The Downtown Detroit Development Authority board will consider next week nearly $50 million in funding for the Olympia Development of Michigan and Related Cos. team’s development efforts in District Detroit.
The board’s finance committee approved on Friday a trio of 34-year, 1% loans totaling $23.76 million to help cover hard construction costs for the development’s three residential projects with affordable housing as well as a $25 million reimbursement to cover infrastructure costs across its 10 planned developments. The matter goes before the full DDA board on Wednesday.
The loan program under the DDA’s Housing, Office, Retail Development and Absorption Fund is a new financing tool the agency says will help residential developers offer more discounted rents for low-income Detroiters within the DDA boundaries.
“We’re seeing downtown go through this transition and now there’s a greater need more than ever around the city of Detroit, including downtown, for affordable housing,” said Kenyetta Hairston-Bridges, executive vice president of economic development and investment services for the Detroit Economic Growth Corporation.
A spokesperson for Olympia Development of Michigan and Related Co. did not immediately provide comment Friday on the DDA panel’s action.
The companies would be the first recipients of funding under the loan program if it is approved Wednesday. The development team’s previously announced plans include 139 affordable housing units for residents earning at 50% area median income — or an individual making $20,000 annually.
The proposed $1.5 billion joint venture between the Ilitch family organization and developer Stephen Ross is a mixed-use development that includes the construction of six buildings and the renovation of four buildings in the District Detroit. Plans call for 695 mixed-income residential units, 1.2 million square feet of commercial office space, 100,000 square feet of retail and 467 hotel rooms across the 10 properties.
The $25 million infrastructure reimbursement would cover items including design, engineering, permitting, material and construction costs related to public infrastructure improvements, according to the DEGC.
The loans would be funded through tax revenues captured by the DDA, Hairston-Bridges said. In the past, those revenues have focused on business development downtown.
“Now there’s been this seismic shift to deeply support the affordable housing,” Hairston-Bridges said. “That’s where the most demand is today. We’re not going to stop supporting businesses.”
The loans would be as follows: a maximum of $10.9 million based on 40% of the hard construction costs to complete 58 affordable units in a 287-unit development at 2250 Woodward Ave.; a maximum of $8.8 million based on 40% of hard construction costs to complete 54 affordable units in a 261-unit development at 2505 Cass Ave., and a maximum of $4.06 million based on 40% of the hard construction costs to complete 27 affordable units in a 131-unit development.
Interest will accrue and be deferred for 48 months following the loan closing, according to a DEGC document. For every year that at least 50% of the affordable units are occupied by existing Detroiters — defined as someone who has been a city resident for at least three years prior to living in the apartment — 1/30th of the original principal loan amount after the 49th month would be forgiven. Hairston-Bridges said the developer would have to verify the occupant’s status as an existing Detroiter.
To qualify for the loan program, developments must have at least 20% of their residential units set aside for households making between 50% and 70% of the area median income, which is a household income between $31,350 and $43,890 for an individual or between $44,750 and $62,650 for a family of four.
Hairston-Bridges said an individual whose income is at the 50% AMI would pay $840 per month for rent.
“Their market rate is $2,400,” she said of Olympia and Related Cos’ rental portfolio. “That’s a significant reduction from the $2,400 to the $840.”
Julie Schneider, director of the city’s Housing and Revitalization Department, said Friday it’s important for affordable housing to be part of a development plan from the beginning.
“In the last 10 years, we’ve really seen a resurgence in the downtown,” she said. “Even in a shorter time span, the past few years we’ve seen major developments happening in the greater downtown. With that certainly brings benefits and new activities, but it also can lead to increasing rent pressures. When we’re doing these developments, it’s critical that affordable housing a part of the initial work. It helps to maintain lower costs, but it really provides options for Detroiters to live in these spaces — Detroiters who might not otherwise be able to afford some higher rents.”
Schneider said the DDA’s support of affordable housing within the downtown helps the city better focus on the neighborhoods, serving as a complement to the $203 million affordable housing plan Mayor Mike Duggan announced with members of the Detroit City Council last summer.
“It really does help the city be able to focus more of our dollars in neighborhoods,” she said. “Making the pot bigger is incredibly helpful for meeting the need for affordable housing in the city.”
Twitter: @CWilliams_DN
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