What would happen – and who would benefit – if Ann Arbor took its housing crisis seriously?

Many jobs, few homes

What if Ann Arbor took the housing crisis seriously?

That was my thought when real-estate developer Peter Allen spoke up in an April 23 meeting organized by the Washtenaw Democratic Party and advocated passionately for redeveloping publicly owned parking lots as housing. That sounds like a cool idea. Why aren’t we doing that? I thought.

It turns out the city’s already exploring that idea, but the going is slow. Real estate development is not a game for the impatient, and when you throw efforts to make housing affordable into the mix — hoo, boy.
Peter Allen.

“Our town and gown is out of balance,” Allen told me July 15 as he drove me to look at sites he favored for redevelopment. The University of Michigan has burgeoned in recent years, bringing in more and more students and employing more and more people on campus and in its hospital. But the city’s housing stock has not kept up.

And it’s especially hurting the working and middle classes, who find themselves paying more than they should to live near work, or spending too much on a long commute, he said. For people making $20,000 to $80,000 a year, “you ought to be able to walk to work.”

Allen has a long list of sites in mind for redevelopment, often parking lots. He assigns them to his grad students to develop proposals and grades them. But he wants to take these ideas out of the classroom and into towers of concrete and steel. His top targets: The Y-lot downtown, between the library and the Fourth and William Parking Garage. The Ann and Main lot, right across from the County Courthouse. An empty lot next to Huron High School. The top level of the Liberty Square Parking Structure on Washington Street, which was built to support up to four more levels.

Allen believes if public entities provide the land and private developers can sell most of the housing at market rate, a fifth of the housing developed can be subsidized and affordable: say, $500 a month for a one-bedroom apartment.

Jennifer Hall is not so sure it pencils out that conveniently.

Hall, the executive director of the Ann Arbor Housing Commission, is also looking at publicly owned land that could be developed into housing. On April 1, the City Council directed City Administrator Howard Lazarus to work with Hall to study the feasibility of several city-owned properties as sites for affordable housing.

“Peter Allen probably got the idea from me because we’ve been talking about it for so long,” she said.

Jennifer Hall.

All the plans she’s worked on rely on state and federal money to subsidize housing. That’s the only way she’s seen the math work, she said.

“Maybe we can have a pilot project that doesn’t have state or federal funding,” she said.

One of the downsides to government funding is how much it slows the process. “People get mad at developers, but development is complicated,” Hall said. “When you add affordable housing to it, it gets twice as complicated.”

As an example, a lot on Platt Road near where I live — which already was the site for affordable housing — was approved by City Council in 2014 to replace the aging buildings there with new apartments that would house more people. In 2019, crews finally demolished the buildings and graded the property but, as I write, they have yet to pour the first foundation.

An oft-cited 2015 report sponsored by the Washtenaw County Office of Economic Development estimated that Ann Arbor needed to create 140 new units of affordable housing every year until 2035. “Since then Ann Arbor has created 50 new units at most,” said Crain’s Detroit Business in a June 23 article.

“I don’t think you can build enough housing to meet the demand,” said Hall. The Ann Arbor Housing Commission provides housing and related services for low-income people in the city. In November, about 4,300 people applied for 600 spots on the Ann Arbor Housing Commission’s housing-choice voucher waitlist.

Allen wants to speed up the process. He cites what he calls “buckets of risk” — all the things that can go wrong when trying to develop a property. Will the economy slip into a recession during construction? Will the units sell as expected? Is the soil contaminated? Allen says the toughest risks to deal with locally are community goals — what residents want to see happen — and political approvals — getting the project through zoning, planning and the City Council. “Ann Arbor’s so difficult to build,” he said.
 

Who would benefit from workforce housing in Ann Arbor?
 

Matt Newhouse has that Detroit hustle. He talks fast. You sense the rhythm of his sales patter even when he’s not selling. He keeps an eye on the money. He’s worked his way up from a brief bout of homelessness — “if you’re homeless once, you get a taste for the house life” — to owning a restaurant consultancy. He drives for Uber and Lyft three days a week. And he’s been chasing a better deal since he moved to Ann Arbor from Detroit.

He’s worked at New York Pizza Depot, then Insomnia Cookie, then food delivery startup Zoomer. “I kept trying to catch up,” he said, but the Ann Arbor level of prosperity eluded him.

“The American dream for rich people is a straight line,” Newhouse said. “The American dream for poor people is a zigzag.”

Matt Newhouse.

In 2011, Newhouse rented an Ann Arbor room for $350 a month. He met his future husband and they moved into what is now Manchester West apartments — off Liberty Street near Stadium Boulevard — in 2012, splitting $900 rent with a friend. Then a new owner bought the complex, he said, and raised the rent to $1,200 “with no upgrades.”

They moved to Arbor Landings and a two-bedroom apartment in the northwest corner of town. Between 2013 and 2017, the rent rose from $1,200 a month to $1,900. “When we left, we were at $1,600,” Newhouse said. What’s more, the energy bills in the summer were $450 a month “just because of air conditioning,” and $250-300 in the winter. He and his husband had to find a better deal.

“In 2018, we moved out to Ypsilanti,” he said, in Ridgewood Apartments off Carpenter Road. The rent was lower, and so were the heating and cooling bills. Then, another change.

Newhouse’s husband, a professional cellist, decided to pursue his doctor of musical arts at Bowling Green State University. He’s taken a pay cut while he finishes his studies, Newhouse said, but can expect to do a lot better when he’s the one training doctoral students.

Meanwhile, the couple had a choice to make: Who was going to make the commute? The decision wasn’t easy. “I’m a Michigan boy through and through,” Newhouse said.

“We ran the numbers,” he said. “We ran it and ran it and ran it.”

Bowling Green’s low cost of living won the day, Newhouse said: “$675 is what we pay down there. … Our insurance went down about $100 a month, too.” He bought a Prius to shave the expense of driving two hours up and down US-23 and I-75 every workday.

The plan is to move back to Michigan when his husband finishes his studies. “We want to move back to the area,” he said. “We want to have kids.”

How do you define affordable housing?

When it comes to what housing you can afford, there are two rules of thumb: Housing should cost no more than 30% of your income, or the combination of housing and commuting to a job should cost no more than about 50%.

With the 30% rule in mind, the National Low Income Housing Coalition looks at what wage is required to afford a one- or two-bedroom abode in its annual report, “Out of Reach.” In my ZIP code, 48108, that pencils out to $20.19 an hour (on average) for a two-bedroom place. If you’re making under 20 bucks an hour, you’d better find a roommate if you want to live in my neighborhood. If you’re making Michigan’s minimum wage of $9.45 an hour, well — good luck.

There are places where you can live more cheaply, but they’re not that close to Ann Arbor’s job centers — like the U-M campus and hospital. Let’s say you found an affordable place on the far side of Romulus, in the 48242 ZIP code. On average, you can afford the same size place on a $17.69 hourly wage, but you’ve got to spend extra money and time to get to your gig.

Obviously, this generalizes a complex situation. Some folks need only one bedroom; larger families need more. Households frequently combine incomes. The bottom line: It’s expensive to live in Ann Arbor, and not all jobs pay enough to do so.

Peter Allen, the developer who’s pushing public entities to develop their own land into housing, is interested in serving folks who make $20,000 to $80,000 a year. For a full-time job, that means making between $10 and $40 an hour. Even someone making four times the minimum wage can find it difficult to locate housing close to work in Ann Arbor. “People who work in these areas should be able to live in these areas,” he said.

Learn more: In 2018, Ben Connor Barrie wrote a guide to housing-affordability terms for Concentrate.