 Land trust pairs with developers on a ordable housing

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Land trust pairs developers with a ordable housing projects

YB KIRK PINHO

Ann Arbor’s a ordable housing crisis has been well documented, with a shortage of several thousand units prompting the city to look at varying ways to address the issue.

Peter Allen also thinks he has part of the solution. e retiring University of Michigan real estate professor has started a nonpro t, the Equitable Ann Arbor Land Trust, which he calls EA2 for short.

With the goal of spurring 1,000 to 5,000 units of a ordable and market-rate housing in the city over the next ve to 10 years, he and the nonpro t’s executive director, Sarah Lorenz, have a lot of work ahead of them.

But he thinks his program can serve as a model to solve housing issues using what cities like not just Ann Arbor, but others around the country, have ample supply of: publicly owned land.

It would work like this.

EA2, in advance of a request for proposals process, would get advance zoning change approvals, site planning, utility taps and other public approvals, plus negotiate land sale or lease terms and percentage of affordable housing units or subsidies, Allen said.

All that advance legwork helps eliminate some of the risk in the risky business of real estate development.

“ e site would be ‘shovel ready’ as much as possible for the winner of the RFP,” Allen said. “EA2 would then earn a reasonable fee based on the developed land value from the land owner. It also hopes to earn a longterm partnership interest in the development. As a nonpro t, EA2’s sources of revenue will then be reinvested in further deals to address Ann Arbor’s sustainability and affordability concerns.” e bene t, Allen says, is for everyone. e city wins by increasing its tax revenue and, potentially, revenue from long-term land leases, as well as combating gentri cation, increasing a ordability and sustainability.

And the developer lowers its risk.

“ e best sites are publicly owned,” Allen said. “ e public owners don’t know how to go through the development process as well as they should. ey’re learning and they’re trying, but we think we can facilitate that process as a catalytic developer to help hold the hand of those public owners to get those sites fully entitled, shovel ready and to nd an appropriate developer.”

In addition, the land trust is pursuing loans from nonpro ts to put its rst parcels of land under option.

Allen also noted that all the developments he envisions would have underground parking and street-level retail that would “excite the sidewalk.” e goal, Allen said, is to catalyze developments with 25 percent of their housing units a ordable at 60 percent of the Area Median Income, with the other 75 percent available at market rate, and have as many of those units available for sale as possible to help build wealth.

“We’ve got to give them a chance to have appreciation,” Allen said. “All these developments will be in downtown, where there’s likely strong appreciation, and we want to capture that for the bene t of their net worth.”

He also noted that they would try to bring in small local investors.

Among the properties the land trust is targeting are the vacant property known as the Y Lot at 350 S. Fifth Ave. downtown, the site of the former Ann Arbor YMCA for 45 years until 2005 when a new one was built on West Washington. at could be a 19-story building with 250,000 square feet, Allen said.

He said, in all, there are 10 sites EA2 has identi ed as its top targets and it is prioritizing them, although no agreements have been made with their owners yet.

“We continue to make serious progress, identifying and prioritizing sites with the leadership, but nothing is signed,” Allen said.

Christopher Taylor, Ann Arbor’s mayor, said the city has met with Allen about EA2 and would be involved in changing land uses, although no formal agreements have been reached.

Ann Arbor’s a ordable housing crisis includes the need to create about 2,800 units of new, permanent a ordable housing by 2035, or else risk economic strati cation that one report warns could be irreversible. e 2015 study by Alexandria, Va.based CZB LLC commissioned by the Washtenaw County O ce of Community and Economic Development says that the number of people in Ann Arbor and Ypsilanti paying more than half of their income for housing more than doubled from 2,200 to 4,404 between 2000 and 2012, and it increased 74 percent for those paying more than 30 percent of their income, from 7,288 to 12,646.

Experts generally say people should spend no more than 30 percent of their income on housing.

In November, Ann Arbor voters approved a 20-year, one-mill property tax that would raise $6.55 million in its rst year, 2021, and run through 2041, the ballot language read. e goal was to create 1,250 to 1,500 new a ordable units at 60 percent AMI.

Among the properties the land trust is targeting are the vacant property known as the Y Lot at 350 S. Fifth Ave. downtown, the site of the former Ann Arbor YMCA. | LARRY PEPLIN

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