Title
Resolution to Approve a Debt Service Agreement with the Downtown Development Authority for a Contribution to the 350 S. Fifth Avenue Debt Service
Memorandum
This resolution requests approval of a debt service agreement with the Downtown Development Authority (DDA) that contributes funding toward the debt service on the City owned 350 S. Fifth Avenue property.
In August of 2018, the City acquired the property located at 350 S. Fifth Avenue. The City issued Limited Tax General Obligation Capital Improvement Bonds in the amount of $5,350,000 to purchase the property and to pay for related attorney, bond consultant, taxes and filing fees. The City has a 16-year repayment schedule staring in 2019 and ending in 2034. Pursuant to the debt schedule, the City is obligated to make interest-only payments through 2022. Beginning in 2023, the City must pay principal and interest payments. The City's total debt obligation through 2034, including principal and interest, is $6,812,626.
In accordance with Council's direction to pursue replacement of the 100 Affordable Housing units that were previously on this site, the Ann Arbor Housing Commission and City staff are continuing to pursue an affordable housing project and the development of the site. The proposed project is large and complicated and is a new model to the Ann Arbor Housing Commission and the City; therefore, a developer agreement that intends to address the debt on the property, will not be in place prior to the inception of the principal payment requirement of the debt.
Conversation ensued between the City and the DDA regarding their interest in pursuing an agreement to assist the City in the debt service payments until a development agreement is in place. In addition, this arrangement would provide an opportunity to support their mission to undertake public improvement that have the greatest impact in strengthening the downtown area and attracting new private investment. In addition, the DD...
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