Title
Resolution to Approve a Grant Agreement with the Ann Arbor Housing Commission and Housing Development Corporation for a Sub-Grant to Avalon Housing at 1146 S. Maple Road and Appropriate $500,000 (8 Votes Required)
Memorandum
This resolution is requested by the Ann Arbor Housing Commission (AAHC) to appropriate and grant $500,000 from the Ann Arbor Affordable Housing Fund to the Ann Arbor Housing Commission and Ann Arbor Housing Development Corporation (AAHDC) to sub-grant to Avalon Housing, Inc. (Avalon) to develop an affordable housing project at 1146 S. Maple Road.
The City exercised a recorded right of first refusal to acquire this approximately 1.15-acre property containing a single-family house on September 12, 2019 as approved in Council Resolution R-19-299. The property was purchased for $260,000.
In 2022, City Council R-22-253 approved the sale of 1146 S. Maple Road to Avalon to expand its adjacent Hickory Way I and II affordable housing developments at 1120 and 1130 South Maple Road. Hickory Way I and II consist of 70 units of affordable housing, which is available to individuals and families whose income does not exceed 60% of area median income (AMI), including 43 units restricted to households whose income does not exceed 50% of area median income.
Hickory Way III will consist of a single, four-story building with 39 one-bedroom units, along with an elevator and community space. Fifteen (15) units will be targeted to households at or below 60% of area median income. Twenty-four (24) units will be targeted to households at or below 50% of area median income. Twenty (20) of these 50% AMI units will be supportive housing and further targeted to households who have incomes below 30% of AMI. Referrals for the supportive housing units will come directly from the County's central wait list for homeless households, Housing Access of Washtenaw County (HAWC). Avalon will be providing on-site trauma-informed services to residents that are free, voluntary, and client-centered.
Total Bedroom
Area Median Income (AMI) Units Size Rent
30% AMI Supp Housing with project-
based vouchers 20 1 Br $1480
50% AMI Units with project-based
Vouchers 4 1 Br $1480
60% AMI units 15 1 Br $600
Total 39
Avalon applied for funding through a Request for Proposal issued by the Ann Arbor Housing Development Corporation in 2024. Avalon was awarded a total of $1,725,000 in City of Ann Arbor Affordable Housing Millage funds along with two other respondents by the AAHDC Board. The awards were based on the projected timelines for development and projected future millage revenue. This project is anticipating closing on financing in December 2026, followed by construction. The FY26 millage revenue received by the City was lower than projected and the AAHC staffing costs were higher than projected. Consequently, the AAHDC is requesting that the City approve a grant of $500,000 in Ann Arbor Affordable Housing Funds, to replace $500,000 in Affordable Housing Millage funds, to ensure that all existing millage commitments can be met. In addition, $100,000 in pre-development Affordable Housing Funds were awarded to this project by City Council. The total amount from the City for this project will be $1,825,000, with $1,250,000 from the millage and $600,000 from the Affordable Housing Fund.
The primary source of funding for affordable housing development is the Low-Income Housing Tax Credit (LIHTC) Program. 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. To monetize the LIHTC for development of the project, Avalon Housing must form 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.
The current estimated sources and uses (in application process for some sources) are:
SOURCES
$10,043,996 Low Income Housing Tax Credit Equity
$1,267,765 Washtenaw County (federal HOME)
$2,195,689 Washtenaw County (federal HOME ARPA)
$1,350,000 Washtenaw County (additional federal HOME)
$1,225,000 City of Ann Arbor Affordable Housing Millage
$100,000 City of Ann Arbor Affordable Housing Fund Pre-Develop
$500,000 City of Ann Arbor Affordable Housing Fund
$997,648 Washtenaw County Brownfield
$500,000 Philanthropy
$950,000 Federal Home Loan Bank AHP
$23,691 Deferred Developer Fee
$100 General Partner Contribution
$19,153,889
TOTAL USES
$260,000 Land
$14,770,357 Hard Construction Costs
$4,123,389 **Soft Costs
$19,153,889 TOTAL
** Soft costs include financing fees, reserves, furnishings, legal, insurance, permit fees, environmental, title fees, utility fees, appraisal, cost certification, architect, engineer, developer fee, survey, construction loan interest, retail lease expenses, etc.
The total local Affordable Housing Millage funding and the pre-development Affordable Housing Fund grant, combined with this $500,000 Affordable Housing Fund grant will not exceed 10% of the total development costs for the initial construction of this affordable housing project. All 39 apartments are affordable to households at 60% AMI or less. The City requires a permanent deed restriction on the property to maintain long-term affordability.
Budget/Fiscal Impact: Funding is available in the fund balance of the Affordable Housing Fund. It is requested that $500,000 be appropriated from the fund balance to the FY 2027 Affordable Housing Fund expenditure budget.
Staff
Prepared By: Jennifer Hall, Executive Director, Ann Arbor Housing Commission
Reviewed By: Marti Praschan, Chief Financial Officer
Approved By: Milton Dohoney Jr., City Administrator
Body
Whereas, The Ann Arbor Housing Development Corporation requests allocation of $500,000 from the Affordable Housing Fund to sub-grant to Avalon Housing, Inc. to develop 1146 S. Maple Road as affordable housing;
Whereas, The development at 1146 S. Maple Road will include 39 apartments that will be rent- and income-restricted to households with incomes at or below 60% AMI, including 20 of the apartments affordable to households at 30% AMI (Project);
Whereas, The Project’s capital stack includes a variety of federal, state and local fundings sources and the development needs to fill the final gap in financing with local funding sources; and
Whereas, Funding is available in the fund balance of the Ann Arbor Affordable Housing Fund;
RESOLVED, That City Council approves a grant agreement with the Ann Arbor Housing Commission and Ann Arbor Housing Development Corporation for $500,000 for a sub-grant to Avalon Housing, Inc. for the development of affordable housing at 1146 S. Maple Road;
RESOLVED, That the Mayor and City Clerk are authorized and directed to the sign the grant agreement after approval by the City Administrator and City Attorney;
RESOLVED, That City Council appropriates $500,000 from the Affordable Housing Fund fund balance to the FY 2027 Ann Arbor Housing Commission expenditure budget in the Affordable Housing Fund;
RESOLVED, That all amounts herein are without regard to fiscal year; and
RESOLVED, That the City Administrator is authorized to take all appropriate actions to implement this resolution and the grant agreement, including the exercise of all determinations and authority delegated to the City under the grant agreement and the execution and management of ancillary documents, instruments, and agreements.