The orange construction cones and earthmovers on the corner of Washington and First are a very big deal. Construction is finally under way on the $30 million Ann Arbor City Apartments–eleven years after the city first requested proposals to redevelop the corner.
The city also wants to sell a lot it owns across from the library at Fifth Avenue and William. But four years ago, it walked away from a plan to redevelop the former site of the Ann Arbor YMCA–and into a $30 million lawsuit. Though the suit was thrown out by a federal judge, it’s still on appeal; in January, city attorney Steven Postema was in Cincinnati to argue the city’s case before the Sixth Circuit Court of Appeals. With an opinion pending, that saga is now entering its ninth year.
Next door to the library, work is wrapping up on the city’s first underground parking structure. But there, too, city council wanted much more. Plans to build a hotel and convention center on top of the structure were debated for years, only to be killed once it became clear that the center would need public subsidies.
Why is it so hard to redevelop the city’s prime downtown real estate? The Downtown Development Authority thinks it knows the answer–and has been working for more than a year to get the chance to try its solution.
The redevelopment at Washington and First is a win-win. But it almost didn’t happen.
Even before it closed a decrepit parking structure there in 2006, the city invited developers to submit proposals for the site. It chose a plan for a huge multiuse complex stretching from Washington to Liberty, only to see it fall apart when nearby property owners refused to sell. Then the smaller apartment plan was caught up in the real estate crash. But the city gave the developer more time, and last fall Farmington Hills-based Village Green bought the site for $3.2 million. The building will include 155 rental units and a 244-space parking garage. Once it’s done, the city will buy the garage for $9 million, then turn it over to the DDA to operate.
“That asset will generate its own revenue stream” in parking fees, says city CFO Tom Crawford. In addition, he notes, Village Green will pay property taxes. The site “was not on the tax rolls before, and it is now.”
The city would like more such happy endings–and fewer disasters like the YMCA lot. The roots of that debacle stretch back to 1989, when the city guaranteed a loan to expand the Y’s single-room-occupancy hotel. In exchange, it got first right of refusal to buy the building–which it did when the Y moved out in 2003.
The plan was to continue to operate the 100 small rooms as affordable housing–but then the heating system failed. The city closed the hotel, found other places for the residents, and put out a Request for Proposals (RFP) to redevelop the site. The RFP called for a project that would both repay the city’s $3.5 million investment and replace the affordable housing.
Novi-based HDC, LLC promised to do both–but never delivered. In its lawsuit, HDC claims to have invested $2 million in architectural and engineering fees, feasibility studies, and other expenditures, in addition to jumping through all of the bureaucratic hoops necessary to secure more than $18.5 million in MSHDA tax credits and another $7.5 million in state brownfield redevelopment tax credits. But as the HDC’s plans changed, and its requests for additional funding mounted, the city terminated its option to buy the site in 2007.
Earlier RFPs for the former city maintenance garage on Washington and for the “Kline’s lot” at William and Ashley also went nowhere. Given that history, developers may be skeptical of the city’s latest scheme to redevelop the Fifth Avenue sites and three others nearby. But that’s where the DDA thinks it can do better.
“The DDA can do this a little differently,” says Amber Miller, the authority’s planning and research specialist. “What we were hearing from developers from previous RFP processes was that there were vague RFPs. A lot of city planning has gotten us to the point where we have great, broad goals for our downtown, but there are a lot of uses that fit within those broader goals.” That led to developers investing a lot of time and resources into proposals without knowing for sure what city council would be looking for when it evaluated them. The plans would then become ensnared in politics.
Miller thinks part of the problem was that the city has many priorities but looks at only one project at a time–with the result that “there is a tendency to want to fit all goals into one site.” The “Connecting William Street” review will look at the Fifth Avenue sites, the Kline’s lot, and two others nearby: the ground floor of the Fourth and William parking structure and the small parking lot next door to Palio restaurant. The hope, says Miller, is that “by looking at five sites together, we can find something that is more practical and achievable.”
This being Ann Arbor, the process started by inviting public input. “Connecting William Street is an effort to capture the community’s priorities and strategies for five city properties,” says DDA executive director Susan Pollay. “This is a great time to be encouraging community feedback, as this section of William Street has many things taking place at this point.”
“Now that we’re coming out of the recession, people want to see progress,” adds DDA board member Joan Lowenstein. “This is a pretty small area of the downtown that isn’t overwhelming for people to consider.”
In fact, it’s smaller than the DDA wanted. After a year of negotiations, a joint city-DDA committee recommended a broader plan that covered more of downtown and twice as many sites. But when that proposal came before council last April, it was curtailed to the smaller area–over the objections of the councilmembers who’d negotiated the agreement, Christopher Taylor and Carsten Hohnke.
“My colleagues disagreed with me” on the scope of the project, says Taylor, “but I’m looking forward to what the DDA brings to us to consider.”
“I think it was kind of mutually agreed upon that we would narrow this down to something that truly is doable,” says Lowenstein diplomatically.
“Our mission is to see that there is progressive development within the downtown,” Lowenstein explains. In the past, “we have focused on providing the infrastructure … that would enable developers to come in, but it hasn’t really happened in the way that we would want. This is a way for us to make that more easily happen.
“There is enthusiasm, and I think there are a lot of expectations” for the study, Lowenstein says. “But the way our budget is going, and, as a result of our negotiations with the city [increasing transfers to the general fund], we don’t have very much money to do the projects. We did get a federal grant for this project, so people in the DDA are excited to have some money to do any type of project at all.”
With that $65,000 grant, plus $20,000 from its own funds and $15,000 worth of staff time, the DDA hopes to not only assess priorities, but also hire a “land use economist” to evaluate the sites’ value and the feasibility of potential uses. The group won’t make any decisions–if projects result, they’ll still go through the normal planning review and city council debate. But this time, at least, the city should start with a better idea of what’s possible.