The Ann Arbor City Council met at Larcom City Hall Thursday night to approve the Industrial Facilities Exemption Certificate, a municipal tax incentive sanctioned by Michigan Law to offer tax reductions of up to 50% to private development companies, between the City of Ann Arbor and Sartorius BioAnalytical Instruments, a German biopharmaceutical research company. The company provides technology for the creation of pharmaceuticals and currently has four sites in Washtenaw County. The council also approved a resolution to collect and communicate mortgage information to low-to-moderate income city employees and residents. Mayor Christopher Taylor, Councilmember Erica Briggs, D-Ward 5, and Councilmember Travis Radina, D-Ward 3, were absent.
Sartorius has been planning to expand its operation in Ann Arbor since last year. The company wished to construct a new 13,000-square-meter plant at 3874 Research Park Drive, an environmentally contaminated site, to serve as the center for its Laboratory and Bioprocess products and services in North America. According to Ann Arbor SPARK, an economic development agency, Sartorius’s expansion is projected to create 160 high-paying jobs. The expansion is also predicted to create economic benefits by inducing spin-off jobs and increasing the tax base for public service entities.
Currently, Sartorius has received robust city- and state-level support in recognition of its potential economic, environmental and community benefits, including the Michigan Strategic Fund announced by Gov. Gretchen Whitmer and the Brownfield Policy approved by the city during an April 4 City Council meeting. The latter would utilize tax incremental financing to subsidize 2.7 million dollars for Sartorius development. In exchange, along with economic and property tax contributions, developers have to contribute 1.1 million dollars to Ann Arbor’s Affordable Housing Fund. The Industrial Facilities Exemption Certificate offers Sartorius yet another layer of financial incentive, paving the way for its final construction and expansion.
Councilmember Lisa Disch, D-Ward 1, emphasized that Sartorius hopes to redevelop an environmentally contaminated site and spoke on the sustainability efforts behind Sartorius’s proposed construction.
“We spoke for many hours with the planning commission about this and reached the conclusion that (Sartorius is) doing what is technically feasible in this climate, in this geography and our weather conditions,” Disch said.
Councilmember Jeff Hayner, D-Ward 1, said while he supported the tax incentive, the council should look into tax relief for property owners to better justify tax benefits for corporations, especially in light of the recent budget allocation and property tax plan, which proposed a tax millage increase.
“When we tell the individual homeowner, ‘no (tax relief)’, and we tell the corporation, ‘yes, there’s something we can do’ … It just doesn’t sit well (with me)” Hayner said.
Councilmember Ali Ramlawi, D-Ward 5, said the main reason behind his support for additional corporate tax incentives is Sartorius’s commitment to Ann Arbor’s affordable housing fund in the previously approved Brownfield Policy.
The Brownfield Policy dictates that development projects that use residential land must dedicate at least 15% of constructed units to households with an income of 60% or less of the Area Median Income. Projects that do not use residential land must pay a fee of $50,000 in addition to 2% of their overall private investment amount.
“There is a public benefit that will be given in exchange for (the Brownfield Policy),” Ramlawi said. “I do like the way our Brownfield system is set up where there’s going to be over a million dollars heading into the affordable housing fund. It’s great to welcome more high-paying jobs into our area, but those jobs are going to compete with folks who may be competing for housing. I know it’s a delicate balance, but it’s not mutually exclusive.”
The resolution passed unanimously.
The Council also voted on resolution DC-2, which requires the city to collect and communicate mortgage information to low-to-moderate income city employees and residents.
The original version of this resolution was discussed in an April 18 Council meeting and specifically supported providing informational materials from the Neighborhood Assistance Corporation of America (NACA) about mortgages. NACA is a nonprofit organization providing below-market-rate, zero down-payment and zero-closing-cost mortgages. It offers even lower interest rate mortgages to households making 100% or less of the Area Median Income.
Brian Chambers, a U-M graduate and resident of Ward 3, has been advocating for NACA with his research, titled “Ann Arbor’s Middle-Income Needs Analysis: Introducing the Neighborhood Assistance Corporation of America (NACA).” His research found a huge decline in homeownership among middle-income households, who would potentially benefit from the NACA mortgage products. According to NACA, a middle-income household is defined by an annual income of $50,000 to $100,000.
The city modified the original version of the resolution to avoid exclusively mentioning NACA. The amended resolution, which was voted on at Wednesday’s meeting, called for the city to gather and communicate information on programs supporting low and moderate-income mortgages to city employees and residents. NACA is now mentioned in the “Whereas” clause of the amended resolution.
During the public hearing, Chambers extended his support to the substitute resolution and stressed the importance of confronting homeownership challenges in Ann Arbor.
“The City Council has done much to foster more housing development in the city,” Chambers said. “My understanding is that short of the affordable housing developments, these will be predominantly rentals exposed to market rates. As we know, rents will continue to increase and therefore homeownership itself should be an additional priority for the city housing policy.”
Linh Song, D-Ward 2, said she disapproved of the resolution. Song said she was suspicious of NACA based on its history.
“I am very wary of the private entity (NACA) that was referenced before,” Song said. “This organization has presented to the Baltimore City Council, and the way the organization was presented there is really, really problematic.”
NACA presented its RICH program to the Baltimore City Council April 26. This program calls on a city to sell its city-owned housing to qualified prospective homebuyers for one dollar in exchange for the buyers living there for at least 10 years and renovating the home with assistance from NACA and their city. NACA founder Bruce Marks harshly criticized the Baltimore council members who did not support this program during the hearing and led a protest outside the building where a hearing on the subject was being held.
Song also questioned the real cause of homeownership challenges and the city’s role in promoting homeownership.
“I’m worried about promoting homeownership when we are really struggling with supply and providing basic housing,” Song said. “And I’m not quite sure where the city’s role is in promoting this. I’m not sure if folks are held back from homeownership for not having access to (mortgage) information … Throughout the pandemic, very low-interest mortgages have been promoted.”
Councilmember Julie Grand, D-Ward 3, asked Milton Dohoney, the City Administrator, to provide an update on the changes the city made since the last meeting. Dohoney explained the modifications.
“Staff raised concerns that the earlier version of this resolution seems that it is embracing the city taking an exclusive role to single out one vendor,” Dohoney said. “I can’t say that all issues are addressed, but now we’re encouraging all the products within the marketplace and I see no issue with that.”
Ramlawi said that although he supported the resolution, he believed solving the middle-income homeownership challenge would require more resources than the resolution calls for.
“I am shocked that this resolution calls just to disseminate information and educate and communicate with no budget impact and that would leave someone reluctant,” Ramlawi said. “I think we need to do as much as we possibly can on all levels for this issue, and it’s not picking and choosing the most effective way.”
The resolution passed 6-2, with Song and Grand voting against.
Daily Staff Reporter Chen Lyu can be reached at lyuch@umich.edu.