Ann Arbor City Council on Dec. 15 approved funding and a payment‑in‑lieu‑of‑taxes agreement for a 330‑unit affordable housing development at 350 South 5th.

City housing staff and partners described the project as entirely affordable to households earning up to 80% of area median income (AMI), with roughly one‑third of units reserved for households at 30% AMI and the rest at 60%, 70% and 80% AMI. The presenters said the full development cost is about $213,000,000 and that roughly $43,000,000 of that is local funding. Staff explained the financing plan relies on multiple sources, with Low‑Income Housing Tax Credits (LIHTC) covering a large share — commonly 40%–60% — and additional state and federal programs, plus local millage and other contributions.

“Our most recent development before this one applied five times before we were funded,” the staff presenter said, describing the competitive LIHTC process and the state’s scoring preferences for projects near transit and services. Council members pressed staff on alternatives and the role of local funding; staff said building outside downtown typically yields fewer units because of height and density limits and that construction costs are substantially higher than five years ago due to post‑COVID labor, supply chain pressures and tariffs.

Council member Malek asked for a staff introduction to explain how the financing fits together; the presenter replied with a multi‑source overview and said the project team is pursuing ten or more funding sources and will request an additional $1,000,000 from the city's climate millage in January to support sustainability features. Staff said those sustainability upgrades would cost roughly $7,800,000 in total but provide long‑term operating benefits.

Council voted to approve CA‑15 (appropriating housing funds and authorizing a grant agreement with the Ann Arbor Housing Development Corporation) and CA‑16 (the PILOT), with ten members present and voting in the affirmative. The staff presentation and council discussion noted that building downtown can improve access to jobs and services for residents and that the project mixes unit sizes of one‑ and two‑bedrooms targeted to smaller households.

The project partners named in the presentation included the Ann Arbor Housing Commission and Related Midwest as developer; the city noted an ongoing need to leverage local funds to fill financing gaps for affordable projects. Council concluded the item without further amendment; the approvals clear the city to proceed with the funding and PILOT steps outlined by staff.

The council's vote follows a period of public comment earlier in the meeting in which several speakers addressed broader land use questions and downtown policy.