Some forced to move as Ann Arbor-area apartments transition from affordable to market rate
Megan Mishler has lost her sense of security.
Mishler, who has a rare genetic condition called Ehlers-Danlos Syndrome that prevents her from working, was recently forced to move from her apartment just west of Ann Arbor because her landlord is transitioning from affordable housing to market rate.
Mishler is not alone; the transition will impact 144 units at the 368-unit Woodchase apartment complex at 1100 Rabbit Run Circle in Scio Township.
“This has been extremely, extremely difficult. I was almost paralyzed at first,” Mishler said, referring to when she learned she would have to move. “This just added a whole other layer on top of all the other stuff that I’m already dealing with.”
Mishler was told the rent for her one-bedroom apartment would jump from $770 per month to about $1,200 per month at the end of her lease term.
The Woodchase apartments in Scio Township were developed in 1998. Mishler uses the Section 8 Housing Choice Voucher Program, administered by the Michigan State Housing Development Authority (MSHDA), to help pay for a portion of her rent. At Woodchase, Mishler paid $104 and the vouchers covered the remaining $666.
She had to find a new apartment because she could not renew her lease and pay the rental rate increase.
Mishler is now living at Arbor Pointe apartments in Pittsfield Township. She worries that complex could follow suit and bump up rents after the building’s Low-Income Housing Tax Credit agreement expires. Florida-based Concord Management owns both Woodchase and Arbor Pointe.
“It’s the fear of not knowing where I’m going to go, not knowing what’s going to happen and not having a place where I know I can live long-term. I hate having to move from place to place,” Mishler said.
Low-Income Housing Tax Credit program
The transition of affordable apartment units to fair market rent units is not uncommon.
Created in 1986, the Low-Income Housing Tax Credit program is an indirect federal subsidy used to finance the development of affordable rental housing.
States are allocated tax credits based on population and MSHDA administers the credits to qualified developers that apply for projects in the state. Developers then sell those credits to investors to raise capital, reducing the debt the developer would have to borrow.
Rental rates for Low-Income Housing Tax Credit apartments are adjusted based on the area’s median income as determined by the U.S. Department of Housing and Urban Development (HUD).
The program requires developers to keep units affordable for a 15-year compliance period, but landlords can opt to lift rent restrictions once that period expires.
“That is the downside to for-profit developers owning affordable housing in a heated housing market like Ann Arbor,” said Ann Arbor Housing Commission Director Jennifer Hall. “They do not have the long-term mission, like non-profit housing providers, to provide affordable housing. A non-profit provider would try to maintain the housing as below market-rate even after their use restriction expires.”
According to data from HUD, approximately 2.2 million units were developed through the Low-Income Housing Tax Credit program from 1987 to 2009. A report commissioned by HUD found the vast majority of Low-Income Housing Tax Credit properties remain affordable once the affordability requirement expires after 15 years.
However, apartments in “low-poverty” areas are the properties most likely to be converted to market rate housing, the report says.
In Ann Arbor specifically, the number of income restricted housing units – which includes public housing, housing choice voucher, Section 8 new construction and low-income housing tax credit units – dropped from more than 2,100 in 2000 to less than 1,600 in 2012. Low-Income Housing Tax Credit units grew by 61 over that time period.
Transition at Woodchase
Concord Management’s construction arm, CED Construction, purchased the approximately 40-acre Scio Township property for $1.63 million in 1996. The company opened Woodchase in late 1998.
According to MSHDA documents, the company received about $1.77 million through the tax credit program.
Concord is now opting to lift the rent restriction for 144 units at the complex after the Low-Income Housing Tax Credit compliance period expired.
Signs advertise the newly branded Liberty Grand apartments at the Woodchase complex in Scio Township. Lori Trainer, the company’s vice president of public relations, said the complex has been split into two brands with separate leasing offices and amenities: Woodchase and Liberty Grand.
The 144 units at Woodchase will remain affordable for now, with no plan yet to convert the units to market rate.
Meanwhile, 144 units in the Liberty Grand portion of the complex are being converted from affordable to market rate over the next nine months. Eighty units at Liberty Grand have been market rate units since the complex was developed in 1998.
“Concord has been around a little over 20 years, so we’re doing this across the country at our communities as the financing obligation expires,” Trainer said. “We will come in and basically give the community a facelift and determine whether we want to continue with it being affordable or make it a market rate community. That’s driven by the market and what’s going on then.”
Concord Management operates about 22,000 apartment units across the U.S., and Trainer said a large majority of those are affordable. The company has just started transitioning some of its units to market rate.
At Woodchase, Trainer said the Liberty Grand portion of the complex is undergoing a major renovation. Once a tenant’s lease term expires, units receive upgraded cabinets, counters, electrical fixtures and paint. There is a remodeled clubhouse and a repaved parking lot.
“We’re doing all the things renters expect to have in 2014,” she said.
Rents for the affordable units at the complex are targeted to households with income levels at or below 60 percent of the area median income. In the Ann Arbor region, the 2014 area median income is $87,400 for a four-person household and $61,200 for an individual. The maximum monthly housing cost for individuals at 60 percent of the area median income is restricted to $918.
Trainer said rents vary day by day for the market rate units at the Scio Township apartment complex. Online marketing materials list a two-bedroom unit for lease for $1,240 to $1,320 per month.
What does the transition mean for renters?
Trainer said Concord Management is working with tenants in affordable units at Liberty Grand to move some people to the Woodchase portion of the complex as their leases expire and the Liberty Grand units are converted to market rate.
For some renters, such as Suzanne Aldea, a move can be very disrupting. Aldea has lived at the Liberty Grand portion of Woodchase since the complex was developed 15 years ago. She is disabled and uses Section 8 vouchers administered by the Ann Arbor Housing Commission.
Aldea pays $208 for monthly rent and the vouchers cover the remaining $543.
Aldea’s lease expires in June 2015. Her rent will jump to market rate and she will be forced to move. She’s on the waiting list for an affordable unit at Woodchase.
“This is my hometown, I’ve lived here for 40 years. I would like to move to (an affordable unit at Woodchase) if I cannot stay where I am. I’ve been at the complex 15 years and it wasn’t my intention to leave here. I’m not looking for short-term living, I’m looking for long-term living,” Aldea said.
She added: “I have to think about where I’m going to be and how I’m going to get the money to make a move. …I don’t know how I’m going to be able to manage if I have to move, honestly.”
Aldea said she has been looking for affordable apartment units in the Ann Arbor area, but is having trouble finding a quality, accessible apartment in the right location. She said she’s looked at 10 other apartment complexes.
Mishler, who was Aldea’s neighbor before moving to Arbor Pointe, agreed that it’s difficult to find affordable housing in the Ann Arbor area, and it’s even more challenging for disabled people.
Hall, of the Ann Arbor Housing Commission, said there is additional pressure on the area’s affordable housing market due to the Housing Commission’s plan to redevelop hundreds of low-income public housing units over the next four to five years.
Hall said it’s “extraordinarily difficult” to relocate people living in affordable housing units in the area.
“We have to move people all the time,” she said. “It’s unfortunate, no matter what the reason is. Our tenants are transient and they end up moving and there’s not a lot we can do about it. We always have to work with them as they’re coming to the end of their lease.”
Lizzy Alfs is a business reporter for The Ann Arbor News. Reach her at 734-255-2638, email her lizzyalfs@mlive.com or follow her on Twitter.
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