Water Street Flats… What are your thoughts?

Screen shot 2014-01-20 at 10.12.08 PM

At tomorrow night’s Ypsi City Council meeting, our elected officials will be considering a proposal concerning the development of 3.14 acres at the intersection of South and River streets, on the 38-acre downtown parcel commonly referred to as Water Street. The proposal, which you can download on the City’s website, outlines the intention of Indiana-based developer Herman Kittle Properties (HKP) to construct a 76-unit, multi-floor affordable housing complex on the banks of the Huron River. The project isn’t exciting in any aesthetic sense (see image above), and it’s a long way from the higher-end single-family housing our elected officials had been aiming for 14 years ago, when first setting down the path toward remediation and redevelopment, but it’s hard to imagine any scenario where our City Council would say no. We’ve just got too much debt to hold out any longer, waiting for the truly transformative project that would help turn the City around and bring good jobs in the process.

wsflatsHere, with the specifics as to what we currently owe on the property, which we went so far into debt to acquire in 1999, is a clip from today’s Ann Arbor News.

…The city still owes around $24 million on the Water Street debt, a decrease from 2006 when the city owed close to $30 million. The principal amount owed on the property was $15.7 million, but due to interest, the costs ballooned.

In 2014, the city will have to pay $1,340,727.50. The interest rate will rise to 5.75 percent in 2014 and continue to increase unless the city is able to refinance the debt, which it plans to around 2016.

The land has lost $1,995,335 in value within the past year, but the city has successfully committed $4.6 million in fund balance for the next five years to pay for the annual debt payments resulting from the sale of bonds to finance acquisition and demolition on the site…

Assuming we go forward with the HKP proposal, they would give us $157,000 upfront, for the 3.14 acres, and invest another $1.7 million in bringing roads, sewers and other infrastructure elements to the site, which would ostensibly make it easier for the City to then sell the adjacent properties. And, perhaps most importantly, it’s estimated that the building owners would pay approximately $73,000 a year in taxes, based on a taxable value of $2 million. Also worth noting, it sounds like they want to get moving on the project as soon as possible, which means that those tax revenues would likely start rolling in by the end of 2015. (HKP wants to have a signed purchase agreement with the City by April, break ground in October 2014, and begin leasing units in August of 2015, according to the Ann Arbor News report.)

Screen shot 2014-01-20 at 10.11.21 PMThe entire project is estimated to cost $12.1 million, much of which would be financed by way of Rental Housing Tax Credits and tax-exempt bonds from the Michigan State Housing Development Authority. And, as that’s the case, rents, in accordance with the terms of these programs, will be set at a level deemed affordable by the State. According to HKP, that means rents would range from “$597 for a one-bedroom (unit) to $1,125 for a four-bedroom (one).” (The current plan calls for 13 one-bedrooms (738 square feet), 21 two-bedrooms, and 21 three-bedrooms (1502 square feet).)

A few years ago, I think I would have had quite a bit to say about this. Now, though, in the wake of the Family Dollar announcement, I think I’ve come to accept the fact that Water Street isn’t going to become what I’d wanted it to be. For a while – and I think this was true for a lot of us – Water Street was a beautiful blank canvass that we could project our dreams for the future of our community on. We all, of course, had different visions for what should ultimately be there. We all had our own ideas as to what would right the ship and get Ypsilanti heading in a more sustainable direction. And we were all passionate on the subject. Personally, I’d envisioned a co-housing development, a year-round farmers’ market, an expanded food co-op, a thriving public arts park, and space along Michigan Avenue for locally-owned businesses. There were a million ideas, and they all shared a common attribute… They were hopeful… The unpleasant truth, however, is that those with money aren’t from our community, and the way they see Ypsilanti isn’t the way that we see it. And, as a result, we’re not talking about indoor farmers’ markets, but dollar stores, fast food franchises and more Peninsular Place-like apartment complexes. To those outside our community, we just represent money that can be siphoned off. They don’t, in short, see our potential. They don’t care about our long term viability as a community, only what they can get from us today. And that’s sad. Sadder still, though, is the fact that I’ve come to accept it.

Here’s the thing, though… Regardless of what happens on Water Street, life will continue and people will still keep fighting to make Ypsi great. It just won’t all happen on that 38 acres of downtown real estate. And maybe that’s OK.

What are your thoughts? I’d like to know.

update: I didn’t intend for this post to sound fatalistic. I haven’t “given up” on anything positive ever taking root on Water Street. I just meant to say that I’ve come to terms with the fact that Water Street isn’t going to be the thing that gets Ypsilanti moving in the right direction. And, for what it’s worth, I’m not altogether down on the idea of this housing project. Density is a good thing, as is affordable housing. I’d like to know more about the company, though, and how they manage their other properties.

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  1. Paul
    Posted January 22, 2014 at 5:51 pm | Permalink

    That Meridian Flats project is in Carmel *Indiana*, players. A sight less glamorous than its California namesake…

  2. Posted January 22, 2014 at 8:28 pm | Permalink

    A comment was made about Peninsula place renting ‘by the room’ ~ there was a lot of positive excitement about Peninsula place before it went in…… it has a nearby captive market – one wonders why they would resort to a strategy of ‘by the room’.

    My guess is that they found it necessary, given their target market, (also its unusual to rent fully furnished and with a bathroom for every person) and so opted to approach this adapting to the perceived needs of students/parents ~ the way one does a dorm room – you go off to college and have no idea often who your roommate is…. and its a furnished room.

    That kind of model wouldn’t likely be possible or doable with a non-student rental ‘clientele’.

  3. Anne
    Posted January 22, 2014 at 9:44 pm | Permalink

    There is still a hope that they don’t receive the Low Income Housing Tax Credits though from their website it looks like they’ve been pretty successful at getting LIHTCs in other states. I haven’t been directly involved in the LIHTC process in Michigan, but I’ve heard that it is a lot more competitive here and it looks like this will be their first development in Michigan utilizing LIHTCs. There has been a movement from HUD and State Housing Authorities to try to encourage more creative low income housing projects that involve greener elements and also encourage mixed rate developments (most studies show that creating concentrated areas of poverty isn’t a good strategy). However the LIHTC scoring rubric hasn’t really gone far enough to encourage more forward thinking approaches to affordable housing. Big players like HK with a cheap cookie cutter approach and a long history with HUD tend to be favored by the process.

    Also, from the proposal it looks like this might be a TIF district/project. Anyone know if this is the case? If so, the City won’t be actually seeing those taxes for a while.

  4. Posted January 22, 2014 at 10:24 pm | Permalink

    Water Street Flats can benefit Water Street and downtown with a diverse group of renters that includes recent college grads, seniors, and families below the 60% area median income for Washtenaw County. This diverse group of people will attract more development to Water Street as well as patronize downtown businesses. Herman Kittle is committed to the Waters Street development because they will develop and manage the property.

    Water Street Flats must have high quality design and materials, stringent lease requirements, and attentive maintenance to be successful and enhance our downtown.

    There is also plenty of Water Street acreage left for a grocery store and other development.

    Paul Schreiber

  5. Rustbelt Revival
    Posted January 22, 2014 at 11:43 pm | Permalink

    since when did the far eastern edge of Water Street become “right at the heart of downtown”? it’s not even in the same zip code…

  6. EOS
    Posted January 23, 2014 at 4:58 am | Permalink

    Section 8 housing projects do not lead to a diverse group of renters, but rather a segregated concentration of low income families. There’s well documented evidence that this will lead to lower performing schools and higher crime rates. The question is not whether there is room left for more development, but whether viable businesses would choose this site rather than a multitude of other more desireable locations.

  7. Kristin
    Posted January 23, 2014 at 7:57 am | Permalink

    I’m surprised at my own swinging emotions on this project. I do think it’s impractical to wait for a utopian developer, and as someone with riverfront property for sale I’ll tell you that it isn’t worth what it used to be, anywhere. Maybe on the Hudson, but not here. Then you read the proposal and it sure isn’t inspiring, and doesn’t necessarily fit the vision most of us have for Ypsi, and it’s more than disappointing. You can see how it would thwart future efforts. Unfortunately I think that if we citizens want something different we have to come up with our own plan, that includes money, to change the trajectory. It’s not fair to ask the city to carry their admittedly poor investment forever.

  8. anonymous
    Posted January 23, 2014 at 8:46 am | Permalink

    Paul, Amanda, Murph, and other (in some cases self-appointed?) stakeholders,

    As a longtime Ypsilanti resident, mother, and worker, I personally would support this project if a few alterations can happen:

    > the name contain neither ‘Water Street’ nor ‘Flats’

    > the design of the complex be specific or at least semi-specific to the location where Herman & Kittle proposes to build it

    > the design inhibits in no way the course of the B2B Trail

    > the building be constructed of sustainable, local materials, to a degree the city deems feasible

  9. Emma
    Posted January 23, 2014 at 9:45 am | Permalink

    You don’t have to be eligible to receive a Section 8 voucher to live in a place that accepts Section 8. I don’t understand the issue here. Accepting section 8 is beneficial to a landlord. If I was building an apartment complex I would be sure to be Section 8 eligible. It is better to be guaranteed at least part of your rents.

  10. Dan
    Posted January 23, 2014 at 10:29 am | Permalink

    “You don’t have to be eligible to receive a Section 8 voucher to live in a place that accepts Section 8. I don’t understand the issue here. Accepting section 8 is beneficial to a landlord. If I was building an apartment complex I would be sure to be Section 8 eligible. It is better to be guaranteed at least part of your rents.”

    The issue here is that people generally do not want to live in high crime apartments. Section 8 housing has proven to increase crime rates substantially. Why would someone choose to live in a crime ridden apartment complex, if they could afford not to?

  11. MM
    Posted January 23, 2014 at 10:51 am | Permalink

    Murph, Paul, others,

    Would you agree that a development which included a mix of various types of housing, catering to a wider range of individuals, would be preferable to one which just catered to those individuals with low incomes? I haven’t read studies concerning the prevalence of crime in areas of concentrated section-eight housing, but it seems intuitive that everyone would be better served by a development where those with greater means and those of lesser means lived side by side, in the same neighborhood. Assuming you agree, are there no developers currently doing that kind of work?

  12. Posted January 23, 2014 at 12:03 pm | Permalink

    “Section 8 housing has proven to increase crime rates substantially. ”

    Actually, that doesn’t appear to be the case. There appears to be a good amount of discussion as to whether Section 8 has any correlation with “increasing crime rates” (in what time? what place?) or even whether Section 8 has anything to do with the dispersal of crime. I don’t think that there is any consensus on the issue.

    Is there anything to suggest that Section 8 would increase crime in Ypsilanti?

    It appears to me that the reaction to Section 8 is one which seeks to exclude the poor, associating poor families with crime.

    I’m curious, exactly where should poor families go? It’s a sad state of affairs if a town like Ypsilanti is going to exclude them, through process or by accident.

  13. skeptic
    Posted January 23, 2014 at 12:09 pm | Permalink

    This could be a great Amanda Edmonds for mayor 2014 campaign slogan!

    “As an FYI, these things take relationships and time and money, and some of us are working on them.”

  14. Posted January 23, 2014 at 1:08 pm | Permalink

    MM asks “Would you agree that a development which included a mix of various types of housing, catering to a wider range of individuals, would be preferable to one which just catered to those individuals with low incomes?”

    Of course. The problem is that those kind of mixed use/wider range kinds of projects are easier to bring to higher income areas than lower income areas. It’s easier for an Ann Arbor to build some kind of development that includes “affordable housing” options than it is to build some kind of mixed development that hopes to also attract higher income folks to the Ypsilantis of the world.

    And by the way, no, this is not the way it should be.

    Maybe there is a way to do something that is more approaching the mixed use space, but it seems to me it would take convincing someone to take a risk. So for example, suppose the Zingermans people could be convinced to open a restaurant/grocery in this complex? Suppose Slows BBQ got a deal on opening a second location on the Huron River?

  15. EOS
    Posted January 23, 2014 at 2:19 pm | Permalink

    The township buys foreclosed homes at auction. Habitat for Humanity refurbishes them and then low income families move into the houses in existing neighborhoods. There is better support for the families and they are integrated into a community of diverse incomes. There is no concentration of low incomes in a single location and this works significantly better for all involved. You can’t sit around waiting for a developer.

  16. Dan
    Posted January 23, 2014 at 2:25 pm | Permalink


    you’re likely reading about the conversion of giant public housing projects (e.g., Cabrini-Green in Chicago) to Section 8 vouchers. i.e., removing a large amount of govt subsidized residents from a single location, and dispersing them into neighborhoods. That’s not really the situation here. This is adding a 76 unit Section 8 building to a single location. There’s some research on this, actually, and the amount of Section 8 “homes” in a neighborhood is a determining factor on what happens with crime. Generally more than 50 “homes” in a neighborhood seems to be the cutoff. Above that = increased crime rates. So this would be 76 “homes” in not actually a neighborhood, but a single structure.

  17. jcp2
    Posted January 23, 2014 at 3:45 pm | Permalink

    Mixed income communities tend to be more sustainable over the long term if there is a constrained housing market and a good public school system, neither of which is the case here.


  18. anony
    Posted January 23, 2014 at 3:59 pm | Permalink

    I wondering why Peter Larson is so set on turning Ypsi into a place where people who are earning money wouldn’t want to be? They such nasty folks – expecting academically successful schools, lower crime rates, driving cars, possibly – wait for it, owning property(gasp). Who would want to live in a place like that!

  19. Emma
    Posted January 23, 2014 at 5:01 pm | Permalink

    I’ve never looked into my ability to qualify for section 8 assistance but I have CHOSEN to live in apartment complexes (River’s Edge, and Scenic Lake which is now called something else) I’m assuming were accepting section 8 vouchers. My current home is next door to a small complex that I’m also assuming accepts section 8 (I’m not sure where to go to find out but the other neighbors say it is city owned section 8 housing so I’m going to believe them). I lived in the complexes because it was cheap and I wanted to save/spend my money on things more important than rent. I never had any issues with crime in the apartments. Where I had an issue was in houses I owned not the current next to section 8 one but, I have houses broken into three times in Ypsi. and once in Ann Arbor, none of these were in section 8 housing. I know this is a small sample of one here but I find it incredibly difficult to believe that the section 8 voucher causes crime. If I were in the market for an apartment I would look into whatever is being built there. I don’t want to pay a lot for an apartment, it would be a gigantic waste and believe me there are bad neighbors everywhere.

  20. Anne
    Posted January 23, 2014 at 5:36 pm | Permalink

    There are developers that do mixed income housing, and once again this is what HUD/MSHDA says they would like to see, but when it comes down to it the incentives are often harder for these folks to get. Investors don’t think market rate buyers want to live among affordable/low income units (which hasn’t necessarily held true). Incentives for affordable housing are skewed towards these cookie cutter approaches. Just as an example here is a project that my company is working on the energy components of http://aeggroup.wordpress.com/ with a very forward thinking Housing Authority in Connecticut. The community will eventually become very close to being Net Zero. The per unit cost is higher than what HK is planning, but the operating costs are much lower – building materials that will last and don’t require the same maintenance combined with very small utilities. The Housing Authority recently completed a LEED project with a similar approach, but no renewables, that has also become mixed income. The feel and sense of community in the completed project is completely different than the one we are currently remodeling. The newly remodeled neighborhood is 100% occupied and there is extremely long waiting list of folks that would love to move in.

    As a side note, Section 8, is a voucher program and not a type of housing. Any landlord can qualify to accept Section 8 and in my neighborhood there are a couple of rental houses that usually have folks with Section 8 vouchers. Managers of affordable housing like Section 8 vouchers not only because it is guaranteed income, but also due to the fact that it is often worth more than what they can charge the residents that qualify for Affordable Housing. As Dan mentioned part of the Section 8 program goal as well as HUD programs like Hope 6 was to help disperse low income individuals and do away with the large high rise type projects like Cabrini-Green in Chicago or Brewster in Detroit that tended to promote the cycle of poverty and crime.

  21. Posted January 24, 2014 at 3:15 pm | Permalink

    This has been extremely interesting to read all the way through in one sitting (going a bit stir crazy from being stuck at home). Do any unbiased (as unbiased anything can be) studies exist on Section 8 and how it affects cities and neighborhoods. I have had two experiences in living in places where Section 8 was added and both were extremely negative. But I don’t want to base an opinion on two personal things…I’d like to know if any hard data exists.

  22. Emma
    Posted January 24, 2014 at 6:33 pm | Permalink

    From wikipedia:

    “…The study concludes that there was no increase in violent crime for the participants of subsidized housing or their surrounding neighborhoods in the five cities tested…”

    “…according to a paper prepared for the U.S. Department of Housing and Urban Development and the Office of Policy Development and Research[26] rather than increasing crime, those who use housing vouchers are more likely to move into areas where crime is increasing….”

    Also this article:

    and P.S.
    “Fear is the mind killer.” -F. Herbert

  23. Emma
    Posted January 24, 2014 at 6:50 pm | Permalink

    Furman Center Study:

    Urban Institute:

    I didn’t read all of the last one.

  24. Meta
    Posted January 31, 2014 at 9:51 am | Permalink

    There’s also a local “higher-end” developer looking at Water Street.

    A high-end housing development and a mixed-use project could be on the way for Ypsilanti’s 38-acre Water Street site.

    Officials confirmed the city is vetting two proposals for the city-owned property, one of which is from a “high-end” developer who would build market-rate housing, according to City Manager Ralph Lange.

    The city began assembling the property in 1999 with a vision to turn the property into a premier residential and waterfront property.

    City Planner Teresa Gillotti said during a Jan. 21 council meeting that the market-rate proposal was from a Washtenaw County developer, interested in a two-story residential project.

    Read more:

  25. Meta
    Posted February 20, 2015 at 3:14 pm | Permalink

    From the Ann Arbor News:

    Ypsilanti will provide a tax break worth up to $750,000 to the developers of an affordable housing project on Ypsilanti’s Water Street development.

    At its Feb. 17 meeting, the Ypsilanti City Council approved on second reading an ordinance granting a payment in lieu of taxes (PILOT), which will allow the developer, Indiana-based Herman & Kittle, to pay a percentage of its rent revenue instead of direct taxes to local governments.

    That means the city will receive $25,000 less in annual taxes than it would without the ordinance and up to $750,000 less over the PILOT’s 30-year life.

    The PILOT won’t kick in immediately. Instead it will start in approximately 20 years upon expiration of a separate county financial incentive providing Herman & Kittle with an estimated $77,000 in annual reimbursements for cleaning up the site.

    Council voted 5-2 to approve the deal, with Council Members Brian Robb and Pete Murdock voting against it.

    Read more:

  26. Mark Lee
    Posted May 21, 2015 at 8:00 am | Permalink

    I saw the pictures in M-Live. It doesn’t look that different than the stuff being built in Ann Arbor. Are you still going to lay in front of the bulldozers? Thanks.

3 Trackbacks

  1. […] took it upon herself to send her thoughts on our proposed downtown low-income housing development, Water Street Flats, to members of both the Township Board of Trustees and our City Council. You can find her entire […]

  2. By Race and the Water Street Flats debate on March 8, 2014 at 9:35 pm

    […] As I’ve stated here previously, I believe that a legitimate case can be made against Ypsilanti’s proposed Water Street Flats development. When I read stuff like this note to Ann Arbor News reporter […]

  3. […] of the Water Street property that Indiana-based developer Herman Kittle expressed interest in for the affordable housing project they planned to call Water Street Flats. Things, it would seem, were advancing relatively well, in spite of some citizen pushback against […]

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