Avalon's TARP

"We figure we can recover our costs and make a reasonable profit." --Bill Godfrey


The Ann Arbor News reported that 3 Oaks spent $3 million on the proposed Near North site. At the January public meeting, Bill Godfrey said that was too high. He said that they'd offered to sell it for $3.5 million, but had paid just over $2 million.

According to neighborhood landlords, though, even $2 million is far more than those houses are worth. We believe that if they had to sell the property in this market, they'd be lucky to get $1 million.

No wonder 3 Oaks wants the City to change its zoning to bail out their bad investment. That's what makes partnering with Avalon such a brilliant move.

Five years ago, 3 Oaks sought a PUD for a supersized condo project, the Terraces on Main. It was practically laughed out of City Hall. Now politicians are tripping over themselves trying to find a way to approve the still-supersized Near North.

The partnership with Avalon brings 3 Oaks more than political respectability. With the condo market dead and the commercial credit market frozen, it's also their only chance to redevelop this property.

But a good deal for 3 Oaks is a bad deal for Avalon. They're not only putting up the political capital, but the financial capital as well - the money to build NeNo would come entirely from federal tax credits and state and local grants. Avalon would even find the tenants. As far as we can see, all 3 Oaks is bringing to the partnership is the "opportunity" to buy some very expensive land.

In effect, Avalon is running its own Troubled Asset Relief Program. But if they really want bail out private failures with public money, they can do better elsewhere.

In this economy, there are plenty of other developers who are underwater on Ann Arbor real estate. Once this project is defeated, Avalon should put out a Request for Proposals, inviting offers from anyone who's willing to get rid of a vacant parcel in exchange for a share in an affordable housing project. I bet they'll find plenty who'd be glad to make a deal.

Only next time, if Avalon really needs a downtown-sized building, they should put it downtown.

note: this entry has been revised since its original posting.

Sign Us Up

Embarrassed by the dozens of "No Giant PUD" signs in the neighborhood, Near North's developers are faking support by putting up pro-NeNo signs on their own vacant property.

But they don't need an "astroturf" campaign. We'd be glad to put these signs up ourselves.

No one in the neighborhood opposes affordable housing on Main Street. In fact, there's more affordable housing there now than there would be if the entire Near North project were built.

We opposed the developers' original plan to build expensive condos here because the building was too big. We're fighting the supersized Near North for the same reason: it's 3 times the maximum scale permitted by the zoning!

All the developers have to do right-size this project, and we'll be at Planning next week to support it.

Postponed!

"I don't want to vote against it, but I'm not ready to vote for it." That was Planning Commissioner Tony Derezinski, moving to delay today's scheduled vote on the Near North project. By a vote of 7-1, the rest of the commissioners agreed.

Several commissioners made strong and cogent comments about the many problems with the project, but it was also clear that 3 Oaks' calculation in recruiting Avalon Housing as a partner paid off - several others quoted the developers' sales pitch word for word.

Derezinski in particular seems to be hoping the developers can use the time to fill out their "vision" for the neighboring properties - persuading the city to buy and remove the three houses on their own site as well as the Summit Party Store. Since the city, not the developers, would have to put up the money and create the park, it's hard to imagine how this could count as a benefit provided by the project.

At this point, however, the neighbors are essentially shut out of what's become a private negotiation between the developers and the Planning Commission. Planning staff has even refused to release the letter they sent to the developers following the May 5 meeting.

Hopefully, we'll at least have a chance to make these and other points in writing before the project returns to Planning Commission on Tuesday, June 16.

Sonnet from a Supposed Neighboring Nabob of Negativism

Three Oaks, you've stooped to slander. Tell me why

You've spread the word that neighbors who oppose

Your Near North plans are NIMBYs. Why this lie

That bleakly casts us all as so-and-sos?

You know what's true and not. Can you not bear

The thought that truth proves barren to your plight?—

Your need to wash your dirty underwear

Of poor investments in your Near North site.

Had you applied to build this monstrous wart

Within your neighborhood, would you still call

Nay-saying neighbors NIMBYs? Still resort

To tactics "Robbing Peter to pay Paul"?

You claim you're trying to help by what you do.

But what you do do says, "This PUDs for You!"

Michael W. Brinkman 5/5/09

Workforce Housing: Is Less Really More?

As noted below, most of the huge Near North project would not be the "supportive" housing that Ann Arborites associate with Avalon Housing. Instead, 24 units would be "workforce" housing targetted at people with low-paid jobs downtown.

According to the developers' website, the "workforce" units would rent for “$450-$650 per month, plus utilities.” That's less than the $750 figure they initially cited in neighborhood meetings, so I wonder if they can achieve it--but if they can, it would be an attractive price for the proposed large one-bedroom units. I'm sure Avalon could find enough single, childless individuals to fill them. (Keeping them filled would be another matter—a couple working full time would break the income ceiling and have to leave—and there would be no room at all for families.) [Update: a pro forma budget the developers submitted to the city assumes an income per unit of $774/month.]

It's important to note, however, Near North is not being sold as a way to upgrade workforce housing—it’s being sold as a way to increase it. And to build those 24 one-bedroom units, the developers plan to demolish or convert to non-residential use eight houses with a total of 26 bedrooms. The bottom line: a net loss of two bedrooms. The new units would also be cost much more than existing rental housing on this block.

Reading the Planning packet for the April 21 meeting, I was surprised that the developers had presented no evidence that the proposed new units would make it cheaper to live in the neighborhood. In fact, they never even revealed what they charge their own tenants in the eight houses they presently own on this site.

After doing my own quick survey, I think I know why they didn’t: it turns out that this block already has a lot of affordable housing—and it costs less than Near North’s claimed $450/650 per bedroom.

My unscientific sample consisted of emailing people I know to ask them to tell me tell me their rents. I got responses covering four units on Main Street with a total of 14 bedrooms. Those bedrooms rent for an average of $337/ month - 50 to 100 percent less than NeNo’s “affordable” units!

Near North would hurt its neighbors, intimidate the many people who pass its site daily on foot or bicycle, and trash 50 years of planning for the near-downtown neighborhood. To offset this destruction, it claims the "benefit" of creating workforce housing.

Yet it would actually provide less workforce housing than exists on that site right now - at a much higher price.

Supportive Housing: Is Less Really More?

Near North's developers want the city to ignore its zoning and planning because their project would create 38 one-bedroom apartments. This would include 14 subsidized "supportive" units targeted at people with various problems, many of them formerly homeless.

This is the kind of housing Avalon has always provided, and we know they do it well - they already operate a seven-bedroom “supportive” house on this block, at 532 N. Main. They've been good neighbors to us, and we've been good neighbors to them.

But until the Near North project was introduced, none of us saw any sign that Avalon wanted more supportive units here. In fact, we had the opposite impression.

That's because Avalon already owns a second house on this block, at 618 N. Main. Yet instead of using it for more supportive housing, they've chosen to rent it to Dawn Farm.

Avalon could add another five supportive bedrooms on this block overnight simply by reclaiming that house. The fact that it has not done so suggests that until the 3 Oaks Group approached them, Avalon saw no need for more supportive housing here.

If that has changed, and Avalon now wants to maximize supportive housing here, it could, and should, propose a purely supportive project. As Margaret Schankler and Steve Glauberman have previously pointed out, they could construct 24 units on this site under current zoning. This would solve all of the worst problems with the supersized Near North PUD - while providing ten more supportive units than Near North.