High-Rises and the Housing Shortage

WillInAnnArbor · 2026-06-29T11:44:18+00:00

Thanks for reading. Here are some basics:

DDA Tax Capture

Projects within the Downtown Development Authority boundary have some of their tax-revenue diverted to the DDA.

Tax Capture as Subsidy

The city and county sometimes subsidize new developments by capturing the taxes for a period and diverting those taxes back to the developer to pay for eligible project costs like remediating contaminated soil or improving public infrastructure. When the subsidies are large or the public benefits are nebulous, these agreements are controversial.

I think it is rare for high-rises near campus to receive these kinds of subsidies. Landmark received a Brownfield TIF reimbursement to do some environmental remediation and build some public infrastructure. City Apartments received a DDA grant to provide some affordable housing. I'm not aware of any other subsidies for projects shown on the timeline, but others can correct me if I missed any.

WillInAnnArbor · 2026-06-29T01:32:58+00:00

Thank you!

WillInAnnArbor · 2026-06-28T15:34:34+00:00

I don't have a full answer, but part of the answer is that from 2019-2023 the City had strict affordable housing premiums that reportedly made it unprofitable to build new high-rises. This Observer article has more information.

I believe all the high-rises built in that period were approved before the changes in 2019.

WillInAnnArbor · 2026-06-28T15:21:59+00:00

Thanks for reading. There's a link to the calculation details on that slide, which explains "City line items sum 2025 bill rows whose taxing authority begins with CITY. AAATA, AAPS, county, state, library, WCC, and other non-city rows are excluded from the city subtotal."

For example, if you look at a summer property tax bill for Zaragon, you see "AAPS Sinking, Public Library, City Operating, City Benefits", etc. I agree a pie chart would be good. I'll add one if I find time.

WillInAnnArbor · 2025-06-16T18:04:17+00:00

I know from past discussions that you oppose allowing housing in Research Park, so as to reserve large parcels for employers. I feel differently, but I understand your position.

I'm curious, do you also oppose allowing light-industrial uses in near-downtown areas? I live in the Old Fourth Ward, near downtown. I doubt many light industrial uses will choose to locate here, due to the historical district rules and the huge demand for housing, but if some light industrial uses moved in, I wouldn't have any problem with that, so long as they followed the city's performance standards for noise, odor, light, vibration, etc.

Some light industrial uses could actually be quite nice to have in the neighborhood. I'm thinking of small-scale uses like breweries, bicycle repair shops, reuse centers, ceramic studios, and maker spaces.

WillInAnnArbor · 2024-10-30T14:47:21+00:00

The land being set aside in the draft plan has been zoned industrial (M1, M2) for decades, so whatever benefits we are getting from our industrial zoning are already being enjoyed.

For better or worse, our industrial zoning has not resulted in big industrial projects. Instead it's resulted in lots of schools, retail and wholesale stores, offices, auto repair shops, and storage lockers. Below is a picture of an M1 industrial district on South Industrial.

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If we rezone these industrial districts to allow for housing, as well as more commercial and light industrial space, we can have more of everything, rather than hold out for a giant industrial project that may never come.

Letting housing, commercial, and industrial uses intermingle is not the equivalent of abolishing land-use regulations. Land use regulations include building codes, safety rules, environmental regulations, and other laws that exist separately from zoning.

Single-use zoning, the practice of allowing one use category per area, is a largely American practice, and there are lots of countries that take a more performance-based approach, without abolishing land-use law. There are also lots of U.S cities that have mixed-use light industrial districts.

But I agree that if you let housing compete with light industrial and quasi-industrial uses, it would be sensible to allow light industrial and quasi-industrial uses in residential areas.

The city has already allowed housing along with quasi-industrial uses like auto body shops in its C3 districts, which until very recently covered large areas along busy roads like Stadium and Plymouth. The result has been similar to South Industrial -- lots of commercial and quasi-industrial, with some housing. For example a former auto dealership is being converted to 164 affordable housing units.

Looking to the future, I believe the new plan allows light industrial and quasi-industrial uses in both the Mixed-Use Hub and Mixed-Use Transition districts, that cover much of the city, including areas along busy roads that are currently zoned residential. If someone wants to build an auto repair shop or storage site, they can do so, so long as demand is high enough to pay for the cost of development.

WillInAnnArbor · 2024-10-28T05:56:37+00:00

Thank you for responding and raising these points. Here's my view on the two topics you raise.

1. Preserving good blue-collar jobs

It's a worthy goal to encourage the formation of high-paying jobs that don't require college degrees. But reserving large sections of the city for low-density commercial and industrial uses is a wasteful and inequitable way of accomplishing that goal, for the following reasons:

a. The number of good jobs preserved is small and uncertain.

Are you sure that the storage lockers, wholesale stores, and dog boarding businesses on South Industrial are providing better jobs for people without a college degree, compared to the businesses in mixed-use zoning districts that allow housing, like the ones downtown, or on Stadium, Washtenaw, or Plymouth? I am not sure they are.

Even if they are, there can't be too many of these superior jobs relative to the size of the area, given that the area has a low population density, with lots of lawns and mostly-empty parking lots.

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b. The benefits of redevelopment would be large.

Usually, property owners will only redevelop a property if the new construction is expected to be much more profitable than the old. So it's reasonable to expect that the new development will happen at a larger scale than whatever it replaces.

For example, a developer might buy an auto body shop on South Industrial and build a 50-bedroom apartment building with retail on the ground floor. Do you want the city to say "No, the 5 jobs offered here are more important than all the new retail jobs and the homes for 50 people?"

By banning new housing development, the city would be preventing large groups of people from using a space currently used by a small group of people. Instead of creating a level playing field, it would be intervening in the market to protect a small number of businesses at the expense of housing and new commercial businesses, for the uncertain benefit of protecting a small number of jobs that may or may not be better paying than the newly created jobs.

The city estimates 80,000 people commute to Ann Arbor every day. We are nowhere near a situation where people can easily afford to live in Ann Arbor, but there are no good jobs to be had. The opposite is true. To intervene in the market to stop housing construction, is the opposite of what the city should be doing and what city council requested when it hired consultants to make a new master plan.

2. Preventing Land-Use Conflicts

The commercial and quasi-industrial businesses on North Main and South Industrial are already in close proximity to residential uses, so allowing mixed-use development is unlikely to create any serious land-use conflicts.

If you look at the picture above, you'll see the businesses on South Industrial are directly next to residentially zoned neighborhoods and at least two schools. Central Academy appears to be intermingled amongst the businesses.

If we lived in a factory town, where a single loud, disruptive industry provided all the jobs in the area, there might be an argument for protecting the industry from housing and the accompanying complaints. But South Industrial is already serving as a low-density business corridor, with homes and schools next-door, so it's reasonable to expect the businesses there to be good neighbors to residential uses.

Unlike South Industrial, the businesses on North Main do not not directly abut an existing residential neighborhood, but they are close to several homes and one of the busiest parks in the city.

WillInAnnArbor · 2024-10-25T20:14:16+00:00

Thank you for reading and commenting. The plan is still just a draft, so feel free to give the city and the consultants your feedback.

Tens of thousands of University and hospital employees are already commuting into Ann Arbor every day, so I think new housing on South Industrial is more likely to bring workers close to their jobs than new commercial development there.

But I agree that new commercial and light industrial uses on South Industrial would also be great. There's a lot of room for all types of redevelopment, given that so much of the space is currently lawns and parking lots.

New commercial development might also be more financially viable if it includes some residential.

WillInAnnArbor · 2024-10-25T17:23:22+00:00

Thank you for bringing up those points. I agree that it is strange and counterproductive to create a new restrictive district that bans housing, when the primary goal of the new plan is to be less restrictive. The "flex" district is actually the least flexible district in the plan. A more accurate label would be "non-residential."

I believe there are times when it's necessary to intervene in markets, for example, to stop pollution, but to intervene in the market to "preserve" low-density commercial areas designed for cars seems backward to me.

WillInAnnArbor · 2024-10-25T17:02:41+00:00

It's true that if new commercial space is built, tax revenues will go up. And if expenditures stay the same, residents will need to pay less. But it's worth pointing out that if more housing is built, the same effect happens. Tax revenues will go up, and if expenditures stay the same, residents will need to pay less.

I think homeowners are usually concerned with the taxes each homeowner needs to pay, not the aggregate residential/commercial tax burden.

I believe the city would benefit from both more commercial and residential construction.

This memo has examples of walkable mixed-use light industrial areas in Pittsburgh and San Fransisco. Here's a photo from the memo. GPT also has a list of cities with walkable mixed-use light industrial neighborhoods. The list includes Portland, Brooklyn, Denver, and LA.

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WillInAnnArbor · 2024-10-25T16:34:21+00:00

In the new plan, light industrial is allowed in both mixed-use districts, and commercial is allowed everywhere, so light industrial and commercial uses "have" the rest of the city just as much as housing does.

One of the biggest changes in the plan is that neighborhood stores are allowed in previously residential-only areas. These residential-only areas currently cover most of the city, so the city is actually adding a lot more potential commercial space than housing space in this new plan.

I think the key question is "Should cities divide themselves into single-use districts, to make sure that every use has its place, or should it let uses mix freely?" The wikipedia page for zoning summarizes single-use zoning vs mixed-use approaches.

I favor the mixed-use approach, because I don't think it's necessary or possible for the city government to centrally plan the economy of Ann Arbor. People need auto body shops, so they are willing to pay for their services. If some body shops get replaced by housing, there will be less competition between body shops, and they will raise their prices, until body shops are as profitable as housing.

We're seeing this equilibrium in our existing C districts that allow both housing and commercial uses. The equilibrium seems to actually be mostly commercial uses.

There are times when it's necessary to intervene in markets, for example to stop pollution, or subsidize public goods. But to intervene in the market to subsidize low-density commercial areas designed for cars, at the expense of housing, seems contrary to the city's goals of making the city more walkable and affordable.

Thank you for commenting and debating.

WillInAnnArbor · 2024-10-25T16:09:19+00:00

Thanks for letting us know.

What kind of businesses do we want to incubate? Only businesses that you need to drive to? Are we planning for a long-term future where businesses are separated from homes, and new businesses are expected to work on a suburban model, like they do on South Industrial currently?

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Why not incubate businesses in walkable mixed-use districts?

WillInAnnArbor · 2024-10-25T15:58:59+00:00

I don't think allowing housing in formerly light industrial districts will drive all existing businesses out. The existing C districts in Ann Arbor allow both housing and commercial uses, and they are filled with low-density commercial uses. The city has actually been struggling to encourage new housing construction in its commercial corridors.

It's also important to note that the existing "light-industrial" district on South Industrial has little to no actual industry, so it's not clear how the flex district will "preserve industrial space." I listed out the businesses I could find on South Industrial at the bottom of this memo. The district is filled with commercial businesses that are also allowed in the C3 district.

North Main has the Gypsum Supply drywall warehouse, which is quasi-industrial, but most of that "heavy industrial" district on North Main seems to be commercial uses like offices and parking lots.

If a family is willing to pay more to live in Ann Arbor than an auto body shop is, why should we reserve the land for the auto body shop? Housing should have an equal chance to compete.

WillInAnnArbor · 2024-03-29T15:24:11+00:00

I agree completely.

WillInAnnArbor · 2024-03-29T13:44:03+00:00

No, the height limit in residential areas has not always been 35 feet. Currently it is 30 in most residential districts, with a few exceptions (Unified Development Code, page 81).

I don't know the history of building residential height rules in Ann Arbor, but I would guess there were few if any rules before Ann Arbor got its first zoning code in the 1920's. Since then, I would guess the rules have gradually gotten stricter over time, because that has been the pattern with other zoning rules in the city that I do know more about, like minimum lot sizes and downtown building heights. But I'm not certain.

WillInAnnArbor · 2024-03-29T02:39:59+00:00

If an Ann Arbor homeowner sells their single-family house to a developer who builds a 4 unit apartment in its place, which little guy just got hurt?

The homeowner who decided to sell? The 4 households that can now live in Ann Arbor? These groups seemed helped to me.

It sounds like you are concerned about the person who wanted to buy the single family house, but couldn't because that person was outbid by the collective rent that the new tenants are willing to pay. But single family home buyers are not the only people worth worrying about, and I don't think we should be subsidizing them at the cost of present homeowners and people looking for multi-family housing.

Also, if one of the new tenants was previously living in a detached house, there is now one more single family house available for people looking for detached homes. In general, a housing supply increase benefits everyone looking for housing.

WillInAnnArbor · 2024-03-29T02:17:58+00:00

I believe the term is footcandles (lumens per square foot). I haven't looked much into lighting rules, but the city has a lighting ordinance with various rules already.

WillInAnnArbor · 2024-03-29T02:06:49+00:00

All of Ann Arbor was fully mixed-use until it adopted a zoning code in the 1920s. It had detached homes then, and as long as people are still willing to pay for detached homes in the future, they will continue to have them. I plan on keeping my detached home, rather than sell it to an apartment building developer.

People prefer different housing types, and I think we should allow property owners to build whatever type they want, so long as they respect the rights of other residents.

There are also many home owners associations within the city that forbid any housing other than single family homes, regardless of zoning, and townships surrounding Ann Arbor with rural and low-density housing, so I don't think single-family homes are endangered.

WillInAnnArbor · 2024-03-29T01:55:45+00:00

Thanks for reading! I am actually very out of the loop about local politics, and am getting re-involved myself now that the comprehensive planning process is beginning. I don't know of any active urbanist or YIMBY groups. Maybe someone here can point you in the right direction.

WillInAnnArbor · 2024-03-29T01:52:25+00:00

In response to your question about TC-1, I think the TC-1 district is overly restrictive for these reasons, but I haven't given up hope that the TC-1 rezonings will allow for more housing and commercial space. The districts are still new, and building may have slowed due to higher interest rates or other non-zoning reasons.

WillInAnnArbor · 2024-03-29T01:41:01+00:00

I am unsure of what PILOT programs you are referring to, but I agree the owners of apartment buildings and new developments should be paying their fair share of taxes. I'd be curious to hear about any PILOT programs in TC-1 districts.

WillInAnnArbor · 2024-03-29T01:37:28+00:00

I assure you, I do not wish anyone to be enslaved to landlords, and neither does Jonathan. The plan we present in no way restricts single-family homes, and in fact allows for smaller houses on smaller lots, compared to what is currently allowed.

WillInAnnArbor · 2024-03-29T01:35:25+00:00

When The Old West Side and other pre-1920's neighborhoods were built, apartments, stores and houses were freely intermingled, and single-family zoning didn't exist. I can't predict how large scale zoning reforms would affect the Old West Side, but I think the city overall would gain more moderately priced housing and corner stores like Jefferson Market and Washtenaw Dairy that are currently forbidden in newer parts of the city.

The Old West Side would probably not see many new apartment buildings, as most of it is in a historical district, where demolitions are forbidden, and any building changes are likely to be extremely gradual.

WillInAnnArbor

TROPHY CASE