Orange construction fencing now surrounds the parking lot at 350 S. Fifth Ave., signaling that Ann Arbor's largest affordable housing project is about to break ground after 23 years of false starts, lawsuits and demolished units.

"Yes, we should be breaking ground shortly," Ann Arbor Housing Commission Executive Director Jennifer Hall told MLive.

The 20-story tower will bring roughly 330 affordable apartments to the block-long site between Fourth and Fifth avenues along William Street, just south of the Blake Transit Center and across from the Ann Arbor District Library. Rents will be set for residents earning up to 80% of area median income, with one-third of units reserved for those earning up to 30% AMI and the building averaging 60% AMI overall.

The project carries a price tag of approximately $209 million, according to cost estimates the Housing Commission presented to the Michigan Strategic Fund Board in May. The Housing Commission is partnering with developer Related Midwest, with SmithGroup as design architect.

Funding comes from about a dozen sources: $35 million in city bonds authorized by a unanimous City Council vote on March 16, nearly $30 million in state tax incentives through a transformational brownfield plan, $118.6 million from the Michigan State Housing Development Authority according to WEMU, low-income housing tax credits, geothermal energy tax credits, federal HOME loan funds, Downtown Development Authority contributions and DTE Energy rebates.

The city will repay the $35 million bond debt using revenue from its 20-year affordable housing millage, which voters approved in November 2020 with 73% support. Ann Arbor is the first city in Michigan to issue general obligation revenue bonds for affordable housing, Hall said at the March 16 council meeting.

Council Member Chris Watson, D-2nd Ward, noted at that meeting that the city had grown more comfortable bonding millage funds. "We have gone from using it to support about 63 units at Catherine Street to about 330 planned units at 350 S. Fifth tonight," Watson said March 16.

Plans call for a mix of one- and two-bedroom apartments, ground-floor commercial space that could include a grocery store, and a new mid-block bus lane serving the Blake Transit Center.

The site's history is tangled. The city acquired the property in 2003. It once held the Ann Arbor YMCA and 100 affordable housing units demolished in 2008. After a failed development deal and a $30 million lawsuit the city won in 2012, the lot was sold to developer Dennis Dahlmann for $5.25 million in 2014. When his project stalled, the city repurchased it for $4.2 million in 2018 and paid $1 million to settle Dahlmann's lawsuit. In 2023, the city sold the lot to the Housing Commission for $6.2 million, funded by the millage and federal stimulus dollars.

The city's five-year millage report, released July 30, shows 537 affordable apartments added or under construction since 2021, with more than 900 additional units in the pipeline. The millage has provided $30.7 million and leveraged more than $526 million in total development costs across all supported projects.

A groundbreaking ceremony is planned, but the Housing Commission has not set a date.