City Council establishes priorities for proceeds from future sale of Kline’s Lot
The Ann Arbor City Council on Tuesday, Sept. 22, approved a prioritized plan for investing proceeds from the future sale of the city-owned property at 309 S. Ashley St., a parking lot commonly known as the Kline’s Lot.
Based on the current development concept, the city anticipates receiving up to $17.4 million in sale proceeds. The ultimate purchase price will be $31,500 per approved residential unit, with a minimum purchase price of $14.175 million. The City Council prioritized $18 million in expenses.
The funding will not become available until Hines closes on the purchase of the property. City Council approved the purchase agreement Sept. 8, but that action did not complete the sale. Hines must first complete due diligence and pursue required development approvals, and closing will occur after applicable conditions of the purchase agreement have been met.
“This gives us a clear plan for putting a significant one-time resource to work on priorities that will benefit the community for years to come,” said City Administrator Milton Dohoney Jr. “We are strengthening the city’s financial position while investing in housing, infrastructure, public safety, sustainability and future economic development opportunities.”
The resolution establishes the following priority order for use of the sale proceeds. If the final sale amount is less than what would be needed to fund all of the allocations, funding will be provided in this order:
1. CBRE fee — $500,000: To satisfy the required brokerage fee associated with the sale.
2. City reserves — $2 million: To strengthen the city’s financial position and maintain prudent reserve levels.
3. Sustainable Energy Utility (A2SEU) working capital — $2.6 million: To provide capital enabling the SEU to advance its operations and long-term viability.
4. Ann Arbor Housing Commission — $2.5 million: An allocation to the Affordable Housing Fund to support affordable housing projects.
5. Alpha House capital support — $250,000: To support a new family shelter on the Trinity Health System campus.
6. Shelter Association of Washtenaw County — $500,000: To provide capital acquisition funding for a second shelter facility, contingent upon a county match.
7. Strategic Property Acquisition Fund — $4.6 million: To establish a fund allowing the city to proactively acquire parcels for strategic reuse. The fund would be overseen by the city’s economic development director with support from the chief financial officer, community services administrator, deputy city administrator and a representative of the Economic Development Corporation Board.
8. Economic development due diligence and legal services — $500,000: To support routine due diligence, predevelopment work, specialized analysis and legal services needed to evaluate economic development opportunities.
9. Police Records Management System acquisition — $2 million: To acquire a modern records management system designed to enhance transparency and improve reporting.
10. Throne contract — $1 million: To fully fund the city’s share of a five-year contract supporting downtown public restroom infrastructure.
11. Dixboro Bridge repair grant match — $1 million: To provide the required local match for anticipated county grant funding.
12. Ann Arbor-Saline Road street lighting project — $550,000: To install 39 new streetlights and replace existing solar crossing lights.
Because the final purchase price will depend on the number of housing units approved through the site plan process, the actual proceeds will not be known until later in the development process. The City Council’s resolution directs the city administrator to implement the allocations after the sale is finalized and requires council approval for any future changes to the allocations.
Hines’ proposal calls for a two-phase, mixed-use development with housing and ground-floor commercial space. Under the purchase agreement, the project must include at least 450 market-rate, all-electric residential units and at least 10,000 square feet of ground-floor commercial space. Hines’ initial concept included approximately 554 residential units.
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Media Contact:
Steve Kilar, Communications Director, skilar@a2gov.org