236 existing affordable housing units in Midtown to be renovated, preserved for 30 years
All income-eligible residents will remain in their homes, avoiding displacement
Developer plans to increase affordability for all units from 80% AMI to 60%
$12 million renovation planned for building systems, $2.15 million from Bedrock under the city’s new affordability agreement
Residents of Cathedral Tower Apartments, a prominent 236-unit affordable Midtown high-rise, will no longer have to worry about rising rents in the popular neighborhood. The building will be acquired by a joint venture between MRK Partners and local developer Fortus Partners, who plan to preserve the building as affordable for another 30 years and lower the affordability rate from 80 percent of the area median income to 60 percent or below for all units.
With the property up for sale earlier this year, the building was in danger of being converted to market rate units in the high-demand neighborhood, displacing residents who have lived there for years. Now, MRK-Fortus, in partnership with Bedrock, will preserve the affordable units, increase affordability and complete a $12-million rehabilitation of the building. The building will see major system improvements including a new rooftop HVAC system, new windows, upgraded fire alarm system, kitchen and bath improvements, new plumbing and interior and exterior upgrades.
“For equitable growth to happen in Detroit, we need to retain the residents who have stayed while attracting new neighbors. Preserving affordable housing in buildings like Cathedral Tower is a large part of that equation,” said Arthur Jemison, Director of Housing and Revitalization for the City of Detroit.
Bedrock, under a new affordable housing agreement approved by City Council last week, will provide $2.15 million to support the preservation and renovation of the building, to help keep long-time residents in their homes and ensure that future residents will have access to affordable housing options in the greater downtown area. Over the next several years, Bedrock plans to develop or rehabilitate up to 3,500 residential rental units on its own and with partners. With this agreement, Bedrock is committing that 20 percent of the units, or an estimated 700 units, will be affordable housing.
“We are thrilled to be part of making this important project possible,” said Dan Mullen, President of Bedrock. “Our first two new residential developments downtown have been mixed income developments, and we plan to keep creating new affordable housing options. With this project, we are also taking the critical step of helping preserve existing affordable housing, ensuring that we don’t take one step forward and two steps back by losing the existing affordable housing and long-time residents we have today.”
The Cathedral units are among 2000 existing affordable housing units throughout the greater downtown area of Detroit that are at risk of expiring within the next five years. Under the new agreement, the units will extend their affordability for 30 more years.
“Affordable developments should not be an afterthought of growth but rather an integral part of the change,” said Jordan Friedman of Fortus Partners. “Fortus is proud to work alongside MRK, Bedrock, and the City to achieve that goal.”
MRK embraces this approach to their developments with a long term vision combined with a caring mandate to enhance the Affordable space. “Affordable is not just a unit with lower than market rent,” Sydne Garchik of MRK Partners said. “Affordable space is an opportunity to empower existing residents by providing essential building amenities and features.”
The deal is expected to be financed through a combination of federal Low Income Housing Tax Credits, tax-exempt bonds, and low-interest financing through Bedrock Real Estate Services.
Built in 1972, the 18-story Cathedral Tower building has been an important affordable housing property for decades, but residents faced losing their affordable rates in 2020 when the use agreement requiring the lower rents was set to expire. The building, enduring a foreclosure in the early 2000s and multiple owners since then, has also fallen behind on improvements to apartments and building upgrades.
MRK-Fortus will seek additional funding support from the Michigan State Housing Development Authority. Construction is projected to begin in early 2019 and is expected to be complete by early 2020.
Fortus Partners is an experienced investor in commercial and residential real estate across the United States. Beginning in 2013, Fortus relocated its headquarters from Los Angeles to Detroit to focus its efforts solely on the development and expansion of Southeastern Michigan. Guided by a core set of principles of integrity, innovation and social responsibility, Fortus has aligned itself with government and community leaders to drive growth and add value to our local communities.
For additional information about Fortus Partners, email Jordan Friedman, Managing Partner, at email@example.com.
Detroit-based Bedrock is a full-service real estate firm specializing in acquiring, leasing, financing, developing and managing commercial and residential space. Since its founding in 2011, Bedrock has located more than 160 office and retail tenants to Detroit’s technology-centric downtown. In addition, Bedrock and its affiliates have invested more than $3.5 billion in acquiring, renovating and developing 95+ properties in downtown Detroit and Cleveland totaling more than 15 million square feet. For more information, visit bedrockdetroit.com or engage with us on Twitter @BedrockDetroit and Facebook.