Avalon Housing's unprecedented development activity holds lessons for Ann Arbor affordability crisis

Encouraging news is rare in Ann Arbor's ongoing affordable housing crisis, but Ann Arbor nonprofit Avalon Housing has recently made headway on the issue in multiple ways. Avalon, which develops and manages low-income housing, currently has an unprecedented three new developments underway, thanks in part to state-level changes to tax credits for supportive housing units.


The three new developments are the 70-unit Hickory Way on South Maple Road in Ann Arbor, a solar-powered housing development with a mix of affordable and market-rate units called Veridian at County Farm on Platt Road in Ann Arbor, and a new, as yet unnamed 24-unit development in Dexter.


Veridian at County Farm is a joint project between Avalon and THRIVE, an Ann Arbor design and building firm dedicated to sustainability. THRIVE will build 75 market-rate units, while Avalon will be in charge of 50 affordable and supportive housing units.


"Avalon has not had this many (developments) in the pipeline at one time before, so that's exciting," says Avalon Housing executive director Aubrey Patiño. "We are open to continuing to develop and grow, as long as there is a need for that in the community."


State changes to tax credits for affordable housing


Avalon's current momentum is due in part to the state's Qualified Allocation Plan (QAP). Every two years, the QAP is rewritten to determine how tax credits for affordable housing are assigned. The QAP breaks out several categories, including supportive housing, which is the category Avalon applied under.


Wendy Carty-Saxon, director of real estate development for Avalon, says the QAP was recently rewritten to align its tax credits for supportive housing with other statewide initiatives to address homelessness.


"There was an increased emphasis on housing chronically homeless or those with the highest need by using points," she says.


Under the old QAP, a 100-unit development could get into the supportive housing category if only 25 units were being used for supportive housing for people with special needs or the homeless. Applicants could get an additional five points on the application if the development specifically targeted the chronically homeless for at least 30 percent of those 25 units, or about eight units total.


Under the rewrite, an applicant needs to have 35 percent of units designated as supportive housing to receive the allocated funds, and the incentive has been raised from five to 15 points if half of total units are targeted to households in the highest need as identified by local lists of those who are chronically homeless, Carty-Saxon says.


Patiño says some Michigan developers were leveraging tax credits but "not providing services up to par."


"They were screening for easier populations to serve and not using the resources for the people who need it the most," she says.


Under the QAP re-write, Patiño says the highest scores are now going to developers willing to support people who need supportive housing the most.


Avalon expects to build Hickory Way in two phases, starting this year. Residents should be able to move into about half the units some time in 2020. If all goes to plan, the Dexter development will be ready for residents in the second half of 2021, while Veridian at County Park should be ready for residents in the first quarter of 2022.


Lessons for affordable housing advocates?


Avalon's recent successes may hold a few lessons for Ann Arbor and its affordable housing problem.


Avalon's three recent developments were aided by private landowners, Washtenaw County, the city of Dexter, and a Dexter-based nonprofit called Faith in Action (FIA). Two private landowners offered the Hickory Way property to Avalon after reading about the need for affordable housing in the area, while Washtenaw County sold Avalon the property for the Veridian project. The Dexter project will be built on property formerly owned by the city.


The Dexter development in particular came together much more quickly than projects of this type typically do.


"The (Dexter) deal was brought to my attention in October and unanimously passed the city council in the last (few) weeks," Patiño says. "Our Platt Road development took us five years. I think it's noteworthy for other communities to look at that and ask themselves what led to such an expedient and barrier-free approval process."


Patiño says Avalon's reputation for creating housing that enhances neighborhoods rather than dragging down home values has been an asset. Similarly, she says FIA has a great deal of credibility in Dexter, and the organization's assistance helped ease the way.


FIA executive director Nancy Paul says FIA became aware a few years ago that the city of Dexter had a piece of property it was considering using for a fire station. FIA approached the city council to suggest that the city consider offering the property up to be developed by Avalon for affordable housing if it was not used for that purpose, Paul says.


"They were super supportive of work we're trying to do," Paul says. "Once the city of Dexter decided not to use that property for a fire station, it was a fairly easy ask at that point."


Paul notes that because Avalon operates on grants, it can often take a long time to secure funding for a deal. That can be discouraging for private landowners who want to turn a deal around quickly, but the city of Dexter was willing to be patient.


"That's where the city's cooperation has been really key to the success of this whole thing," Paul says.


While affordable housing proposals in other areas of Washtenaw County have experienced pushback from area residents, Paul says the Dexter community as a whole has been positive about the planned housing development.


"Nobody voiced any concerns to us," Paul says. "Maybe it has to do with the speed with which it happened, or maybe it was because FIA and the city were involved. FIA has a high trust factor in the community."


Patiño is excited about the new projects in the pipeline but says an emphasis on preserving existing affordable housing stock is important too. She cautions that these new developments can barely replace 700 Ann Arbor affordable housing units that are transitioning to be market-rate rentals.


Ann Arbor has plans to add 3,000 units of affordable housing in the next 20 years, but at the current pace, Patiño says it's "hard to see how we can meet that need."


She says that statewide, communities could make progress on affordability by implementing changes to master plans and other measures. While not currently legal in Michigan, another option is inclusionary zoning, which encourages or requires developers to include some affordable housing units when they come into a community to build a new development.


"There are aggressive things that can be done like updating the master plan with a common definition around affordable housing," Patiño says. "There are basic steps that we need to take that other communities have done. We're having lots of good conversations, and there's momentum building, but we want to see that actually lead to development."


Sarah Rigg is a freelance writer and editor in Ypsilanti Township and the project manager of On the Ground Ypsilanti. She has served as innovation and jobs/development news writer for Concentrate since early 2017 and is an occasional contributor to Driven. You may reach her at sarahrigg1@gmail.com.


All photos by Doug Coombe.

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