Delays continue with Ann Arbor City Apartments project; city still counting on $3.2M from land sale
The Ann Arbor City Council unanimously approved another delay Thursday night on the sale of city-owned property at First and Washington to developer Village Green.
Village Green, which has plans for a 156-unit complex called Ann Arbor City Apartments, has had an option to purchase the downtown site since February 2007. City officials say they're continuing to work out final details with the developer and it's taking time.
The option agreement was last amended in April to extend the term to Aug. 30. The council's action Thursday night extends the option to Nov. 3, with Village Green paying the city a $50,000 non-refundable fee as an expression of its commitment to the project.
Village Green submitted this rendering for Ann Arbor City Apartments when it was approved in 2008.
Tom Crawford, the city's chief financial officer, said the developer still anticipates breaking ground this construction season and is anxious to do so. He noted the resolution permits an additional 30-day extension to Dec. 3 for an extra $50,000 non-refundable fee.
Village Green plans to build an 11-story (8 above grade) project that, in addition to apartments, also includes a 244-space parking garage. The Downtown Development Authority would manage the public parking structure, which would be owned by the city.
Council Member Stephen Kunselman, D-3rd Ward, went along with supporting Thursday's action on the project but not before expressing some concerns.
"If you look at our debt per capita, it's gone up significantly under these parking structure projects," Kunselman said. "We're only going to be adding to our debt with this project."
The City Council agreed last October to authorize up to $9 million in general obligation bonds to help pay for the parking structure. Of the 244 spaces planned, about 72 are expected to be held for residents, leaving about 172 spaces available to the general public.
Noting that it's a 156-unit complex, Kunselman asked why the city doesn't just amend the agreement and let the developer have the whole parking structure. He suggested the city get out of paying for it and instead just take the money for the land and make a profit.
"We are well down the road on delivering this project," Crawford responded. "Changing a substantial portion of the project is not something that can be done very easily at this stage."
The city had long intended to sell the property to Village Green for $3.3 million, and it has budgeted $3 million of that toward the police-courts building addition to city hall.
After a recent vote by the council, that price is now $3.2 million. The reason for the change has to do with flooding issues that are being addressed through revisions to the foundation design.
Crawford said the city, the DDA and the developer have identified several other modifications that should be made in order to provide a parking structure that operates effectively. Some of those modifications include reducing the size of columns, potentially changing the location of some columns, and addressing visibility and durability issues with the stairways.
The mutual resolution of those issues has taken longer than anticipated and has necessitated the latest request for an extension of the option agreement, Crawford said. Proceeds from the sale of the property were planned to complete the financing for the city's new police-courts building, officially called the Ann Arbor Justice Center.
Crawford said the delay has caused a need for the city to provide short-term financing for the police-courts building until the sale happens. He said staff is working on the financing and plans to make a recommendation to council on Aug. 15.
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 e-mail newsletters.
Comments
Veracity
Sun, Aug 7, 2011 : 3:20 a.m.
Does Village Green's Ann Arbor City Apartments remind you of Ashley Terrace? Although Ann Arbor City Apartments will lease units rather than sell them, very likely the rental rate asked by Village Green will be higher than the market will bear. Here are key facts related to this type of construction from a recent Paula Gardner article: "Downtown activists were concerned as Ashley Terrace and other projects were proposed for the central business district, with forces advocating higher density, mixed-use buildings clashing with others who said the market for downtown housing was limited. Ed Shaffran was among those who cautioned against overbuilding. He said this afternoon that the Ashley Terrace foreclosure appears to signal what he warned against: New construction downtown could only be built at a price that would effectively price a typical unit out of the range of most buyers." <a href="http://www.annarbor.com/business-review/lender-foreclosing-on-ann-arbors-ashley-terrace-high-rise-20-million-owed/">http://www.annarbor.com/business-review/lender-foreclosing-on-ann-arbors-ashley-terrace-high-rise-20-million-owed/</a> I wonder if the request for an extension by Village Green could be denied by City Council and provide the opportunity to retract approval of the proposal. Such an action will avert another embarrassing bankruptcy and loss of any TIF financial benefits expected after completion of construction. Also the DDA will not have to ask taxpayers for a milage or income tax to service the $9 million bond issue that will pay for the parking structure to be built under the Ann Arbor City Apartment building.
Ron Granger
Sat, Aug 6, 2011 : 1:26 p.m.
"The city had long intended to sell the property to Village Green for $3.3 million, and it has budgeted $3 million of that toward the police-courts building addition to city hall." Ah yes, the expensive city hall project that voters TURNED DOWN time and again. Yet it was built by the council against the wishes of the city. They're still trying to figure out how we'll pay for it, and they're selling off chunks of our city to do it. But at least the city workers got their window views and expensive Germna art.
Ron Granger
Sat, Aug 6, 2011 : 1:24 p.m.
Isn't it obvious that taxpayers are going to take a huge bath on this project? So many cities do. And Crawford's position seems completely disingenuous: "We are well down the road on delivering this project," Crawford responded. "Changing a substantial portion of the project is not something that can be done very easily at this stage." Wrong- these delays are our opportunity to re-negotiate. The developer's on-going delays als represent "substantial changes" that Crawford says can't happen. DO NOT BUILD THE PARKING STRUCTURE WITH TAXPAYER MONEY.
Ross
Sat, Aug 6, 2011 : 2:47 a.m.
Great, another uber-expensive underground parking structure partially financed by city bonds, i.e. US taxpayers. Let's see, 9 million does not even cover all of it, so we're looking at what, over $40,000 PER PARKING SPOT!? How can anyone keep thinking this is an affordable expense given our current economic climate!?!? UGH! Even if every single spot somehow made a full $5 every day in parking revenue, and there was magically no overhead for this structure, it would take an intolerable 25 years to pay it back. Thats assuming vehicular traffic to downtown remains in ultra high demand to keep this thing full. Will there even be available or affordable gasoline in 20 years? Why do we need 244 spots.... the building only has 156 units... one would hope that living right downtown that many residents won't even need a car. NO MORE UNDERGROUND PARKING STRUCTURES.
Will Warner
Fri, Aug 5, 2011 : 10:50 p.m.
Hurry up and get this built. I'm ready to move downtown. I'm tired of mowing my acre.
CynicA2
Fri, Aug 5, 2011 : 10:06 p.m.
This whole situation is starting to remind me of the never-realized project slated for the old YMCA lot - endless delays and excuses, and eventually, the developer walks away from the whole mess. If it looks like a duck, and walks like a duck... etc.
DonBee
Fri, Aug 5, 2011 : 8:47 p.m.
...and the building is still ugly. Ann Arbor needs the money and the $50,000 will cover the interest on the loan the city takes to cover the fact they have not been paid the $3.2 million.
Ariel
Fri, Aug 5, 2011 : 8:31 p.m.
Village Green doesn't deserve to build anything in Ann Arbor until they clean up their existing apartment complexes that are failing and full of awful reviews.
a2grateful
Fri, Aug 5, 2011 : 8:29 p.m.
OK, council . . . It's time to face the music . . . This project is unlikely to proceed . . . Just another brick in the wall for city government/development failure . . . Tally Hall! i.e. Tally Ho!
pbehjatnia
Fri, Aug 5, 2011 : 7:53 p.m.
Nice. We get to keep viewing a big mess for a few more years while city council tries to figure out a way to make doing business in Ann Arbor even more cumbersome than it already is. Meanwhile taxpayer land is just sitting around not making any money for us. That's great.
racerx
Fri, Aug 5, 2011 : 7:42 p.m.
LOL! The council has no choice but to approve another delay. They're counting on $3.2M from the sale that was budgeted for the Taj Mahall project. Mmmm...what happens if the sale doesn't go through? Will the city ask the DDA for that extra $3.2M? Or, just leave Taj Mahall as a cost overrun? Hey wait! Maybe the city can get the extra funds from the art project!
Jim Clarkson
Fri, Aug 5, 2011 : 6:43 p.m.
So how many empty apartments will this make for downtown. Are'nt there already two apartment / condo buildings in foreclosure already. Do we really need more housing downtown? I always thought that cities had retail space downtown and the people lived outside of that. All seems rather silly to me. Down with the DDA I say.
johnnya2
Fri, Aug 5, 2011 : 7:04 p.m.
A condo is different than a rental. While the housing market for selling condos has been hurt a lot by the current economic situation, the rental market is VERY strong.