Arbor South receives final state approval for 20-acre Ann Arbor project

Oxford Companies and Crawford Hoying announced that Arbor South, a 20-acre mixed-use community at 2845 S. State St. near Eisenhower Parkway in Ann Arbor, has received final state approval from the Michigan Strategic Fund Board. The program calls for more than 1,000 apartments and condominiums, 100,000 square feet of ground-floor commercial space and a hotel. The approval came through a brownfield tax recapture plan that the developers describe as the largest of its kind in city and county history, a tool that captures future taxes generated by the development and applies them to eligible site work, environmental cleanup and infrastructure costs.

Jeff Hauptman, chief executive of Oxford Companies, called the approval "an important milestone for the project," adding that advancing a project of this scale "has involved careful coordination and sustained collaboration with the city." The specific reimbursement amounts and the share of project cost they cover sit in the plan documents rather than the release, leaving open how much equity and construction debt the development team must supply before any building rises.

The team now assembled includes Detroit-based general contractor Sachse Construction, Detroit-based architecture and design firm Lord Aeck Sargent, and Ann Arbor civil engineer Midwestern Consulting. Apartments and condominiums, ground-floor commercial space and a hotel pull the project across several revenue streams and capital markets at once, from construction debt to eventual condo absorption.

The hotel component sits in an asset class this publication covers closely; as in Pivot's conversion of a Nashville office tower into an LXR hotel and Hilton Grand Vacations timeshares, it is the slice of a mixed-use program with its own brand and management math. The brownfield mechanism is one piece of the financing; the release still does not name the construction lender, the ground-breaking date or the phasing plan across 20 acres.

The projects that clear are the ones whose public and private capital arrive in the right order. Arbor South has cleared one piece of that order; the construction lender's name is the next item to surface.