Mayor Signed Letter to Support Low-Income Project on Bailey Lot; Developer Answers Questions
ELi broke the news on May 25 that Detroit-based developer American Community Developers (ACD) is looking to build affordable “workforce” housing at 530 Albert Ave. on much of what is now the surface parking lot behind the Peanut Barrel.
Now, results of a Freedom of Information Act (FOIA) request and responses to questions put to the developer are providing more information about the redevelopment project.
First, some background:
ACD Vice President Chris Young told the Downtown Development Authority on May 25 that his company is looking to purchase the privately-owned portion of Parking Lot #11 (at the southwest corner of Bailey Street and Albert Avenue) and to construct a new apartment building with 120 units, ranging from studio to two-bedroom apartments.
The apartments would be restricted to individuals or households presently earning about $30,000 to $70,000 per year. ACD specializes in income-restricted “affordable” housing and is seeking local, state and federal funding assistance to bring the project to fruition.
At the meeting with the DDA, Young said his company had secured funding from the federal and state agencies whose support is needed. This was a surprising claim to a number of ELi readers who responded to the story and have worked in commercial real estate. That’s because support from the Michigan State Housing Development Authority (MSHDA), which helps developers build low-income housing, typically requires written proof of local support for a project. In East Lansing, that means support of the City Council.
A new FOIA response to ELi from the city shows that, without checking with the rest of Council, Mayor Ron Bacon signed a “Letter of Support” to MSHDA for the project.
Bacon indicated the letter was “from the City of East Lansing.”
In fact, the project is far from City Council’s approval, not yet even having been scheduled for a public hearing at the Planning Commission, an event which effectively starts the process of site plan review and approval in East Lansing.
Produced with the assistance of city staff, Bacon’s letter is dated just a few days after an anonymous letter accused him of overreaching in his actions as mayor and so violating the City Charter. East Lansing’s City Charter generally limits the power of the mayor to ceremonial signings and signing what is approved by the Council.
Answering questions from ELi, ACD’s Vice President Young confirmed his team used Bacon’s letter to apply to MSHDA for funding.
“This letter was provided with the understanding that the project would still need to follow the required development path with the city,” Young wrote by email.
In Feb. 2017, the project now known as Center City District – including the Landmark Apartments, Newman Lofts and the Target store – was announced at a press conference with a similar feel.
With then-mayor Mark Meadows in attendance, the head of the Lansing Economic Area Partnership (LEAP) announced the Michigan Economic Development Corporation (MEDC) had already called the project “everything that we look for.” Yet the project had also not started the local review and approval process in East Lansing.
Provided with Bacon’s letter to MSHDA regarding 530 Albert Ave. and asked to compare that to the 2017 press conference for the Center City District project, Meadows told ELi by email they differed.
While he attended the press conference and spoke in favor of the local developers who were part of the team, he had not signed any support letter to the state without consultation with the rest of Council.
“I would not have sent this letter, which went out over a month before the project was unveiled,” Meadows said of Bacon’s letter.
Meadows said he supports affordable housing and could see the city manager telling MSHDA that the city supports affordable housing. But, “By having it come from Ron [Bacon], it implies that the Council supports the project,” he said.
ELi contacted Bacon to ask him to explain why he signed this letter without consultation with Council. He has not responded.
ELi also asked the four other members of Council by email if they had been consulted on this letter. So far, only Mayor Pro Tem Jessy Gregg has responded.
“Nope,” Gregg answered. “This is the first time I have seen this letter.”
In his response, Meadows described the 530 Albert Ave. project as “complicated.” He provided two recent legislative analyses from the state that relate to “workforce” housing development, with more support for these projects likely coming down the pike.
Since our May 25 report of this project, ELi readers have been expressing skepticism that the building would really be something other than standard market-rate student housing.
Asked to explain how screening for renters would work, Young saidby email, “The 530 Albert development would provide housing for those whose income are between 40% and 80% of the AMI [Area Median Income] for the Lansing-East Lansing” area.
It would be constructed using federal Low-Income Housing Tax Credits (LIHTC) and, according to LIHTC regulations, students are not allowable tenants.
“The definition of a student is an individual who has attended an educational institution at least five months of a 12-month calendar year,” Young explained, noting there are some exceptions for people like a student who is living with an income-qualified parent in an apartment unit.
“The development will be under a LURA (Land Use Restriction Agreement) that limits the use of the property to an affordability period of 30 years and other rules of the LIHTC program,” Young said. “The penalties for violating the allowable tenant restriction are severe. A development could lose a portion of or all its tax credit award, along with and a possible ban from participation in future LIHTC projects.”
ACD has developed over 100 affordable housing projects in 11 states.
Young feels confident support will come at least at the state and federal level.
“The application to MSHDA is in process,” he said. “This process is incredibly detailed and takes time; ACD understands this process and is working with MSHDA as the application is processed. We are optimistic that our request will be funded. It should be noted that ACD has a remarkably high success rate in working with MSHDA on the LIHTC program.”
FOIA also showed this project almost did not make it to the starting gate.
On March 10, Young wrote to Interim City Manager Randy Talifarro to tell him the owners of the property had decided to go “with a developer who wants to build a hotel on the site and offered a quick close.”
Just five weeks later, things had turned around, and ACD had its application for 530 Albert Ave. as “workforce housing” submitted to MSHDA.
This is a developing story and may be updated.