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Posted on Fri, Jan 11, 2013 : 5:59 a.m.

City officials: 6 blighted houses on Ann Arbor's North Main will be demolished using HUD funds

By Lizzy Alfs


One of the houses on Ann Arbor's North Main Street that is considered a dangerous building and needs to be demolished.

Ryan J. Stanton | file photo

After seven years of meetings, several project rebirths and finally a mortgage foreclosure, Ann Arbor city officials said on Thursday that six dilapidated houses on North Main Street will be demolished using federal funds.

The U.S. Department of Housing and Urban Development, via its Neighborhood Stabilization Program, has allocated $96,000 to the city of Ann Arbor to demolish most of the houses that were supposed to be torn down by the developers of the proposed Near North development.

“All the parties involved have acknowledged they would like to see the buildings demolished,” Kevin McDonald of the Ann Arbor city attorney’s office told Ann Arbor’s Building Board of Appeals on Thursday.

“This was going to be the fastest way, really, to get the buildings demolished so they don’t have to be an eyesore to the community.”

The eight houses from 626-724 N. Main St. are owned by a limited partnership between Ann Arbor for-profit developer Three Oaks Group and nonprofit Avalon Housing. County records show Three Oaks purchased the properties under various entities over the course of eight years for about $2.5 million.


The city intends to demolish houses on North Main Street with HUD funds.

Ryan J. Stanton | file photo

Until September, the groups were intending to build an affordable housing apartment complex called Near North. The project was canceled entirely when the developers lost financing, largely due to a change in the Federal Emergency Management Agency’s floodway boundaries last year.

The Near North property is now in a six-month redemption period after the lender, Great Lakes Capital Fund, foreclosed in November. Carole McCabe of Avalon told this week that the group is cooperating with the city, but isn't able to demolish the houses.

At the Building Board of Appeals meeting on Thursday, chief development official Ralph Welton said six of the houses, from 700-724 N. Main St., are dangerous buildings and need to be demolished. Normally, property owners come to the show cause hearing and make a case against demolition or state their intention for the site.

No one with Three Oaks or Avalon Housing spoke at Thursday’s meeting, and Welton said the groups intend to waive all proceedings and admit the buildings are dangerous. Once the city gets a signed waiver from all the interested parties — which is expected to happen by next week — the city can move forward with demolition using the $96,000 in HUD funds. The funds are available until March 15.

If the demolition cost exceeds the HUD funds, the city would use money from its $250,000 blight fund and put a lien on the property.

“We looked for a solution that allows us to move forward despite the difficulties with foreclosure and possible transfer of ownership,” McDonald said.

Two people spoke during the public hearing portion of the meeting on Thursday who said they’d like to see the dilapidated structures demolished as soon as possible.

“It’s been a long process…it’s created a lot of difficulty and it is dangerous,” Margaret Schankler, a nearby resident, told the board.

Samuel Callan, a member of the board, expressed concern over what will happen with the property once the houses are demolished, and also asked why the houses fell into a state of disrepair in the first place.

“Those were fine houses,” he said. “I don’t understand why they were put into a state of disrepair…if you knock the houses down, who owns the property and what is going to be built here?”

Board members also noted that two of houses, 626 N. Main and 630 N. Main, are not being demolished at this time and the condition of those structures could worsen. Welton said the property owners have been instructed they must maintain the houses in a safe state.

Senior Assistant City Attorney Kristen Larcom said the city isn’t aware of any future plans for the site. About 50 percent of the property is now in the floodplain, making future development very difficult.

“It would just be vacant property until somebody else proposes to either, (build Near North), or ask for rezoning and propose another project. The bottom line is they’re going to be starting with a property with no dangerous buildings on it.”

Lizzy Alfs is a business reporter for Reach her at 734-623-2584 or email her at Follow her on Twitter at



Sun, Jan 13, 2013 : 11:59 p.m.

From the Three Oaks website: "Affordable housing development planned for North Main Street in Ann Arbor brought together neighbors, developers, city officials and Three Oaks Group. This unique collaboration shows the power of development vision and community input." From the Avalon website: "Avalon coined the term "Enhanced Management" to reflect the way we blend social work into the business of being a landlord. We hire social workers and train them to be property managers. They are then able to focus on community engagement." I wonder how much money both of these places have as of now and how they take on a yearly basis.


Fri, Jan 11, 2013 : 5:24 p.m.

DUD - De-housing and Urban De-development. So FEMA changed the flood plain map rendering Federal funding for housing there on Main ineligible Also, In 2011 the DDA gave Avalon $500k for development. What happened to that money? Couldn't the city (aka DDA) have swapped property with Avalon so that the Fed money (plus the $500k) have been better spent helping a few of the 600 families waiting in line for affordable housing?

Craig Lounsbury

Fri, Jan 11, 2013 : 4:51 p.m.

I am relieved to know this is covered by the HUD bucket rather than the City bucket. As a tax payer I am more comfortable coughing up money from my right front pocket than my left rear pocket. here is an interesting link


Sat, Jan 12, 2013 : 6:21 p.m.

Craig - it's all the same bucket; you pay taxes to fill each of those buckets. The government just prints it or borrows money from other countries ...............


Fri, Jan 11, 2013 : 4:03 p.m.

The federal government (FEMA) killed this project which would have been a nice addition and added tax revenue. Now the government will borrow some money from China, or print some, to give to the city (HUD grant) to tear the buildings down. Just add this to the tab of the taxpayer...............16 trillion and!!!!!!!!!!


Fri, Jan 11, 2013 : 3:51 p.m.

Avalon DOES not take care of there property, please I live Next door too one. Very loud residents, trash comes in my yard. I have called the law and still going on. Junk cars in there driveway, one loaded with junk!!! Just adding to the eye sore


Fri, Jan 11, 2013 : 3:51 p.m.

Avalon and Three Oaks had 7 years to deal with this before the floodplain report was issued. They are responsible for the costs of tearing down these houses, now that they let them fall into disrepair. No one else is at fault except Avalon and Three Oaks. Why should taxpayers bail them out? HUD = tax payers $$


Fri, Jan 11, 2013 : 5:56 p.m.

So, Mike ... would you be the Michael Appel ... you know, the former Associate Director at Avalon?


Fri, Jan 11, 2013 : 4:05 p.m.

JRW - you should be writing to the government, not whining on this forum. You have no idea what it takes to develop a property, especially in this town..............big government interferes every step of the way, causing many projects to be abandoned.

Tony Livingston

Fri, Jan 11, 2013 : 3:18 p.m.

Letting these property owners off the hook is disgusting. At the very least, they should be required to refund the public money spent to do their job for them.


Fri, Jan 11, 2013 : 3:44 p.m.

Totally agree.


Fri, Jan 11, 2013 : 3:11 p.m.

Shouldn't the headline actually read: "City officials: 6 blighted houses on Ann Arbor's North Main will be demolished using YOUR funds", since that is the truth. No one responsible for this is getting billed?


Fri, Jan 11, 2013 : 2:48 p.m.

This is good --- we spend all our tax dollars building and destroying the middle's about time we spend some of our money on ourselves


Fri, Jan 11, 2013 : 4:06 p.m.

What money...............? We're broke last time I checked.................


Fri, Jan 11, 2013 : 2:37 p.m.

It seems we should take a closer look at how Avalon is being run. This situation did not happen overnight. People donate A LOT of money to Avalon. It would be interesting to see what other properties they own/manage which are a waste of money.


Fri, Jan 11, 2013 : 2:37 p.m.

I was going to look up all the dates of redemption based on the addresses of the properties mentioned in this post. However, none of the address are valid except for 700 N Main and 209 Main. The redemption date is ALWAYS 6 months to the day of the sheriffs sale. So if they were foreclosed on Nov 1, the redemption date would be May 1, if closed on November 15 the redemption date would be May 15. There is usually a delay on when the new deeds are recorded but the addresses are just not correct. What is interesting is that 209 Main was sold on Jan 18,2012 for 1,225,000. and recorded with 209 Main LLC the owner. The tax records show that Avalon owns two on Main Street, 618 and 532 Main. If the current owners do not "redeem" the properties and pay all the back fees, then I assume the sheriff deeds would be recorded after the redemption period for each property ends. Again there is no 626 N Main or 724 N Main.

Lizzy Alfs

Fri, Jan 11, 2013 : 3:36 p.m.

@Missy: The addresses aren't valid because they were assembled into one parcel years ago, with 700 N. Main as the address


Fri, Jan 11, 2013 : 3:19 p.m.

Very interesting.


Fri, Jan 11, 2013 : 2:21 p.m.

Sounds like a great place for the "Occupy Crowd" or "Camp Take Notice"! Let them fix it up?


Fri, Jan 11, 2013 : 1:46 p.m.

I honestly feel that the government didn't have Ann Arbor in mind when it thought of allocating funds to rehabilitate cities. But hey, tragedy of the commons aside, we should take whatever we can so long as it's somebody else's money.


Fri, Jan 11, 2013 : 5:33 p.m.

Mike- You'll notice I used the term "commons," to incorporate the point you made. It's a tragedy, however, for a reason - and you are Exhibit A.


Fri, Jan 11, 2013 : 4:08 p.m.

GoNavy - it's our money that we're taking. We the people................

Basic Bob

Fri, Jan 11, 2013 : 2:30 p.m.

It looks like Inkster or an abandoned coal mining town. It's exactly what they had in mind.

Elaine F. Owsley

Fri, Jan 11, 2013 : 1:21 p.m.

I will believe it when the first bulldozer hits the first building. If this situation had been a movie plot, it would have to be a comedy, except that it isn't funny, it's pathetic.


Fri, Jan 11, 2013 : 6:52 p.m.

That probably goes hand in hand with the one person who said they are not holding their breath and another who said they would dance naked it if happens. Especially with Georgetown Mall. Can't wait to see it all come down. Or not.

The Picker

Fri, Jan 11, 2013 : 1:09 p.m.

This is what happens when non-profits become developers. The problem is they have no skin in the game, just other peoples skin. The reason they are non-profit is that the profit desolves into higher pay and bonus' for those at the top. The taxpayers should not have to bail out this folly


Fri, Jan 11, 2013 : 3:17 p.m.

Thanks for a great assessment of this mess. It's spot on.

Basic Bob

Fri, Jan 11, 2013 : 12:57 p.m.

@HB11, the bank is not the property owner. Does your mortgage company pay for work on your property?


Fri, Jan 11, 2013 : 12:50 p.m.

Absolutely ridiculous that taxpayer money is being spent to knock these houses down. Yes, I did read the article. HUD = taxpayer money.

Craig Lounsbury

Fri, Jan 11, 2013 : 4:45 p.m.

"Yes, I did read the article. HUD = taxpayer money" are you absolutely sure on both counts? If you can send me a signed and notarized statement to that effect I won't accuse you of shooting from the hip...... this time. ;)


Fri, Jan 11, 2013 : 12:47 p.m.

Is there ANY, ANY impact from this on Avalon or Three Oaks? It looks to me like this non-profit, which accepts DONATIONS, and possibly money from the City of Ann Arbor (are there any publicly available records that conform this, or does anyone know), paid a bunch of money for these properties, sat back and did nothing, and now watches other people pay for tearing down houses they let languish, and somehow STILL owns the property. Can people remember this next time the city talks about partnering up with affordable housing groups? Why is Avalon still in existence?, I'd really appreciate it if you kept you eye out over the next couple months and made sure that somehow, magically, Avalon/Three Oaks (or some party acting in their behalf, or some entity partially or wholly owned by them) makes good on the property to avoid foreclosure (thus keeping the property just in time after getting free demolition from taxpayers).

Lizzy Alfs

Fri, Jan 11, 2013 : 3:34 p.m.

I will definitely be watching to see what happens next.


Fri, Jan 11, 2013 : 12:32 p.m.

Lizzy- What are the dates associated with the redemption period? It seems to me the Three Oaks is in a hurry to get the demo done for them so that they can refinance on the property that "We the people" paid to clean up for them. They could then redesign the development with all of the unknowns associated with demo and abatement completed. Since they (aka Avalon) will never sell the property the city will have no ability to perfect their lien, thus the city (HUD) will never get repaid.

Tom Whitaker

Fri, Jan 11, 2013 : 6:15 p.m.

According to the City Assessor, the Winter 2011 and Summer and Winter 2012 taxes have not paid either, totaling about $55K.


Fri, Jan 11, 2013 : 5:04 p.m.

If that is the case then the city would be wise to wait until late May to remove the buildings. It is unfortunate that we will have to look at this mess for a few more months but otherwise there is a significant risk that the money will be lost forever. I can promise that the bank will sell the property once they take possession.

Lizzy Alfs

Fri, Jan 11, 2013 : 3:32 p.m.

Carole McCabe with Avalon said the foreclosure was right after Thanksgiving. So we're looking at the end of November. End of may would be the end of the redemption period. I have not gotten a direct answer on whether Avalon and Three Oaks plan to pay off their debt and keep the property. City officials make it sound like the property will go back to the bank, and Avalon and Three Oaks will no longer have an interest.


Fri, Jan 11, 2013 : 12:09 p.m.

Is this a new grant from HUD? Regardless of circumstance, use of HUD funds for this project seems to be inappropriate, unethical, and questionable in legality. 1) The properties were to be redeveloped, with partial use of HUD funds. Specific development guidelines were used to determine project eligibility, qualification, and merit. 2) The project is now cancelled. 3) The site is no longer viable for development according to the initial funding request. In fact, the funds approved for the site are for a configuration that no longer exists. 4) The project developers are no longer in a frontline ownership position. 5) A private capital fund stands to gain profit, while providing nothing in return to taxpayers or HUD beneficiaries. 6) From the outside, this appears to be grand fraud, to be paid for by YOU and me. Good going, team Hieftje. The folly trolley is right on track.


Fri, Jan 11, 2013 : 6:50 p.m.

What Ypsilanti Township does is use funds that they have on hand, tear down the buildings and then go after the banks who refuse to do anything about it. The township has an attorney who like a pit bull. Hard at work getting banks to own up. Most of these homes are in foreclosure and probably have no clue they are even on their books. If Ann Arbor is smart like Ypsi is, they will go after the banks for the money spent.


Fri, Jan 11, 2013 : 1:32 p.m.

How exactly will a private capital fund make any profit by gaining land in a flood zone? If anything they most like lost money on their investment.

Basic Bob

Fri, Jan 11, 2013 : 1 p.m.

I don't see anyone making a profit on this.


Fri, Jan 11, 2013 : 11:47 a.m.

I wish someone could give me a positive answer here.Does anyone go into these houses and strip them first ? I'm guessing that there are old doors,fixtures,floors etc...that have some good value.But the government is involved so who knows ?


Fri, Jan 11, 2013 : 9:17 p.m.

Habitat for Humanity did this just before the houses were "supposed" to be demolished a few years ago.


Fri, Jan 11, 2013 : 3:47 p.m.

Which "dealer" would be allowed inside to do this? There are potentially many "dealers" in old fixtures, doors, etc. Who would decide? I bet most of what is valuable has already been stripped by thieves.


Fri, Jan 11, 2013 : 2:14 p.m.

People should be able to sign a waiver taking personal responsibility for injury and then strip as much as is usable. Why have things destroyed that can be reused in other buildings?

Lizzy Alfs

Fri, Jan 11, 2013 : 11:44 a.m.

If you're interested, I wrote a story a couple months ago asking 'What's next?' for this property. It looks at the challenges of the site and whether a development is viable at this point.


Fri, Jan 11, 2013 : 11:42 a.m.

I wish HDC would step in and save these old houses. Where are these historic district people once we need them.... have they moved to warmer area to avoid cold weather?


Fri, Jan 11, 2013 : 2:57 p.m.

The HDC reviews changes requested for properties already in historic districts. These houses were not in an historic district. They are also beyond saving, which is the fault of Three Oaks who let them get run down.

Elaine F. Owsley

Fri, Jan 11, 2013 : 1:23 p.m.

It's too late for those old houses. There's nothing "historical" about them.

Ren Farley

Fri, Jan 11, 2013 : 11:40 a.m.

This story suggests that the cost of removing six homes will be $96K or $16k per home. Isn't that very expensive? I believe that the City of Detroit estimates a cost of $8K for each home demolished. Is it really much less costly to remove blighted homes in Detroit?


Fri, Jan 11, 2013 : 2:18 p.m.

8K is pretty cheap. The average is about $10 per square foot but varies significantly. Type of construction and presence of hazardous materials affect the cost. If you have to haul away debris vs. burying in on site it is much more expensive. Since it's near the water they probably have to haul it away. Site rehabilitation adds to cost. In Detroit they can frequently shut down the utilities to an entire block and level everything, reducing cost.


Fri, Jan 11, 2013 : 11:44 a.m.

Remember, we are in Ann Arbor and some of our local trades charge three times more than people from out of Ann Arbor.

Bob W

Fri, Jan 11, 2013 : 11:20 a.m.

Hmm, could a case be made to use "public art" funds? ;o)


Fri, Jan 11, 2013 : 11:07 a.m.

Why isn't the bank that foreclosed responsible?


Fri, Jan 11, 2013 : 2:58 p.m.

The bank isn't the problem here. Avalon and Three Oaks are. They had seven years or more to deal with this - before the floodplain maps came out - and it didn't get done. Instead, six (or eight) houses that were in good condition are now in such a state of disrepair they have to be demolished. Avalon receives funding from the city. I'd like to say take it out of that, but I worry that the consequences would be passed on to people in need of affordable housing. My vote is to raid Three Oaks' coffers. On a different note - wasn't there a ballot initiative about this back in 2004 or so?


Fri, Jan 11, 2013 : 1:57 p.m.

As soon as possible ... after seven years.


Fri, Jan 11, 2013 : 12:31 p.m.

So use the federal dollars instead of billing the bank and placing a property lien if necessary, they're not REALLY tax dollars anyway, are they?

Lizzy Alfs

Fri, Jan 11, 2013 : 11:24 a.m.

The goal here, it seems, is to demolish the houses as soon as possible.

Lizzy Alfs

Fri, Jan 11, 2013 : 11:15 a.m.

Avalon and Three Oaks still own the properties. In five months or so it will turned over to Great Lakes Capital Fund. Normally, because the buildings are dangerous, the city would demolish them with the blight fund it established and put a lien on the property for repayment. From the city's standpoint, demolishing those houses is a lot of money and putting a lien on a foreclosed property raises a lot of questions and could mean the city would never be repayed nearly $100,000. That's why they applied for and received the HUD funds. As for the legal question of whether the bank would be responsible for demo in five months, I'm not sure.