Developer: Scaled-back version of 618 South Main apartments to break ground in July
The 618 South Main apartments project in Ann Arbor is planned for the site of the former Fox Tent & Awning building, north of Mosley between Main and Ashley. The existing structures on the site are to be demolished to make way for a 156-unit apartment building. This is the site as it looked on Monday, viewed from Ashley Street.
Ryan J. Stanton | AnnArbor.com
"I'm going to have an apartment on the top floor," said Ketelaar of Ann Arbor-based Urban Group Development, 225 S. Ashley St.
"I've reserved an apartment for myself and I'm going to fix it up," he said. "I think it's a great spot. I think it's a great neighborhood."
Ketelaar said he'll be moving out of his house on Ann Arbor's east side, and his significant other will be joining him in their new near-downtown abode.
"It's going to be a good product, so why wouldn't I be proud enough to move in there?" he said. "I think it's going to be a nice community."
Dan Ketelaar
Ketelaar, using himself as an example, says he's expecting the apartments also will have some appeal among empty nesters who want to downsize and move closer to downtown.
"While we're focused on young professionals, we think this is a real opportunity for people my age," he said.
Ketelaar had hoped to break ground in May, but he said the timeline's been pushed back — he's been lining up financing, revising the plans, and reducing the scope of the project.
He plans to eliminate an entire floor, reducing the building from seven to six stories, while the number of apartments drops from 182 to 156.
He hopes to have construction underway sometime in July, and he expects to be able to welcome the first tenants by summer of 2014.
"We're moving forward with it," he said. "We've gotten all our approvals and financing in place and we're in the process of getting our guaranteed maximum price from our contractor, so we're finishing all our architectural drawings and taking it through that process."
Ketelaar said his decision to reduce the building height was driven by concerns expressed by some members of the community who thought seven stories was too high. He said it also happens to work out for him financially, so he'll be asking the city's planning department to approve the revisions.
"We became more efficient with the building," he said. "There's less wasted space."
Wendy Rampson, the city's planning manager, said representatives for 618 South Main have told the city they want to make some administrative changes to the site plan, but those changes haven't been filed yet. Administrative changes typically are minor and don't require council approval.
Changes mentioned thus far, Rampson said, include raising the finished floor elevation, removing upper-floor units and connecting the pool house to the club house.
Ketelaar said the revised plans still include two floors of underground parking and amenities such as a 1,400-square-foot indoor lounge, fitness center, pool, outdoor areas with fire pits, and a rooftop terrace on the north side on the sixth floor.
"The benefit of this is you can go downstairs to a 1,400-square-foot living room," he said, envisioning the lounge will be a gathering place for tenants and foster a sense of community.
Ketelaar said more than a third of the units will be studio apartments, roughly 30 will be two-bedroom units, and the rest will be one-bedroom units.
Project architect Mike Siegel, left, and developer Dan Ketelaar hold up a rendering of 618 South Main at an Ann Arbor City Council meeting last June when the project was approved.
Ryan J. Stanton | AnnArbor.com
Ketelaar said he's partnering with U.S. Equities Realty, a full-service commercial real estate firm headquartered in Chicago, to make the project happen.
U.S. Equities Realty has been responsible for a number of major projects in Chicago. It managed the design and engineering phases of the Jay Pritzker Music Pavilion (designed by Frank Gehry) in Chicago's Millennium Park, as well as Gehry's B.P. Pedestrian Bridge.
The company also oversaw the engineering and fabrication of Anish Kapoor's famous Cloud Gate sculpture, as well as the design and production of Jaume Plensa's Crown Fountain.
Chicago-based Clayco has been chosen to oversee the construction. Ketelaar said they'll be hiring many Southeast Michigan subcontractors and it'll be a union job.
Washtenaw Engineering is handling civil engineering, Ann Arbor-based Robert Darvas Associates PC is the structural engineer, and Shannan Gibb-Randall of Ann Arbor-based InSite Design Studio is the landscape architect. The building architect is Mike Siegel of Chicago-based VOA Associates.
The Habitat Co., a Chicago-based property manager, will handle leasing for 618 South Main. The company already manages two other apartment complexes in Ann Arbor: Lake Village on the city's south side and Windemere Park on the city's northeast side.
Ketelaar said it's still about a $37.5 million project. He's getting more than $6.5 million in public incentives to undertake the project, including a $3 million Community Revitalization Program loan from the Michigan Economic Development Corp., tax-increment financing assistance valued at $2.9 million, and a $650,000 grant from the Ann Arbor Downtown Development Authority.
According to the MEDC, $2.2 million in school taxes resulting from the project will be captured and reinvested into the project, along with $679,793 in local taxes. The money the DDA is chipping in will pay for streetscape improvements along South Main.
Mayor John Hieftje noted the project has support from the Old West Side Association, which told city officials last year the developer did a great job of working with neighbors to refine the design. Hieftje, who grew up in the neighborhood on Princeton Avenue, said he welcomes the project.
With the 618 South Main project coming, Affordable Vet Services of Ann Arbor vacated its space on Ashley Street next to the Fox Tent & Awning and moved across town to 2117 W. Stadium Blvd.
Ryan J. Stanton | AnnArbor.com
The project is at the site of the former Fox Tent & Awning building, north of Mosley between Main and Ashley. Existing structures on the site still need to be demolished.
The fact that none of that work has been visible yet has led some to question whether Ketelaar was struggling to line up financing for the project.
"It's more procedural," he explained. "It's a brownfield project, so we had to go through that whole process with the state, finalize that, and move forward. It just takes time."
Ketelaar said financing a $37.5 million apartment project that isn't student housing takes a lot of work, especially when "people still look askew at Michigan, even though Ann Arbor is a strong community."
"Things have changed in the last year and a half to two years," he added. "It was more of a concern two years ago than it is now. The economy is changing."
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.
Comments
RjR
Tue, Jun 25, 2013 : 11:04 p.m.
Any new updates on this project starting in July?
Vivienne Armentrout
Thu, Apr 11, 2013 : 9:05 p.m.
Regarding rents and affordability, here is the 2013 HUD housing table for our area http://www.ewashtenaw.org/government/departments/community-and-economic-development/housing-and-community-infrastructure/urban_county/plans_reports_data/hud-income-levels-and-housing-costs/2013-income-limits-v2.pdf According to HUD, an affordable cost of housing (falling within their recommended limits) for a "low income" (75% of median income) single person is $1,093. But because of our high median income, that would be a person who earns $43,700 per year. Of course, it is not being sold or subsidized as "affordable housing". Still, it compares favorably with the rents for a single bedroom in those new developments downtown.
Steve Hendel
Thu, Apr 11, 2013 : 8:16 p.m.
And by the way, how is this a "brownfield project"?
leaguebus
Fri, Apr 12, 2013 : 12:55 a.m.
There was a dry cleaning business on the site. But, if they dig out 30 or 40 feet of dirt out to make underground parking, why should we pay the brownfield costs?
Steve Hendel
Thu, Apr 11, 2013 : 8:14 p.m.
Over $6 million in public loans, grants and tax incentives for a project where the rents START at $1,100/month for a studio apartment? Why should yuppies and empty nesters who can afford such rents be subsidized in this way?
Carolyn
Thu, Apr 11, 2013 : 7:45 p.m.
Let's see, the justification for building high-rises is to prevent urban sprawl. The starting rent in this place is $1100 plus deposits, fees for clubhouse and fitness use, utilities, etc. Let's call it $1300/month. I can rent a brand new 750 SF 1 BR apartment in Brighton for $800/month. I make $30,000 / yer at the hospital and I have 2 Master's degrees. What is the incentive again?
Vivienne Armentrout
Thu, Apr 11, 2013 : 8:54 p.m.
I'm guessing US 23 is a good incentive for you. Location always drives housing costs.
GratefulReb
Thu, Apr 11, 2013 : 5:50 p.m.
Love this news along with the new Brooks Brothers and other projects. Keeping Ann Arbor funky doesn't feed the tax man. Now if we could get the eyesore that is North Main squared away, we'll be in really good shape.
Larry Baird
Thu, Apr 11, 2013 : 3:54 p.m.
".....rents will start at about $1,100 and go up from there." Any idea/speculation regarding what the two-bedroom's will rent for? The financing package should have answered that question - what needs to be charged to cover the loan? Also, how will these rents compare to the new A2 City Apartments being built on First? It will be interesting to see what the demand is for these first, new "non-student" housing options downtown since the financial crisis ended the previous condo boom.
oyxclean
Thu, Apr 11, 2013 : 6:19 p.m.
Larry, I would guess the $1,100 is for a studio, so a one bedroom would be something like $1300. I would never pay $1,100 for a studio but I'm sure lots of folks will.
Ryan J. Stanton
Thu, Apr 11, 2013 : 5:14 p.m.
That's all the info I have on the rents. Of course, that info will be very public before long when they start marketing the place and leasing units. But it's not going to be the first project in the door for the non-student market. The first one to watch will be Ann Arbor City Apartments, which is finishing up this summer.
Pablo
Thu, Apr 11, 2013 : 3:35 p.m.
Can someone explain why we should be subsidizing this developer? When I last drove by there, this seemed to us as a high-rate property, well positioned for development, if that is what the city wants. It is not a slum-type area needing public support to fund it...it just doesn't seem fair to everyone. If I built a $1 million home, could I ask you all to subsidize me? I doubt it.
Craig Lounsbury
Thu, Apr 11, 2013 : 2:45 p.m.
I want to build a 4 car garage but I will be happy to scale it back to 3 cars. How soon can I expect my check?
Craig Lounsbury
Thu, Apr 11, 2013 : 3:35 p.m.
Make it 50 bucks and I'll attach a "take a comic book/leave a comic book" box on the southeast corner.
sigdiamond
Thu, Apr 11, 2013 : 3:10 p.m.
I'd be willing to send you a check for $10 if you promise to put it towards a class on reading comprehension.
Tom Whitaker
Thu, Apr 11, 2013 : 2:08 p.m.
I thought the tax incentives were primarily for providing housing for working people close to downtown. If he's reducing the number of units by 15%, shouldn't the "incentives" also be reduced by 15%? (Note: there's no indication of how many bedrooms are being eliminated--that percentage may be higher.) "Raising the finished floor elevation" means that the first floor will be now higher than what was proposed, so the underground parking, which already made up a good portion of the ground floor, will likely be raised even higher. This could mean that pedestrians on Main will be walking past another parking structure, or worse, an even-larger blank wall, instead of retail outlets or other pedestrian-friendly features. Are they simply taking a floor of more-costly living space off the top and raising the whole building up out of the ground (saving more money on excavation and earth retention) with the net effect of having the same height as currently approved? Why was Affordable Vet (A2's only downtown vet) forced to move out when their building was not shown to be a part of this project's approved site plan? This, to me, is the very unfortunate consequence of this proposal--that it has forced three downtown, walkable business to relocate to the auto-centric West Stadium corridor, with no new retail space coming back in. This is "Downtown Development?" This is not to criticize Mr. Ketelaar, but rather to get some clarity on the details. After all, the taxpayers are now reluctant partners in this project. I'm glad he's worked with the community to make his project better--to me THAT is the behavior that deserves rewarding with incentives, if anything. Contrast this with the UM-financed Greenfield Partners, LLC, and their nose-thumbing at the community with their detrimental 413 E. Huron project.
Tom Whitaker
Thu, Apr 11, 2013 : 8:50 p.m.
@Ryan: I don't doubt that it's still a $37-38 million project, but aren't you curious as to why a 6-story building with 156 units has the same total budget as a 7-story building with 190 units even AFTER receiving $6.5 million in low or no-cost financing help from the MEDC and DDA?
A2isNuts
Thu, Apr 11, 2013 : 8:06 p.m.
The CRP program is what replaced most of the former tax credits that were awarded. It is a $100 M pot from which the MEDC provides low interest loans and grants. It replaced the MBT credits for job creation, job retention, investment in brownfield projects, historic tax credits, and a few others. With the loss of units there will be some adjustment in the assessed value, which will have an effect on the amount of increment captured, but I can't imagine it will be very significant. It is a drop of about 15% in the number of units. Bear in mind that Brownfield Plans allow for capture up to 30 years with the ability to defer year 1 for 5 years to allow for completion of the project. With the current condition of the property and buildings and such a large development replacing it, I would be surprised if the drop extended the capture period by more than a year or two. The purpose of the loan program is to help the developer obtain private financing. The developer has to front all the costs related to the brownfield condition of the property, asbestos abatement, demolition, site prep, remediation if necessary, stormwater management etc; the loan would be to cover these costs and be secured by the TIF stream which allows the developer to get conventional financing for the rest of the project. I don't think the MEDC would see the loss of 15% of the units as significant enough to revisit the project. I have no idea what the DDA position would be or what their contract language is as it relates to the grant, but having watched the A2 DDA in action I can't imagine they care.
Ryan J. Stanton
Thu, Apr 11, 2013 : 7:50 p.m.
Tom, the previous MEDC press release also stated the project was expected to generate a total capital investment of $37M. Ketelaar told me this week it's still a $37M-$38M project.
Tom Whitaker
Thu, Apr 11, 2013 : 5:37 p.m.
"A $3,000,000 Community Revitalization Program loan has been awarded to 618 South Main, LLC to redevelop a contaminated property in the City of Ann Arbor into a six- to seven-story residential building that will be targeted specifically to young professionals." ---MEDC press release. Clearly the MEDQ found the building's target market of housing "young professionals" to be a factor in its decision to award brownfield financing AND a separate loan to this particular project. But regardless, putting my original statement in another way, if the project is being made one floor smaller, with 15% fewer apartment units (and an unknown number of fewer bedrooms), does this not mean that the building will assess for a lower value and cause significant changes to the TIF financing calculations or the developer's ability to repay loans? When the DDA agreed to chip in, there were 190 units proposed. When the MEDC added the $2.9 million TIF on top of a $3 million loan, there were 182 units proposed. Now there are only 156 units proposed. According to news accounts, the developer and these agencies made some projections as to the tax revenues to be generated by the project--revenue projections that served as a basis for calculating the amounts to be awarded. Surely these projections, and the amounts awarded, deserve a second look by the County, DDA, and MEDC now that the project has been downsized.
A2isNuts
Thu, Apr 11, 2013 : 2:19 p.m.
It would depend on the tax incentives. Tax incentives related to a Brownfield project under Act 381 are limited mainly to TIF (now that there is no MBT credit anymore) based on environmental costs (DEQ approved) and non-environmental costs (MEDC approved). Approval has nothing to do to providing housing for working people, although this can and is often a part of the consideration that the MEDC makes in approving school tax capture for non-environmental activities. The State likes to see projects that are mixed use, walkable, sustainable (all the typical buzz words) and where there is local support and contribution. If the local Brownfield redevelopment authority recommends approval of a Brownfield Plan, and the local unit of government (in this case the city) approves the plan the State will usually also approve the capture of school taxes providing the activities proposed are eligible under Act 381.
A2isNuts
Thu, Apr 11, 2013 : 2:05 p.m.
It never ceases to amaze me that people who have no idea what they are talking about will post comments that are wildly inaccurate and flat out wrong. The capture of School tax is the combined 24 mils that are STATE taxes, not local taxes and have absolutely nothing to do with the level of funding schools receive. Schools are funded on a per pupil basis by the State based on a headcount of students, completely unrelated to the money collected by the State in School taxes. This is the reason that the capture of School tax requires approval from the State. The base tax is not touched and continues to go to all of the taxing jurisdictions, only the increment is captured. The amount approved for capture is based on eligible activities tat the developer will incur theoretically to level the playing field between developing a contaminated or impaired site vs developing a "clean" or greenfield site. The developer is only reimbursed those costs actually incurred, so while they may estimate that asbestos removal prior to demolition or removal of contaminated soil will cost $X if the actual cost is only $Y then they are only reimbursed $Y. The development agreement with the City will dictate what type of submittal is required to determine actual cost, typically submittal of paid invoices to contractors. The taxes are also not deferred. The developer (or property owner if sold, or lessee if a triple net lease) has to pay the full amount of the assessed taxes, then they are reimbursed by the treasurer based on a schedule also outlined in the development agreement. If this property is in a DDA that can further complicate the project as the DDA would normally capture the increased local taxes based on redevelopment, in this case the DDA can in some cases waive their capture or they can commit to spend their capture on projects that will benefit the project to show a local contribution. Once the developer is made whole, all of the increased taxes go to the city/state.
leaguebus
Fri, Apr 12, 2013 : 12:43 a.m.
We, the public, are investing almost $3M in this $37M project. That means we should get 8% of the profits once its built, LOL?
DJBudSonic
Thu, Apr 11, 2013 : 2:16 p.m.
Perhaps if there was more complete or in depth reporting of these issues they would be better understood. You cannot expect everyone to understand the intricacies of tax incentives based on a 300 word press release. As far as the DDA goes, it is certainly subject to debate that any improvements they might make in lieu of taxes are being better spent. Think excessive wayfinding signs, debt servicing, ornate light fixtures, etc.
annarboral
Thu, Apr 11, 2013 : 2:01 p.m.
I couldn't find any information on additional parking. With 156 new apartments there would be up tp 2 * 156 or 312 cars added top that area. Where will those people park their cars? It should be unnecessary to say that parking in Ann Arbor is already challenging, so any new develoment must address that problem.
Boo Radley
Thu, Apr 11, 2013 : 3:24 p.m.
"Ketelaar said the revised plans still include two floors of underground parking ..."
justcurious
Thu, Apr 11, 2013 : 2:16 p.m.
I "think" I remember parking underneath. But I could be wrong.
Lola
Thu, Apr 11, 2013 : 1:49 p.m.
They can always hang out at the hookah bar going in across the street.
Twanders
Thu, Apr 11, 2013 : 1:37 p.m.
I too was hoping to see ground floor retail/restaurant space! We need a good pub/restaurant over here!!!! Consider decreasing some of that public "living room" for tenants and increasing your profitability as well as fostering a sense of community among neighbors by putting in some retail. A restaurant in that space will be a huge hit if its done right. Plus tenants would love the option of eating on the ground floor of their house! It's not too late to change the plans now!
Arboriginal
Thu, Apr 11, 2013 : 1:19 p.m.
Woo Woo says the Choo Choo! Does anybody remember the OWS'ers trying to get the A2 RR exemption from state law regarding crossings?
Vivienne Armentrout
Thu, Apr 11, 2013 : 12:55 p.m.
This looks like all good news to me. A reduction to six floors will make the scale better, and I like that many units are studio and one-bedroom, which will make them affordable to middle-income people. (Most of Paris is six floors, as I recall.) I'm glad that we are doing some infill in the near-downtown area that does not tear up an existing neighborhood. And thank goodness, not another student monstrosity. (It's not the students who are monstrous, but the layout of those buildings.) As noted, the developer worked with the neighborhood association and made a number of concessions. This is a huge contrast with the 413 E. Huron project, which is simply mining the D1 zoning they sit on for the maximum value possible. I'm sorry to see some of those businesses go, but perhaps this will "anchor" the area and help out existing businesses. If I were considering living there, I'd be pretty pleased about having South Main Market just across the street. (Not mentioned is Overture Audio, which we are happy to welcome on Stadium - the new west side downtown.) And having the developer live there means that the building should be maintained at the very highest level.
Ryan J. Stanton
Thu, Apr 11, 2013 : 1:35 p.m.
In addition to Overture Audio, I'm told Deluxe Drapery made the move over to Stadium Boulevard as well.
SemperFi
Thu, Apr 11, 2013 : 12:45 p.m.
This is a dandy project and completely appropriate for a Main Street in a town this size. The captured funds are a temporary situation. They're not taking funds away from the schools, but rather not paying them for a few years. In a short time, this development will be paying it's share of school taxes. Also, with the targeted demography, this will put no additional strain on the school system.
DJBudSonic
Thu, Apr 11, 2013 : 12:56 p.m.
So the payments are deferred, but still obligated? Or we (via our 'representative government' ) are waiving the requirement to pay for a few years, even though the taxable structure will be built and standing? In that case it IS taking them away from the schools. How many private homeowners have the option of not paying taxes for a few years in consideration of their building a new house?
Brad
Thu, Apr 11, 2013 : 12:17 p.m.
It just seems totally out of place and out of scale for that area. I hope I'm wrong.
a2miguy
Thu, Apr 11, 2013 : 2:37 p.m.
Compared with what's there right now? Believe you me, I have absolutely hated a number of these developments going up around town, but in this place? Better to build something new and useful to replace what is starting to look like a small pocket of blight.
justcurious
Thu, Apr 11, 2013 : 2:15 p.m.
Brad, I agree with you. It is totally out of place and will tower over the homers with character on the street behind it. It will turn them into dark caves.
sigdiamond
Thu, Apr 11, 2013 : 1:42 p.m.
Agree with the regs or not, they exist. He knew that. End of story. Sorry, attention whores aren't entitled to my sympathy.
Brad
Thu, Apr 11, 2013 : 1:32 p.m.
As opposed to that genuine outrage which is only appropriate under extreme circumstances like ... the wrong fence.
sigdiamond
Thu, Apr 11, 2013 : 1:26 p.m.
Yeah, it's amazing what happens when you actually work with people instead of, you know, knowingly and purposely violating regulations just because you want to be a martyr and go on a pointless crusade. The OWS fence guy is the perfect hero for this message board: He's like the Babe Ruth of entitled, manufactured outrage.
Brad
Thu, Apr 11, 2013 : 12:46 p.m.
One thing for sure - since the OWS Ass'n is involved we know they'll have an appropriate fence!
DJBudSonic
Thu, Apr 11, 2013 : 11:58 a.m.
It is a nice neighborhood now, not so sure after this goes up. It must be nice to get all that money from the taxpayers to support your private development. Wonder what one has to do to qualify for such an outpouring of assistance? Am I reading this right, that $2.2 million in monies header for the schools will instead be given back to the developer? Something doesn't sound right about that.
timjbd
Thu, Apr 11, 2013 : 11:51 a.m.
Would be a good location for some ground floor retail. No? MIXED use...
Alan Goldsmith
Thu, Apr 11, 2013 : 10:51 a.m.
"According to the MEDC, $2.2 million in school taxes resulting from the project will be captured and reinvested into the project, along with $679,793 in local taxes." Perhaps a better phrase than 'captured' would have been "looted" from the public schools to fund incentives to a millionaires. And the DDA is on board for the ride too of course.
Brad
Thu, Apr 11, 2013 : 12:35 p.m.
I like "skimmed" myself. And of course the DDA gets theirs because they call that area "downtown" even though everyone living here knows better. Can we get rid of the DDA yet?