Developers of the Near North affordable housing project and property owners who opposed it shook hands at Tuesday's Ann Arbor City Council meeting, announcing they've reached a compromise.

Representatives of Avalon Housing and the Three Oaks Group, the two organizations collaborating on a multi-story apartment complex near downtown Ann Arbor, said they've been in close talks with the North Central Property Owners Association. They say they're revising plans to alleviate some of the group's concerns.

"It's a team effort," said Bill Godfrey of the Three Oaks Group. "We're reducing the massing, we're reducing the height of the building, we're going to phase in development of the market only when there's money available to purchase the current market and demolish it, and we're doing more landscaping and more parking."

The plans still need the blessing of the Ann Arbor City Council. 

A resolution to approve the rezoning of eight properties at 626-724 North Main Street to create a Planned Unit Development for Near North was pulled from Tuesday's agenda at the developers' request. Godfrey and Michael Appel, executive director of Avalon Housing, told council members they plan to come back Sept. 21 with a revised PUD based on input from NCPOA.

Appel said the total price tag for Near North should be somewhere around $10 million. Because it's a low-income housing project, most of the money will come directly or indirectly from public subsidy.

Godfrey said he's thrilled with the changes and thinks many neighbors are happy now, too.

"The building is better," he said. "The design is better, its profile is much lower, it's no taller than four stories, and it'll be a great addition to that neighborhood."

NCPOA, which had been a leading critic of the Near North project up until this week, announced on its blog Tuesday that it now supports the proposed development.

"NCPOA's area committee met on Labor Day with the neighbors who will be most affected by the Near North project. After reviewing changes made by the developers in the past few days, we agreed that the project is now acceptable," John Hilton, a member of the group, wrote at http://www.ncpoa.blogspot.com. "We no longer oppose its approval by City Council."

NCPOA member Tom Fitzsimmons confirmed the group's support at Tuesday's City Council meeting.

The previously drafted plans called for a five-story, mixed-use apartment building to rise in the place of eight houses being demolished. The building was to measure 67,719 square feet and feature 40 residential units - 36 one-bedroom and 4 two-bedroom units. That's being scaled back.

Also included in the plans were 16,996 square feet of underground parking (40 spaces), 2,950 square feet of retail space, and 1,645 square feet of office space. The plans called for a maximum building height of 55 feet and included 10 surface parking spaces.

But all those numbers will change - some up, some down - under the revised plans, according to the developers. They said the overall square footage will come down, and so will the cost.

As recently as last week, supporters of NCPOA had been protesting in downtown Ann Arbor, carrying fliers bearing the slogan “Say No! To NeNo.” They claimed the project grossly violated the height limit for buildings in the district, ignored the required setbacks, and was more than twice the maximum building size permitted for the site.

"The truth is that Near North will cut a gash in downtown’s greenbelt," Hilton wrote on the group's Web site on Aug. 24. "It will reverse decades of good planning, and badly hurt both our neighborhood and the city."

Appel said it hasn't played to Near North's benefit that it came on the heels of City Place, another controversial development that proposes to demolish century-old homes near downtown Ann Arbor to make way for high-rise apartments.

"We touched on some of the same nerves," Appel said. "But I think if you look at what we're offering the city in terms of public benefits, they're very different proposals. The public benefits that we're proposing are some of the highest level you could achieve."

Appel said Avalon Housing worked hard with NCPOA on revisions to the plans. He said it will now include 39 one-bedroom affordable housing units - no more two-bedroom units - and concerns about setbacks were addressed.

"In working with the neighborhood, they were very concerned, for example, that the building be as far back off Main Street as we could make it," he said. "We worked on the nature of those setbacks so, as you're walking down the sidewalk, the interface between you as a pedestrian and the residents on their balconies or front doors is as smooth as possible. We've also worked so that the setback to the back of the building, which is adjoining to the backyards of Fourth Avenue neighbors, is increased."

Avalon Housing is a nonprofit organization that develops and manages permanent supportive rental housing for people with low incomes. Appel said all of Near North's residential units will be designated as affordable housing for people with incomes ranging from 30 percent to 50 percent of the area median income. Of the 39 units, 14 will be considered "supportive housing" as defined by the Michigan State Housing Development Authority.

Karen Sidney, a certified public accountant in downtown Ann Arbor, urged council members Tuesday to oppose Near North. She said the estimated cost of $270,000 per unit - which inevitably will come from tax dollars - is a bad use of public money.

"Public tax dollars should not be used to pay a developer who made a bad investment," Sidney said, suggesting the Three Oaks Group bought the property at the height of the real estate bubble and now is trying to rescue an overpriced investment.

But developers stressed Tuesday it's important the City Council take swift action at its next meeting to approve the revised PUD so they can apply for state tax credits. The Michigan State Housing Development Authority has a tax credit deadline at the end of September and, to be competitive in their application, Near North's developers need to have public approval, zoning and a site plan in place, they said.

The Near North PUD will require eight votes from the City Council instead of a simple majority because six residents who live within 100 feet of the proposed project filed a petition with the City Clerk's Office on Aug. 10, contesting the rezoning. Some, if not all, of those same residents now support the project.
 
The City Planning Commission's motion to recommend approval of the last PUD for Near North failed at a June 16 meeting, with a 5-2 vote in support of the project when six votes were needed. Concerns expressed included the impact on the scale of the neighborhood, compliance with master plan recommendations, demolition of the existing houses and benefits of the project.

City staff noted Tuesday that, in response to floodplain review, the developers have agreed to remove a fence located within the floodway along the northern edge of the surface parking lot. That alleviated the city's concern that the fence could be an obstruction in case the site ever floods.

Image: An artist rendering shows the proposed Near North building in context viewed from southwest on North Main Street looking northeast. A revised plan for a smaller, four-story building will be presented in two weeks.

Ryan Stanton covers government for AnnArbor.com. Reach him at ryanstanton@annarbor.com or 734-623-2529.