Affordable Housing, Sensationalism, Manufactured Outrage And Intrigue In Ann Arbor

Yep, this is about the Sports Illustrated resort proposal for the Kline’s Lot on Ashley/William

I read the article in the January 2024 edition of the Ann Arbor Observer today about the Sports Illustrated [SI] resort proposal for a big building with lots of hotel rooms, condos and parking at what is now a surface parking lot at the corner of Ashley/William streets, also know as the Kline’s Lot. I’m not super enthused about a sports ball-themed playground for wealthy A2 residents and their out-of-town friends.

However, regarding the actions/ communications from our city administrator, Milton Dohoney, with SI and their development reps over this past summer… The outrage and intrigue created by a few residents and a marketing professional with a slick website sampling a 981 page FOIA document is surprising given that no decisions have taken place yet in terms of whether to accept the unsolicited proposal for the above-mentioned development idea.

What is not surprising is that the city received an unsolicited proposal for this city-owned property that was part of the Analysis of the Financial Feasibility of Developing Affordable Housing on Under-utilized City-owned Property. The feasibility analysis was conducted 2019-2020 leading up to A2 voters approving a 20-year affordable millage in November 2020 with nearly 3/4 of the votes cast in favor of it.

Residents who are upset with Dohoney’s communication with SI reps seem to be focused on two primary concerns: 1) Dohoney and Council members are not following a proper public process and 2) Residents were “promised” that we would get affordable housing on the Kline’s Lot site. More about the latter in a bit.

Why is the unsolicited proposal not surprising?

Back in May of 2023, this past spring, our city administrator, Mr. Dohoney, publicly floated the idea that “…the city sell the city-owned Klein Lot parking lot downtown to facilitate another high-density, market-rate development to generate new city revenue” while also proposing to transform our city hall mezzanine level into a market-rate housing development to generate additional revenue for the city. Council members generally voiced support for these ideas. Council member Briggs is reported to have asked Dohoney whether he needed a resolution from council to move forward and pursue the development ideas mentioned above. He told her that it wasn’t necessary.

In the months following, Mr. Dohoney was approached by SI developers about a proposal for the development roughly described in the first paragraph above. While the city has a policy regarding the Request for Proposals process, it does not have a policy for a process to deal with unsolicited proposals.

At the October 16, 2023 council meeting, CMs Radina, Eyer and Briggs sponsored a resolution that in part directs Mr. Dohoney to inform the SI reps that council will deliberate “…the best process to move forward, and that Council encourages them to respond to any future RFPs that may be issued for the site.” The sponsors were the only CMs who voted in favor of the resolution. Mayor Taylor, who voted against the resolution, is quoted in the article linked-to above that he is “extremely comfortable” with letting staff continue to discuss and assess whether the SI proposal is worth consideration.

Some folks in our community like former CM Elizabeth Nelson are claiming that current council members are being deceptive, secretive and are not following proper public process in failing to introduce an RFP as soon as they were informed that city staff led by Dohoney were in talks with SI reps about a possible resort development at the Kline’s Lot.

Nelson goes on to quote CM Briggs as revealing that “…council members recently got a look at a rough concept for the Sports Illustrated Resorts development, which also includes condos.”

What Nelson fails to include is the remainder of the quote from this Mlive article. Here is Briggs full statement about the SI proposal:

More recently, CM Eyer has come out in favor of issuing an RFP and going through that public process to determine if we are going to sell the Kline’s Lot rather than work on a development with housing at mixed-income levels to address our housing and affordability crises. Dohoney is quoted in the January 2024 Observer article as expecting that one of the next steps is “…some kind of community meeting that allows for the people associated with the hotel, the people associated with Destination Ann Arbor, to sort of make presentations about what it’s [SI hotel/resort proposal] all about and give people an opportunity to give input.”

CM Eyer’s detractors are stating that she should have issued the RFP resolution as soon as she found out that our city administrator was in private discussions with SI reps about a development proposal at the Kline’s Lot site. Dohoney’s detractors are stating that his approach in responding to the unsolicited proposal is turning community engagement upside down.

I think that residents should be involved with the conversations with SI reps and would’ve preferred that Dohoney et al announced this sooner than was done this fall. That said, I also think given we have no formal process at this time to deal with unsolicited development proposals, the anger and hyperbole of some of the resident reporting on this story is excessive and not productive in terms of the stated goal of advocating for more affordable housing at this and the other city sites. Instead, the sensationalism with which some are expressing their objection to the initial dealings with SI seems politically motivated to unseat current council members up for reelection in 2024.

Analysis of the Financial Feasibility of Developing Affordable Housing on Under-utilized City-owned Property.

Ok back to the question of affordable housing. First thing I will say here is that I am in favor of the mixed-income development residents asked for in the community engagement about this site three years ago. However, I also recognize there are significant challenges with turning those community desires into tangible, feasible proposals for mixed-income development at the site.

First we have the fact that proposed affordability for the Kline’s Lot is, in large part, tied to a federal subsidy program, Low-Income Housing Tax Credit [LIHTC]. Mission-driven, nonprofit and public entities like the Ann Arbor Housing Commission will use these credits to subsidize housing affordable to people making ~$40K/ yr and less [often referred to as 60% Area Median Income, AMI, and less], with a focus on the lower side of that income range. These tax subsidies have only a 30-year regulatory span per federal law. So, when for-profit developers/ property management companies receive these tax credits they have the ability to increase the rents once these credits expire. We’ve had that take place starting about five years ago in Washtenaw County.

From the Mlive article linked-to above:

Therefore, if we use LIHTC subsidies on the Kline’s lot there are two considerations. First, if partnering with for-profit developer, the city should maintain ownership of the property. Second, it may make more sense to partner with mission-driven organizations like Avalon Housing or our Housing Commission. In both of these scenarios we would be able to maintain the affordability of the apartments in perpetuity. If we sell the property, we give up that power.

Given the amount of housing in the pipeline that each of the above entities are already engaged in with 121 E Catherine and 350 S Fifth, to name two, will they have the capacity to take on another project as large as one at the Kline’s Lot?

Others have cited “promises” city elected officials made to bring affordable housing apartments to the Kline’s Lot. While there have been resolutions to assess the *feasibility* of such development and also community engagement resulting in a strong community desire for affordable housing on this site, that doesn’t mean the city and its mission-driven partners will be able to move forward with a project with the scope of the Kline’s Lot. Additionally, the claim that promises were made in regards to this site are hyperbolic at minimum.

The feasibility assessment produced a report linked-to above. Here is the breakdown of development possibilities on the Kline’s lot:

All this said, I hope we find a way to make the best use of this city-owned site for affordable housing and shift back to an open, community engagement-driven process regarding plans for its development.

Finally, I think the recent January 2024 Observer article about this site mentioned above strikes a more reasonable tone for public deliberation than what I’ve seen on social media and some grassroots websites. While I think the communication from some has been sensationalistic, overblown and possibly politically-motivated, I also realize that people have strong feelings about development, in general. However, I’m not a cynic. Ultimately, I believe that we are all trying our best, aiming for equity and want what is the best for our future city as it continues to grow.

Have any of you read this January 2024 Ann Arbor Observer article yet?

[It will be available online January 15]

What do you think?

Thanks for reading. We wouldn’t be here if you hadn’t been there.