Council agrees to brownfield plan for apartments on 9 Mile Road

By: Mike Koury | Woodward Talk | Published February 22, 2017

 The City Council recently approved the brownfield plan from Wolf River Development Co., which allows for tax capture on any new taxes generated on the property following the developer’s investment.

The City Council recently approved the brownfield plan from Wolf River Development Co., which allows for tax capture on any new taxes generated on the property following the developer’s investment.

Photo by Deb Jacques

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FERNDALE — The City Council agreed Feb. 13 to a developer’s brownfield plan application to receive millions in reimbursement expenses for a mixed-use apartment building.

The project, called 409 on Nine and developed by Wolf River Development Co., is a four-story, mixed-use building with 127 apartments, more than 5,500 square feet of retail and office space, 130 parking spaces on-site for all residential units, and green space at the street front. It’s located at 371 to 475 E. Nine Mile Road.

The brownfield plan by Wolf River, according to city documents, is “requesting a reimbursement not to exceed $2,643,920 for eligible expenses over a duration of 17 years, followed by five (5) years of capture to the benefit of the City of Ferndale’s Local Site Remediation Revolving Loan Fund (LSRRF).”

Brownfield plans allow for tax capture on any new taxes generated on the property following the developer’s investment. The plans are considered for sites that are deemed to be blighted, contaminated, functionally obsolete, or historic and that will be redeveloped.

Mike Dowdle, a partner with Wolf River, said the concept with the apartment building is that they wanted it to be “reasonably priced.” He said the building would contain 90 one-bedroom units, 31 two-bedroom units and six studio apartments. The two target groups for the apartments would be millennials and baby boomers looking to have a place up north from Florida.

“What we’ve observed is that throughout the metro area, and actually nationally, almost all the money in apartment development is going into, quote, ‘luxury apartments,’” he said. “That concerns us two ways. One, we don’t think this is the right marketplace, but more importantly, we think there’s going to be problems in the future in those kinds of buildings, because we’ve been in the apartment business cycle for a long time. It’s all going into that kind of investment, and we think there’s going to be an overbuild. So our plan is to build apartments that are a notch down, more moderately priced.”

While pricing still is being worked out, Dowdle said they expect a two-bedroom unit to rent for $1,500 to $1,600 a month and a one-bedroom unit to cost more in the range of $1,200.

“If you look at the marketplace now, a similar apartment would be going for $2,000 or more,” he said. “We’ve brought it down quite a bit. It’s not low-income housing.”

Councilman Dan Martin, who also is the council’s representative to the Planning Commission, said he was getting a little nervous because Wolf River said at the commission that the price point for the apartments was going to be in an area that would be affordable to get people into the downtown. He noted that the reason he was nervous was because they didn’t seem too sure at the council meeting, whereas it didn’t seem that way when they were before the Planning Commission.

Dowdle said the company still is working through financing, and they have worries about the potential of interest rate increases in the near future, so for the purposes of the meeting, he wanted to be careful to not “undersell” something.

Councilman Greg Pawlica also chimed in on the pricing, saying houses on his street are going for about $1,100 to $1,200 a month.

“That’s a whole house and, in some cases, has a garage,” he said. “A lot of millennials can’t afford that today. So I’m not sure I can agree that $1,200 to $1,500 is a moderately priced apartment for a millennial. For a 30-something, probably, but not for a 20-something.”

Dowdle said the company has done extensive surveys of what’s going on and that millennials are renting in Royal Oak and in Midtown for $400 or more above what they’re asking.

“All of those buildings, both in Royal Oak, the new building with the newer amenities, and in Midtown are 100 percent leased,” he said. “We’ve never represented this as low-income housing or anything like that. We wanted to be a contrast to what’s going on in the marketplace now.”

Mayor Dave Coulter said after the meeting that the topic of pricing didn’t have much to do with the brownfield agreement, but that it continues to come up in these projects because it is an important issue.

“The affordability in Ferndale is an important issue, and it continues to come up as we have these projects, and I think you won’t see us do another project like this before we have a discussion with council, as you heard tonight, in the next month about how we want to address the issue of affordability,” he said.

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