Midtown housing units to be renovated, keep lower rents
Amid soaring rents in the city’s popular Midtown neighborhood, 236 high-rise units are slated to be renovated and preserved as affordable housing for 30 years, city officials and partners announced Friday.
The Cathedral Tower Apartments, which was up for sale this year, risked conversion to market rate units, possibly displacing longtime residents since an agreement requiring lower rents was set to expire in 2020.
The units at the 18-story structure are among an estimated 2,000 designated as affordable housing around downtown Detroit that could expire in the next five years, according to the city.
“For equitable growth to happen in Detroit, we need to retain the residents who have stayed while attracting new neighbors. Preserving affordable housing in buildings like Cathedral Tower is a large part of that equation,” said Arthur Jemison, the city’s director of housing and revitalization.
The complex is being acquired by a joint venture between MRK Partners and local developer Fortus Partners. The groups plan to preserve the affordability rate from 80 percent of the area median income to 60 percent or below for all units, city officials said in a statement.
MRK and Fortus are also teaming with the Detroit-based real estate firm Bedrock to preserve the affordable units and finalize a $12 million building rehabilitation.
Improvements planned for the apartments include new windows and plumbing, an upgraded fire alarm system as well as kitchen and bath enhancements.
Under an agreement approved by Detroit’s City Council last week, Bedrock is expected to provide $2.15 million to support the efforts.
The firm also plans to develop or rehabilitate up to 3,500 residential rental units on its own and with partners over the next several years. With this agreement, Bedrock is committing that 20 percent of the units — or an estimated 700 — will be affordable housing, officials said.
“We are thrilled to be part of making this important project possible,” Bedrock President Dan Mullen said. “Our first two new residential developments downtown have been mixed income developments, and we plan to keep creating new affordable housing options. With this project, we are also taking the critical step of helping preserve existing affordable housing, ensuring that we don’t take one step forward and two steps back by losing the existing affordable housing and long-time residents we have today.”
The deal is expected to be financed through federal low-income housing tax credits, tax-exempt bonds, and low-interest financing through Bedrock Real Estate Services, officials said.
“Affordable developments should not be an afterthought of growth but rather an integral part of the change,” Jordan Friedman of Fortus Partners added in a Friday statement. “Fortus is proud to work alongside MRK, Bedrock, and the City to achieve that goal.”
MRK-Fortus plan to seek additional funding support from the Michigan State Housing Development Authority. Construction is expected to start in early 2019 and end the next year.
Affordable is not just a unit with lower than market rent,” added Sydne Garchik of MRK Partners. “Affordable space is an opportunity to empower existing residents by providing essential building amenities and features.”