no longer on the commission include Andy LaBarre, who resigned after winning an election for Washtenaw County commissioner in 2012, and former city councilmember Leigh Greden, who was not re-appointed when his first term on AAHC expired last year.

There has also been turnover in the executive director’s position. Betsy Lindsley retired in the summer of 2009 and was replaced by Marge Novak – first as interim director, then as the permanent replacement. However, Novak resigned in July of 2011.

Jennifer Hall has served as executive director since she was hired in the fall of 2011. Hall previously was housing manager for the Washtenaw County office of community development.

Housing commissioners present: Tim Colenback, Christopher Geer, Marta Manildi, Ron Woods (president). Also: AAHC executive director Jennifer Hall.

Absent: Gloria Black.

Next board meeting: Tuesday, Feb. 25 at 6 p.m. at Miller Manor, 727 Miller Ave, Ann Arbor.

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