Ann Arbor Mayor John Hieftje said he's glad the DDA can help support elements of the 618 South Main project but he didn't want to pay for items the developer normally would be responsible for.

Ryan J. Stanton | AnnArbor.com

The DDA's governing board voted 10-0 on Wednesday to provide $650,000 in matching funds for a brownfield grant application by the developers.

"This is going to dramatically improve Main Street and make it a much more pedestrian-friendly area, a much more pleasant area," said Mayor John Hieftje, one of the DDA's voting board members. "And I think it's going to help that neighborhood down there around the Washtenaw Dairy. It's a vital neighborhood now. It's just going to make it better."

Over several meetings, DDA officials reviewed and discussed a request from the developers for a DDA grant that would be used by the state as the local match for a brownfield grant.

A look at the 618 South Main proposal

They also determined the project will add to downtown's residential density and that the environmental design of the project appears to exceed city requirements.

"By doing this, we're really able to leverage state funds and bring them back into the community," said DDA board member Sandi Smith.

"This is an area where we have not spent any resources in anybody's memory, so it is a spot within the DDA and a zone that has not been invested in," Smith said. "And this is really going to give us an opportunity to make a nice streetscape, activate the sidewalk, perhaps help other future developments come in, as well as help the retailers that already exist there."

According to a breakdown of the DDA grant, $384,500 will go toward streetscape costs for the Main Street sidewalk north of the project to Ashley Mews, $85,000 will go toward streetscape costs for the sidewalk adjacent to the project on Mosley and Main streets, and $100,000 will go toward a rain garden to keep stormwater from releasing into the city's storm sewers.

Additionally, $80,500 will go toward upsizing the water main under Ashley Street to a 12-inch pipe.

The streetscape improvements will touch only the western side of Main Street as part of the grant, and DDA officials are in the early stages of talking about how they might help facilitate streetscape improvements on the other side of the street.

"The one side will be dramatically improved and we'll have to take a look as time goes on what we could do with the other side," Hieftje said.

Project developer Dan Ketelaar of Ann Arbor-based Urban Group Development Co. is planning to demolish two existing structures and construct a seven-story residential building containing 190 apartment units, 121 underground parking spaces and 65 bicycle parking spaces.

During the course of the board's deliberations on Wednesday, what was expected to be a $725,000 grant was whittled down following concerns raised by Hieftje.

Hieftje said he was uncomfortable with $25,000 included for bank carrying costs and won support to remove that part. Following that vote, the board agreed to whittle from $135,000 to $85,000 the amount going toward streetscape costs adjacent to the project.

Hieftje said afterward he was satisfied that the grant was narrowed down so what remains are improvements above and beyond what the developer normally would be required to do. He noted it's a project with broad support, including from neighbors.

"I wanted to make sure we drew a pretty bright line in between helping the developer pay for things that would be required of any developer and actual improvements that weren't required," Hieftje said. "I don't want to spend it on things the developer would be required to do, but if we can enhance the streetscape of Main Street, and they get kind of a twofer that this helps them to receive some other brownfield funding from the state, I'm willing to vote in favor of that."

Hieftje stressed that the $650,000 is not money coming out of the DDA's pocket, but rather money the DDA wouldn't even have but for the development.

The developer of 618 South Main has estimated the portion of the new taxes generated by the project that will be captured by the DDA will be about $250,000 a year. The DDA plans to use a portion of those receipts to pay out the grant over four years.

The DDA's board also voted 10-0 on Wednesday to approve a recently developed brownfield grant policy that includes criteria for doling out grants like the one for 618 South Main.

If the city assessor determines that the taxes captured by the DDA from the proposed project are less than $250,000 a year, the DDA plans to reduce its grant proportionately.

The brownfield application for the proposed project at 618 South Main still must be approved by Ann Arbor City Council, the Washtenaw County Brownfield Redevelopment Authority, and the state of Michigan before the DDA's matching grant becomes effective.

The site plan for the project still hasn't been approved by the City Council. Should the council-approved site plan differ significantly from the plan the developer presented to the DDA, the DDA has reserved the right to adjust its grant accordingly.

The developer also is being asked to provide more detailed drawings for the streetscape improvements to be installed along South Main, north of the project to Ashley Mews, so it's more clear what the improvements will look like once installed.

"We're talking about sidewalk improvements, we're talking about plantings, maybe there'll be benches along there," Hieftje said. "There could be new street lighting, all sorts of things."

Added Hieftje: "There are a whole bunch of people who live and work in that area and they go back and forth all the time. We can make it much more inviting."

DDA Executive Director Susan Pollay now must work with the DDA's attorney to formulate a final agreement between the DDA and the developer of 618 South Main.

Ryan J. Stanton covers government and politics for AnnArbor.com. Reach him at ryanstanton@annarbor.com or 734-623-2529. You also can follow him on Twitter or subscribe to AnnArbor.com's email newsletters.