Financial Plan

Our vision for this site is rooted in building a replicable model for other cities to scale affordable, sustainable housing for its developing workforce. Thus, our vision for this development is to maximize the number of affordable units while still remaining financially viable. Understanding that a key financing lever - the low income housing tax credit - is not an option, we have determined other potential funding sources that we believe will help us reach an optimal mix, which we determine to be 50% affordable, 50% market rate. You can read more about our housing plan here. Potential funding partners are listed below along with detailed spotlights on select potential funders.

Federal:

HOME Investment Partnerships program
Federal Community Block Grants
Brownfield Funding
Inflation Reduction Act developer tax credits/incentives
Solar Investment Tax Credit and other solar incentives

State:

Michigan State Housing Development Authority
PACE

Local:

Ann Arbor Housing Fund
DDA Affordable Housing Fund

Other:

Housing Revenue Bonds
Philanthropic Partners

Furthermore, in developing our on-site Resilience Hub, we are aware that this amenity will likely require specific investment around resilience-related infrastructure and disaster-response resources. There are a number of potential financing avenues:

Federal Government funding through FEMA, HUD, DOE, and DHS all have precedent in funding community resilience hubs
Impact investment funds such as Generate Capital
Utility support via incentives (e.g. rebates and tax credits)
State and local government funding
Community foundations

Potential Financing Spotlight: BlocPower

We understand that achieving full building electrification and net zero energy requires high upfront construction and development costs. We are keen to identify innovative financing partners and experts in executing on these ambitious goals. One such expert partner is BlocPower, a climate tech startup that seeks to create “smarter, healthier, greener homes” through installation of air source heat pumps (ASHPs). BlocPower specifically works with low to moderate income homeowners. The company's unique lease offering is tied to the equipment rather than the home to reduce risk of foreclosure, while also requiring no immediate money down to install ASHPs.

Potential Financing Spotlight: Michigan PACE

The state of Michigan allows for Property Assessed Clean Energy (PACE) financing - a tool that allows property owners to enter into a financing agreement to spread the upfront costs of energy efficiency investments over the course of 25 years to bring down upfront costs. Due to the unique ownership model of our proposed property, we sought out precedent for nonprofit property owners in Michigan successfully engaging in PACE financing. In 2018, the Luella Hannan Memorial Foundation in Detroit became the first Michigan nonprofit PACE project. PACE financing places a lien on the home, rather than the equipment as in the BlocPower model. If we pursued PACE partnership, our team would advocate that the nonprofit property owner of the CLT be the entity to engage with PACE so that individual residents are not at heightened risk for foreclosure.

Cost Estimates

We acknowledge that our bold vision for a net-zero, fully electrified, affordable multifamily development will incur higher upfront costs than a traditional multifamily development. However, research illustrates that the lifetime cost savings associated with net-zero energy buildings more than pay back the initial upfront costs. In a study conducted by the Department of Energy's Office of Scientific and Technological Innovation, net-zero energy buildings in Ann Arbor's climate zone (6A) can expect a life cycle cost net savings of approximately $200,000 over the lifetime of the building. They can also expect a discounted payback of 13 years when leveraging the federal solar investment tax credit. While these estimates are made with a similar set of technologies, the many cutting-edge design features that we recommend mean the returns on The Atrium could be higher. While we realize that these returns may likely be lower than similarly-sized standard multifamily developments, we believe The Atrium can serve as a proof of concept that this type of development is possible, financially viable, and has opportunity to produce even higher operational returns as technology and policy evolve.

Additionally, in seeking to understand the overall cost implications for our development, we looked to identify projected costs of similarly sized developments in Ann Arbor. Leveraging information from the Ann Arbor City Council, we were able to identify the following data.

Given the proposed number of units of our development (19 total) and the developable square footage (14,520) we can tentatively estimate a development cost between $3,100,000 and $7,600,000.

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