Title
Resolution to Approve a Grant Agreement with the Ann Arbor Housing Development Corporation to Support the Development of a Sustainable and Affordable Housing Project at 350 S. Fifth Ave. and Appropriate Funding ($1,000,000.00) (8 Votes Required)
Memorandum
The City of Ann Arbor has set a series of aggressive goals related to climate action and sustainability, including supporting affordable housing developments with 100% clean and renewable energy.
The Ann Arbor Housing Commission (“AAHC”), through its 501(c)(3), the Ann Arbor Housing Development Corporation (“AAHDC”), is developing the previously City-owned parcel at 350 S. Fifth Ave. as sustainable and affordable housing. The project includes a 329,242 square foot, 20-story mixed-use building that includes approximately 330 1- and 2-bedroom apartments with tenant community space and staff offices, and approximately 6,500 square feet of commercial space. 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. At least 110 of the 330 units (33%) will be targeted to households earning less than 30% of the AMI and will be directly supported by the AAHC through both project-based rental vouchers and supportive services.
The building will have the following sustainable features:
• Compact development with connections to existing infrastructure and public transit to reduce car dependency
• High-performance building envelope to minimize heat loss/gain
• Energy efficient HVAC systems, appliances, and lighting to reduce energy demand
• Geothermal ground source heat pump system
• Full-building electrification, eliminating Scope 1 carbon emissions (aside from emergency generator)
• Solar-ready provisions, supporting future renewable integration
• Low-flow fixtures and water-efficient appliances
• Stormwater management systems to reduce runoff and protect local ecosystems
• Responsibly sourced materials including local materials and recycled content
• Low-VOC materials to improve indoor air quality
• Ventilation systems that meet or exceed ASHRAE standards
• Moisture control and mold prevention through proper detailing and construction practices
• Activity spaces included on site for dedicated recreation and exercise
• Materials and orientations to educate occupants on sustainable features
• Ongoing maintenance plans to sustain performance over time.
The total development cost is $215 million and the green and sustainable features add $7.8 million in hard costs to the development budget. While most of these improvements will lead to notable operational savings, given the tight upfront budget, the AAHC is seeking additional funding support to achieve its goal of making 350 S. Fifth Ave. as sustainable as possible. The Ann Arbor Office of Sustainability and Innovations has a goal of advancing sustainability at affordable housing sites and has fund balance available from unexpended dollars in the County Mental Health Millage Fund.
Budget/Fiscal Impact: Funding for this grant is available in the County Mental Health Millage Fund balance for Sustainability and Innovations ($812,446.00) as well as in existing FY26 Climate Action Millage funds ($187,554.00).
Staff
Prepared by: Missy Stults, Sustainability and Innovations Director
Reviewed by: Valerie Jackson, Assistant City Attorney - Sustainability
Reviewed by: Kim Hoenerhoff, Financial Analyst
Reviewed 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 the previously City-owned property at 350 S. 5th Avenue with Related Midwest;
Whereas, The apartments in the development 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 including 33% of the apartments affordable to households at or below 30% AMI;
Whereas, The sustainability features add an estimated $7.8 million to the development budget of $215 million;
Whereas, These sustainability features will lead to notable operational savings for the Ann Arbor Housing Commission, but present a challenge to the upfront development budget;
Whereas, Through the A2ZERO Carbon Neutrality Plan, the City has set an aggressive goal of achieving community-wide carbon neutrality by 2030;
Whereas, One of the key actions of the A2ZERO Plan is investing in helping affordable housing sites become more sustainable;
Whereas, The Office of Sustainability and Innovations has $812,446.00 remaining in fund balance from the County Mental Health Millage Fund;
Whereas, The Office of Sustainability and Innovations has remaining resources available in its Fiscal Year 2026 budget to support the remaining $187,554.00 of the proposed grant amount to support sustainability features at 350 S. 5th Ave.; and
Whereas, City staff recommend approving the attached $1,000,000.00 Grant Agreement to support the development of a sustainable and affordable housing project at 350 S 5th Ave;
RESOLVED, That City Council approve the $1,000,000.00 Grant Agreement Between the City of Ann Arbor and the Ann Arbor Housing Development Corporation (“Grant Agreement”) to support the sustainability features at 350 S. 5th Avenue;
RESOLVED, That City Council appropriate $812,446.00 from the County Mental Health Millage Fund balance to the FY 2026 Sustainability and Innovations County Mental Health Millage expenditure budget;
RESOLVED, That all amounts herein are without regard to fiscal year;
RESOLVED, That the Mayor and City Clerk are authorized to sign the Grant Agreement after approval by the City Administrator and the City Attorney; and
RESOLVED, That the City Administrator is authorized to take all necessary actions to implement this resolution.