Additional Thoughts (Aug 15, 2020) – Lurie Terrace

Aug 15, 2020 | City Council

The following was originally published in my Aug 15, 2020 Newsletter in the “Additional Thoughts” section

The most exciting item on this week’s agenda is the agreement to purchase Lurie Terrace. For anyone who does not know: Lurie Terrace is a senior community of 136 units offering below-market-rate housing on West Huron Street, near downtown. Since 1964, it has been owned and managed by a nonprofit foundation, meeting the goal and purpose of providing affordable housing for older residents (rents range from $431 for an efficiency unit to $1246 for a two bedroom unit). The units are genuinely affordable and also currently available to anyone aged 62 and over, regardless of income.

Council first discussed this opportunity in the fall of 2019, when we learned that the management of Lurie Terrace was considering a sale of the property. Management of Lurie Terrace approached the City, hoping we might be a buyer that would continue their mission. If the property was sold to a private developer, the community would be redeveloped as market rate housing – likely very expensive housing, given its proximity to downtown. The proceeds from such a sale would be significant (and these proceeds would be re-invested in other community nonprofits), but the existing affordable units would be lost and residents would be displaced.

When Council first considered opportunities related to this property, one of my colleagues wondered what kind of additional tax revenue the City would gain if Lurie Terrace changed hands for redevelopment as market rate housing. This is certainly one aspect of redevelopment and gentrification in Ann Arbor: every time a more affordable housing unit is eliminated to create a more expensive housing unit, the City receives more tax revenue. In that initial conversation, discussion of tax revenue was very brief because most of Council was focused on the affordable units and the need to preserve them.

After discussion and debate in closed session, Council directed staff to explore possibilities and keep us posted about what was feasible. Since 2019, City staff have been negotiating legal agreements and lining up funding to make the deal work. Council was advised that nothing could be discussed publicly. Last month – to facilitate purchase of Lurie Terrace – Council approved new acquisition procedures for our Housing Commission:

Our City’s legal department and the housing commission (led by Jennifer Hall) have worked incredibly hard these last ten months, hammering out details to make sure that no one loses housing and that these below-market-rate units continue to be affordable for residents who need them. Funding arrangements include a HUD-insured loan, $319,000 in the Ann Arbor Housing Commission FY21 budget, and up to $1 million from the Ann Arbor Downtown Development Authority. Moving forward, 40% of all tenants will be limited to 60% of AMI or less and 60% of all tenants will be limited to 80% of AMI or less; all existing tenants are grandfathered in, regardless of income. 

I’m very proud to have supported the current plan to save the 136 units of housing at Lurie Terrace. This opportunity came up at a time when we could effectively leverage resources – these units continue to be important as our community weathers the storm of the pandemic and economic downturn. Ten months ago (when our economic outlook was very different), this decision prompted debate, but I am confident that we made the right decision.