Downtown Housing and the Affordability Gap

Wanna live downtown? In most cases, your success in doing so will depend on who you are or how long you've been standing in line. Urban living is all the rage nationwide, but the longtime popularity of Downtown Ann Arbor has made market rates tough for many young adults, as well as low-income families to afford. 
"It doesn't make sense to have a segregated socioeconomic situation downtown," says Ann Arbor Housing Commission Executive Director Jennifer Hall,  "like in Detroit, where you have completely separate communities. That is not good policy."
Not only is socioeconomic diversity good for an urban area, Hall says, those who can't afford to pay rental rates hovering near $1,000 per bedroom or buy condos listing for more than half a million dollars actually receive a greater benefit of downtown living than those on the high end of the income scale. 
"Downtown is...the best location because it's close to the bus line and all the services," she says. "The jobs are in this area, the schools are in this area; it's where the transportation is." 
While some affordable housing is available downtown, says Hall, it nowhere near meets the demand. Here, we'll look at just what affordable housing really is, where it exists downtown, and what the future of affordable housing may be in Ann Arbor's city center.  
Defining Affordable
The phrase "affordable housing" seems to have as many definitions as ears it on which it falls. Some think homeless shelters; others think of their first apartment out of college or a home for their family. According to Hall, the confusion is warranted.
"I would say there isn't, unfortunately, a 'real definition,'" she says. 
For housing advocates like Hall, the closest approximation is a two-part equation. First, anyone earning 80 percent of the local median local income or lower is considered low income. Then, the U.S. Department of Housing and Urban Development [] has determined that "affordable" means housing costs not exceeding 30 percent of income.
Because Washtenaw County has an unusually high median income of $58,200, our "low income" threshold is closer to 75 percent, meaning a single person making $43,700 or less fits the bill, and should have a monthly housing cost – including utilities and taxes – of no more than $1,093.
Where market values are higher, citizens can apply for Section Eight vouchers, which pay landlords the difference between these income limits and market rate. But before the average 20-something schoolteacher gets excited about qualifying for this benefit, Hall warns that it's not quite that simple. 
"There is a huge wait-list," she says. "We had 15,000 applicants for Section Eight in the last round."
So while a teacher making $35,000 may technically qualify as low income, that hardly matters if she is standing in a line in which 60 percent of 15,512 applicants reported incomes of $9,999 or less. And those are the households that Hall and the Housing Commission are truly working to serve. Most of their work is with those in the "extremely low income" category of 30 percent of median income: $17,500 for a single person locally, or $20,000 for a couple. 
Why the long line? As Hall explains, it's because the housing just isn't available. 
What Is Available
It's clear that housing is in high demand in and near downtown. Several recently completed residential developments, as well as those currently underway, mean that the number of housing units is on the rise. 
So who are they for? At least five of them – Zaragon Place, Zaragon West, 411 Lofts, Landmark and the controversial City Place Apartments – are unabashedly student rentals. With up to six bedrooms per "luxury apartment" and often with separate leases for each, these glorified dorm rooms are certainly meeting a market demand, but are geared toward a tightly targeted and transient demographic. The luxury units are so targeted to the student market, that they report their capacity per bed, rather than per unit. All told, those five developments have added 1,534 student beds to downtown each leasing from anywhere between $800 and more than $1,700 per month. 
Then, of course, there are the downtown housing developments targeted at another specific market: the less transient highest bidder. Condos such as an Ashley Mews three-bedroom and at 111 North Ashley two-bedroom are listed on Zillow for $650,000 and $539,900 respectively. Finding a definitive price on the 155 forthcoming units in the Ann Arbor City Apartments development now under construction at First and Washington is a challenge, but developers have been quoted as saying they will be market rate, promising such luxuries as "sexy bathrooms."
For those residents more interested in reliably running water than the sexiness of their bathrooms, Hall produces a map showing a handful of locations downtown and the number of qualifying units in each. A few show substantial numbers, such as the Courthouse Square Apartments that provides 114 units geared toward the elderly, and Baker Commons with 64 units, many of which are occupied by people with disabilities. For the most part, the buildings are residential, offering 2 to 7 units per home. 
"Before the YMCA decided to move to their current location (from Fifth and William), they had 100 units of affordable housing here," says Hall. "When that was torn down, the city's intent was to have someone develop low income housing there."
To make an extremely long story short, no units have been built to replace the 100 units that went away in 2005. While smaller buildings have added six to nine units at a time, including several Avalon Housing locations, according to Hall, the loss has yet to be made up for, much less meet demand. 
"We could build 1,000 units, and we'd need 1,000 more," she says.
The Gap
So while there seems to be plenty of housing available downtown for students and upper income households, and a small number of units available for extremely low income residents advocated for by the Housing Commission, what about these in between? 
"For medium income," Hall says, "there is a gap for that." 
It's a gap that could be difficult to bridge. Hall has her hands full advocating for extremely low income residents, and one can hardly blame developers asking for and receiving full market rates for their investments. 
"You can't build affordable housing downtown without subsidy," says Hall. That means grants or other incentives that take time to assemble. "Property owners are not going to sit on their property and wait for you to get the financing together." 

And even if a developer had a strong desire to create more housing for those in the affordable housing income gap in near-downtown neighborhoods, where it might be more viable without subsidies, the obstacles for creating the kind of developments attractive to families and young adults abound. Downtown and near-downtown zoning is notoriously difficult to navigate, with certain parking and density requirements that some say incentivize developers to build student-style housing with multiple bedrooms. Add to that overlay districts with specialty requirements, such as historic districts, and a vocal anti-density movement afoot longtime Ann Arbor residents, and it’s easy to imagine why a developer might just decide to build another student high-rise and be done with it.
That doesn't mean there's no hope for those in the income gap who dream of downtown living. Thanks to an agreement with the city, 16 of the 156 units underway in the Ann Arbor City Apartments will fit into the affordable range for those with incomes between 60 and 80 percent of median income, meaning some one-bedroom unites will priced between $875 and $1,093.
So there is something. While 16 out of 156 new units might be just a drop in the bucket of the affordable housing income gap, the agreement does indicate that creating more socioeconomic diversity downtown is on the city's radar. While that may not guarantee a rush of affordable housing – by anyone's definition – will suddenly appear downtown, perhaps it's reason enough to have hope. At least Hall thinks so. 
"I do see more affordable housing in the future," she says. "Do I have a specific site where I think it will be? No. But I am optimistic."

Natalie Burg is a freelance writer, the development news editor for Capital Gains, and a regular contributor to Metromode and Concentrate.

All photos by Doug Coombe

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