Local in Ann Arbor

As we discussed some months ago, there are intriguing links between the failure of the plan to replace housing at the old Y site and the current proposals to have a conference center across the street at the Library Lot.  Our earlier article recounted some of the history of William Street Station, the development proposed by  HDC Construction Company  in response to the City’s RFP to replace the supportive housing lost when the old Y was closed.  The project was voted down by council on November 5, 2007, in an action that a contemporary account said left the developer “stunned”.  Now HDC is suing the city.  The lawsuit reminds us that the developer had by then obtained $18.5 million in low-income housing tax credits from MSHDA (the state housing authority) and a $7.5 million MEGA (Brownfield) grant.  Those were both lost with the cancellation of the project.  Could it be that what killed the project was its last iteration, in which HDC proposed to build a hotel and conference center as the money-making part of the project?

One problem that the developers faced was that the main source of subsidy for the affordable housing, the low-income tax credits, are only effective for 15 years.  But the council wanted the supportive housing in perpetuity.  Another problem was that through 2007, the leading edge of the Michigan recession and general decline in housing demand made the original plan’s viability questionable.  (It would have combined market-rate housing with the supportive housing tower.)  So HDC came up with a revised plan that would have combined a hotel-conference center, the housing, and the bus terminal (don’t forget that this was also a joint project with AATA).  Only weeks before its death, a revised site plan for the project was approved by the Planning Commission.

Could it be that several people on the inside track began to look at this concept and conclude that it might be better without the distressed population of the supportive housing tower and the bus station? After all, a “world-class” facility is…classy. We don’t have a record of the conversations going on behind closed doors in late October 2007, but they can be imagined. Even then there were occasional news stories about efforts to find other locations for the housing. One email conversation between CM Leigh Greden and CM Margie Teall is available by virtue of the citizen FOIA project.   The exchange took place on November 5, 2007. (Teall and Greden apparently voted to extend HDC’s option, though mayor John Hieftje voted against it.)  One interesting statement is, “John H wants the units outside downtown, scattered. If HHSAB comes up with a statement that the units don’t need to be downtown, it frees up strings on the Y site.” The significant thing about this observation is that it was made on the same night that the William Street Station project was killed.

Two players who may have known more about what was being said than even Greden and Teall were Jesse Bernstein, the former president and CEO of the Ann Arbor Chamber of Commerce, and Bob Guenzel, the county administrator.  Consider the timeline:

October 2007:  The site plan for the William Street Station hotel and conference center is approved at Planning Commission.

November 2007:  The project is killed.

December 2007:  Bernstein and Guenzel have coffee at the Cafe Verde and decide a conference center is a great idea (as reported in the Ann Arbor News some months later).

April 2008:  Bernstein organizes a forum to discuss a conference center and Roger Fraser is quoted as saying he wouldn’t mind seeing a conference center over the Library Lot.  But even as the first discussions are breaking in the News, an email discussion with DDA director Susan Pollay links Bernstein with two later members of the Valiant partnership (they of the Secret Plan).  Fritz Seyferth and Bruce Zenkel have already, as of April 9, 2008, had one group of prospective investors tour Ann Arbor and are now working with a second.

By December 2008, as reported by the Ann Arbor Chronicle, the council is hearing about other possible sites to locate the 100 units of supportive housing.  Two of them belong to Washtenaw County.  At this time, I heard anecdotal accounts that Guenzel was meeting with commissioners to win acceptance for the county making one of them available (it never came to pass).

Thanks to another story (January 18, 2010)  in the Chronicle, we now learn that Fraser had an early version of the Secret Plan at a council Budget and Labor Committee meeting and was told by the councilmembers there to “put it on the shelf”.  But instead, he presented it at the January 2009 council retreat.

The January 18 Chronicle account elicited a remarkable addition from CM Sabra Briere (see comment #7), with an account of a December 2009 encounter with Bernstein.  He had asked to meet with her privately, apparently to complain about the ongoing RFP process.  She related,

“Bernstein said he, Fraser and Hieftje had met with people from Valiant. The Valiant people had asked what they could do for the City. The ‘vision’ that had emerged from this meeting was that the City wanted a conference center … Bernstein said he felt betrayed. He said that Valiant’s proposal for a conference center was a consensus project, and that it was not fair that Valiant should have to jump through all of these hoops.”

All this makes it clear that there was an inside track and that the participants had hoped that the Valiant proposal would be accepted without too much fuss.  Since last summer, the process has instead been becoming more and more open to discussion.  It is a test now of the current council (many of whom were not involved with the inside story) as to whether the Valiant proposal will in fact be accepted despite the considerable risk it would involve to the city.  (Even the Secret Plan says that most conference centers have to be subsidized.)  It will probably always be a mystery how much this concept had to do with the failure of the William Street Station project. But maybe we’ll now be running on a fully public and accountable track.  Putting everything about the RFP on the city website is a great start, and the RFP Advisory Committee has made meetings open to the public and even a chance for public questions at the interviews.  What a nice thought for a new year.

UPDATE: AnnArbor.com reports that HDC’s lawsuit was denied in Federal Court.

SECOND UPDATE:  Today (March 30, 2012) AnnArbor.com reports that HDC’s appeal also failed and the City of Ann Arbor declares a final victory.

This entry was posted on January 19, 2010 at 11:31 pm and is filed under Business, civic finance. You can subscribe via RSS 2.0 feed to this post's comments. You can comment below, or link to this permanent URL from your own site.