Tuesday, September 19, 2017

Water Street Update

HRC Commissioner Amber Fellows addresses the audience at the Freight House last night

Note: tonight's Ypsilanti City Council Meeting will be held in the Ypsilanti Freighthouse in anticipation of a large crowd.

Last night about 160 people attended Ypsilanti City Council's meeting to discuss the International Village Development and Affordable Housing. The meeting was held at the Ypsilanti Freighthouse to accommodate the large crowd. At the meeting there was a presentation from 3 members of the Human Relations Commission (HRC), Kyle Hunter, KaRon Gaines, and Amber Fellows. The commissioners outlined their objections to the International Village Development and their feelings like the citizens of Ypsilanti have not been included enough in the decision making process. Commissioner Fellow's brought forward some particularly good statistics: Ypsilantians are young (median age 25) and predominantly renters (67%). Based on last night's meeting many of those young renters don't feel like their voices have been heard by the City. They don't feel like the proposed Water Street development will benefit them. Worse, they worry it will do them harm by drawing wealthier people in from outside the community and driving up the cost of goods and services.

The presentation from the HRC Commissioners was fallowed by a public commentary period in which 44 people spoke. This number includes 6 people who spoke both during the main public hearing and at the public commentary at the end of the meeting. By my estimate between 2/3 and 3/4 of those who spoke were opposed to the current proposal and 1/4 to 1/3 were in support. People who spoke against the proposal sighted the fact that they felt the process had been moving too quickly. They also are worried that the development is not for the current residents of Ypsilanti and that it will lead to the eventual displacement of vulnerable residents. People who spoke in favor of the current proposed development sighted the fact that the developer is willing to cover the estimated $8 million to $10 million in remediation costs. They also argued the current proposal would help improve the city's financial stability. The people who spoke in favor of the development also expressed that they felt it was the best opportunity the city had to begin to put the Water Street debacle in the past.

Last night during the meeting I tweeted Murph to ask him what he thought of induced demand for high end housing as a mechanism for gentrification. In other words, the idea that building a new development targeting wealthy outsiders would lead to gentrification. Here is his response from the email he sent me:

Ypsilanti is facing a lot of demand pressure against a static housing stock. Absent new housing units, prices will go -- are going -- up.

I expect International Village to *increase* affordability in a couple of ways, starting within a year after construction:

First, it would eliminate the Water Street debt retirement millage (by covering the payments through its own tax revenue) and likely significantly reduce the police/fire pension millage as well as the infrastructure surcharge on water bills, reducing total housing costs on residents (and businesses) citywide. This is obviously significant for homeowners, who see those tax bills directly, but renters pay the taxes as well -- my estimate is about 1/3 of rent checks go to covering the taxes.

Second, while some of the IV’s residents, especially in rental housing, would be new to Ypsilanti, others would be existing residents moving from other rental options, or would be incoming students who chose to live there over other Ypsi options. This introduction of a huge amount of supply would drive up vacancies and reduce rents in other housing around the city. (This happened in 2005, when Peninsular Place Apartments opened, and IV would apparently be several times as large.)

Now, I think what you're calling induced demand is a longer-term phenomenon: turning that site from a vacant brownfield to a new neighborhood of a couple thousand residents means downtown business can be supported; retail on site (a grocery store especially!) makes it appealing to live nearby; new revenues to the city, AAATA, the library allows service increases, and all of this supports increased investment.

Of course, most of this is in no way unique to International Village -- it would apply to any significant development on Water Street. But from what I've seen in the news and council packets, the IV proposal brings a much greater ratio of financial benefit: since the developers propose doing remediation and infrastructure themselves, rather than through a TIF, IV would bring greater affordability benefits to citywide residents than a proposal which did use those tools.

Ypsilanti City Council has a big decision to make tonight. Do they enter into a purchase agreement for the International Village Development and risk alienating a large group of citizens? Or, do they decline the purchase offer and wait for who knows how long to find another buyer.


  1. Great summary, but I wanted to address one of Murph's points about the water street debt. The construction would not immediately retire the millage, which is tied to the existence and size of the debt, not whether other funds become available to pay for it. The city will have the ability to use new tax revenue to make larger payments and retire the millage sooner, but there's a lot of things they could use a large cash infusion for. If I were on council, I'd be motivated to keep bringing in those millage dollars from residents while I could and use the money to improve other services. Which is to say I don't think this development will improve homeowner's bottom lines for several years at least.

  2. Yikes, that "sign out" button sure is inconveniently placed to make one think it's a "post" button after writing a bunch.

    Try again: if you were on Council, yes, you might be motivated to ask whether that money could be used elsewhere. And if I were on staff, I'd remind you that when Water Street was started, the DDA and Council set up the TIF district to essentially function as direct deposit into the debt payments.

    The city cannot legally use those TIF payments for non-Water Street / general services, nor can it legally continue to collect the debt retirement millage for general services if the debt payments are being made by the TIF revenue ("being made by" distinct from "funds available for").

    In theory, the DDA and City could choose to dissolve the TIF district and let the tax revenue flow to its default destinations, such as the city's general fund, so that it could be spent elsewhere -- but that would lose the city access to the TIF revenue that's not generated from its general fund, and the city might not actually come out ahead, in terms of a cash infusion, that way.

    1. (...these are, of course, things that should probably be laid out through formal channels, with actual numbers and proper legalese.)

  3. Thank you for your coverage of this issue. It has many lessons for all of us in the urban area.

    Did you record it using voice transcription? I noticed a couple of homophone errors (or close), like "fallow" for "follow" and "sight" for "cite"