Title
Resolution to Approve a Payment in Lieu of Taxes (PILOT) for the Affordable Housing Project at 2810 Boardwalk
Memorandum
The Ann Arbor Housing Commission (AAHC), through its 501(c)(3), the Ann Arbor Housing Development Corporation (AAHDC), is developing the site at 2810 Boardwalk as affordable housing. The property will be known as The Blondeen, named after local resident and activist Blondeen Munson.
Eisenhower State Land Development Company, LLC (ESLDC) is the co-developer, which is also developing the market-rate portion of the site, known as Arbor South. The affordable housing includes a 183,289 square foot 6-story building that includes approximately 200 1-, 2-, and 3-bedroom apartments with tenant community space and staff offices. All residential units will be affordable to households with incomes at or below 80% of Area Median Income (AMI) with an income average of no more than 60% AMI, as restricted by Low Income Housing Tax Credits (LIHTC) and the City’s PILOT ordinance.
The primary source of funding for affordable housing development is the Low-Income Housing Tax Credit (LIHTC) Program. The Blondeen has received the highest gap financing score by the Michigan State Housing Development Authority (MSHDA) for Round 20, and is preparing the LIHTC application for a firm commitment. LIHTC provides the owner with tax credits that can be claimed annually over the course of ten years in exchange for a minimum of a 30-year commitment of affordability. The AAHC will place a restrictive covenant on the property requiring the property to provide affordable housing.
In order to monetize the LIHTC for development of the project, AAHDC must form a limited dividend housing association, which can be either a limited partnership or limited liability company with an equity investor that will invest capital in exchange for the right to claim the future LIHTC, as required by the IRS. The AAHDC will own the land and will execute a long-term ground lease with Blondeen, Limited Dividend Housing Association, LLC; the limited liability company created for the improvements (buildings). The AAHDC formed a single-asset entity called Blondeen Housing Association, LLC that will be the co-managing member of Blondeen, Limited Dividend Housing Authority, LLC with ESLDC or an affiliate during development. The equity investor has not yet been selected.
Blondeen, Limited Dividend Housing Association, LLC is applying for LIHTC from the Michigan State Housing Development Authority (MSHDA). MSHDA requires the adoption of a service payment in lieu of taxes for LIHTC-funded project through a separate resolution specific to the tax credit project. The City’s Tax Exemption for Housing Projects’ ordinance (Chapter 19, Section 1:651 of Ann Arbor City Code) applies to all affordable housing projects that meet the requirements of the ordinance, but this resolution is needed to satisfy MSHDA’s requirements. The AAHDC is requesting approval of a service charge of $1/unit/year in lieu of taxes for all the affordable residential units for the term of the LIHTC commitment of 45 years.
Staff
Prepared By: Jennifer Hall, Executive Director, Ann Arbor Housing Commission
Reviewed By: Christopher Frost, Senior Assistant City Attorney
Approved By: Milton Dohoney Jr., City Administrator
Body
Whereas, The Ann Arbor Housing Commission, through its 501(c)(3), the Ann Arbor Housing Development Corporation, is co-developing 2810 Boardwalk with Eisenhower State Land Development Company, LLC as an affordable housing project;
Whereas, The apartments will be rent and income-restricted to households with incomes at or below 80% of Area Median Income (AMI) with an income average of no more than 60% AMI; and
Whereas, City Council has determined prospectively that, under Chapter 19 of City Code, the affordable housing project at 2810 Boardwalk will be qualified for and should be granted a tax exemption and pay an annual service charge in lieu of taxes;
RESOLVED, The housing project to be developed at 2810 Boardwalk in the City of Ann Arbor is exempted from all ad valorem property taxes and shall pay an annual service charge in lieu of taxes equal to one dollar ($1.00) for each eligible housing unit in the housing project, as provided by Chapter 19 of City Code and the Michigan State Housing Development Authority Act, said housing project being the following real property:
Situated in the City of Ann Arbor, County of Washtenaw, State of Michigan, and is described as follows:
Unit 2, 789 EISENHOWER CONDOMINIUM, according to the Master Deed recorded in Liber 5540, page 230, as amended, and designated as Washtenaw County Condominium Subdivision Plan No. 737, together with rights in the general common elements and the limited common elements as shown on the Master Deed and as described in Act 59 of the Public Acts of 1978, as amended.
Parcel Identification No.: 09-12-04-300-067
Commonly known as: 2810 Boardwalk Drive, Ann Arbor MI 48108
RESOLVED, That the tax exemption shall be effective on December 31st of the year in which the City receives from the Michigan State Housing Development Authority a “Notification to Local Assessor of Exemption” for the project;
RESOLVED, That this resolution shall remain in effect for 45 years and shall not terminate so long as both (1) the housing project remains eligible for tax exemption under Chapter 19 of City Code and state and federal law, and (2) a state or federally-aided mortgage loan remains outstanding and unpaid on the housing project, as provided in Chapter 19 of City Code;
RESOLVED, That notwithstanding the provisions of Section 15(a) of the State Housing Development Authority Act to the contrary, a contract between the City of Ann Arbor and the Ann Arbor Housing Development Corporation affiliated entity, the Blondeen, Limited Dividend Housing Association, LLC, and its successors and assigns, with the Michigan State Housing Development Authority as third party beneficiary under the contract, to provide this tax exemption and accept payments in lieu of taxes, is effectuated by adoption of this resolution;
RESOLVED, That the owner or operator of the housing project shall, upon request by the City, provide evidence to verify continuing eligibility for tax exemption under Chapter 19 of City Code; and
RESOLVED, That the City Administrator is authorized to take all appropriate actions to implement this resolution.