MI township testing the limits of new development agreements

By Deborah Goonan, Independent American Communities Blog

It certainly seems like the public is slowly catching on to the financial risks and housing inequities that result from over development of Association-Governed Residential Communities. While there hasn’t yet been an outright ban on new construction of homeowners associations and condominiums, I’m starting to read reports of local government community planning boards setting new restrictions on development.

Take Ypsilanti Township, about 13 miles southeast of Ann Arbor, Michigan. The Board of Trustees has decided that the Township is already home to too many renters, particularly low-income households. A recent study of Washtenaw County Office of Community and Economic Development and funded by the U.S. Department of Housing and Urban Development, city of Ann Arbor, Ann Arbor Downtown Development Authority and the county, documents that Ypsilanti Township has an oversupply of affordable housing, while nearby Ann Arbor has a shortage of affordable housing.

The Trustees also want to discourage real estate speculation, which ran rampant in the Township during the recent economic recession. To that end the Board has set restrictions on new development as follows:

Ypsilanti Township bans section 8 housing, limits rentals in new subdivision

Excerpts:

A new development agreement for the proposed Majestic Lakes subdivision approved on Sept. 14 by the Ypsilanti Township Board of Trustees bans subsidized housing, limits the number of rentals permitted and caps the length of time its single-family homes, or site condos, can be rented at three years. Except in special circumstances, all homes must be primary residences.

But the development agreement is already stamped. Its stipulations:

• Prohibit homeowners from renting single-family homes for more than three years except in extenuating circumstances.
• Prohibit the developer or builder from accepting any sort of government subsidy.
• Requires rent be set at market rate.
• Requires a 60-40 single-family-to-multi-family unit ratio.
• Requires the installation of public surveillance cameras at the neighborhoods’ entrances and requires developers to set up special assessment districts to pay for the maintenance.

The neighborhood association would be the “first line” in upholding the agreement’s terms and could potentially sue property owners in violation, said Winters.

But if the association failed to do so, the township could take legal action. Enforcement would either be complaint driven, or the township could simply check if the properties are listed as primary residences with its assessing office, Winters said, adding that the homes also won’t be sold to speculators or investors in the first place.

In site condominium developments, property owners own and maintain their lots and homes, but all the common space is owned and maintained by a neighborhood association.

Read more details here:

http://www.mlive.com/news/ann-arbor/index.ssf/2015/09/ypsilanti_township_bans_sectio.html

This kind of development agreement raises several questions.

  • First of all, local officials attribute increased crime and blight to their overabundance of Section 8 housing. Is that fair? If you read the comments below the article, you will see there is some convincing evidence that, although blight and crime tend to coexist, an influx of Section 8 and other low-income renters tends to arrive after the onset of blight and crime.
  • On the other hand, HUD’s new policy of Affirmatively Furthering Fair Housing (AFFH) promotes de-concentration of poverty and socioeconomic and racial integration. But while a restriction based on income levels might seem justifiable for Ypsilanti Township, under the circumstances, what is to stop any other municipality or county from requiring the same restrictions based upon income levels? After all, local governments prefer to increase the tax base, and higher overall income levels would help them achieve that objective. How will Counties across Michigan address the NIMBY (not-in-my-back-yard) tendency to exclude entire groups of people based upon socioeconomic status?
  • Who will control the special assessment district to pay for maintenance of surveillance cameras? The Township or the Developer? It appears that the Township wants assurance that increased security will keep crime at bay. But do surveillance cameras prevent crime, or merely record it while it’s happening? Will surveillance systems encroach on privacy of residents? And how much will homeowners have to pay for this system?
  • Can a local government require rental restrictions for private homeowners by way of a contractual development agreement? Or will that be challenged in court at some point in the future? I can certainly see where this type of restriction would discourage real estate investor takeovers and speculative buyers. But then one has to ask the obvious question: why is speculation by investor groups and absentee landlords not a problem in non-HOA, non-condominium neighborhoods, despite the fact that those homes are not subject to any sort of rental restrictions?

This development agreement appears to be testing the limits of property rights and treating renters as second-class citizens.


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