Title
Resolution to Approve Amendment #1 to the Brownfield Plan for 300-312 E. Huron St. (AC Hotel)
Memorandum
The proposed resolution would approve Amendment #1 to the Brownfield Plan for 300-312 E. Huron Street, now developed as the AC Hotel. City Council approved the original Brownfield Plan on October 7, 2024, through Resolution R-24-393. The project involved redevelopment of a surface parking lot at the southeast corner of Huron Street and Fifth Avenue into a six-story, 139-room hotel.
The site was designated a “facility” due to contamination associated with a historic gas station. The original Brownfield Plan, therefore, approved $1,167,448.00 in environmental remediation costs for tax increment financing. Because only local millages will be captured, however, reimbursement is limited to the portion attributable to those millages, reducing the maximum developer reimbursement to $749,529.00.
The project is now complete and operational. During construction, however, total project costs increased from an estimated $16 million to approximately $17.75 million. These additional costs resulted from a combination of unforeseen conditions, delays, and regulatory requirements encountered after construction was underway, at a point when suspending work to pursue a Brownfield Plan amendment would have created additional delay and financial risk.
A portion of the increased costs relates to public right-of-way utility extensions, streetscape improvements, and stormwater infrastructure eligible for reimbursement through the Brownfield Plan. Amendment #1 adds approximately $551,000.00 in eligible public infrastructure costs. Because only local millages will be captured, reimbursement is limited to the proportion attributable to those millages. The amendment therefore authorizes an additional $338,590.00 in reimbursement, bringing the total developer reimbursement under the original plan and Amendment #1 to $1,088,119.00.
The completed project created 35 full-time equivalent jobs and increased the taxable value of the property from approximately $393,000.00 to more than $8 million.
Additional details regarding the proposed amendment, eligible activities, financial assumptions, and approval process is provided in the attached Staff Report and amended Brownfield Plan.
Budget / Fiscal Impact: Approval of the Brownfield Plan does not create an upfront City expenditure or direct financial obligation. The developer advanced the full project cost and may be reimbursed for eligible activities only from future local-proportional tax increment revenues generated by the project. The reimbursement is not funded through an increase in tax rates, a special assessment, or additional taxes imposed on residents or other taxpayers. If the anticipated tax increment is not generated, the City is not obligated to make up the difference from its General Fund or other revenues.
A portion of the new property tax revenue generated by the increased taxable value will be captured for approximately five years to fund Brownfield Plan obligations. Across the original plan and Amendment #1, these obligations include $252,506.00 in WCBRA administrative costs and $343,690.00 in deposits to the Local Brownfield Revolving Fund. After the capture period ends, the additional property tax revenue will flow to the underlying taxing jurisdictions.
Staff
Prepared by: Joseph R. Giant, Director of Economic Development
Reviewed by: Milton Dohoney Jr., City Administrator
Christopher Frost, Senior Assistant City Attorney
Approved by: Milton Dohoney Jr., City Administrator
Body
Whereas, The Washtenaw County Board of Commissioners established the Washtenaw County Brownfield Redevelopment Authority (the “WCBRA”) pursuant to the Brownfield Redevelopment Financing Act, Act 381 of the Public Acts of Michigan of 1996, as amended (“Act 381”), to facilitate the identification, redevelopment, and treatment of eligible properties within Washtenaw County;
Whereas, Act 381 requires the explicit consent of each local unit of government included in the WCBRA, which the City of Ann Arbor granted by Resolution R-35-1-02;
Whereas, The property included in the Brownfield Plan has been determined to be a “facility,” as defined by and required for eligibility under Act 381;
Whereas, Any reimbursement by the WCBRA based on an approved Plan shall be limited to actual eligible expenses incurred in accordance with Act 381;
Whereas, The developer is responsible for advancing the costs of the project and eligible activities, constructing the project, and generating the tax increment necessary for reimbursement to occur;
Whereas, The City is not obligated to reimburse project costs from its General Fund or other City revenues if the project is not constructed, does not generate the anticipated tax increment, or otherwise fails to achieve the estimated taxable value; and
Whereas, Neither initiation of the WCBRA review process nor approval of the Brownfield Plan by the City guarantees approval by the Washtenaw County Board of Commissioners or any other governmental entity, or guarantees that any particular financial incentive will ultimately be obtained;
Whereas, City Council previously approved a Brownfield Plan for 300-312 E. Huron St. through Resolution R-24-393, adopted October 7, 2024;
Whereas, The developer of the project has requested approval of Amendment #1 to the Brownfield Plan for 300-312 E Huron St to modify the previously approved plan through the WCBRA; and
Whereas, City Council held a public hearing on September 22, 2026, to receive public comment regarding Amendment #1 to the Brownfield Plan;
RESOLVED, That City Council waives the City’s Brownfield Policy requirement for a fee-in-lieu payment to the Affordable Housing Fund because the fee is calculated based on total project cost and, in this instance, would exceed the amount of non-environmental eligible costs proposed for reimbursement, effectively negating the benefit of the tax increment;
RESOLVED, That City Council approves and concurs with Amendment #1 to the Brownfield Plan for 300-312 E. Huron St, dated June 29, 2026;
RESOLVED, That the tax capture period shall be the first to occur of nine (9) years, with 2025 being the first year of capture, or a maximum total tax capture of $1,689,972.00, which includes WCRBA administrative costs and revolving fund deposits; and
RESOLVED, That the City Clerk is directed to submit a copy of this resolution to the Washtenaw County Board of Commissioners as documentation of the City’s consideration and concurrence with Amendment #1 to the Brownfield Plan.