Businesses Suing City of Ferndale to Halt Vester Flats Development Due to Parking Issues
(Crystal A. Proxmire, June 10, 2023)
Ferndale, MI – The Vester Flats development is slated to bring 72 apartments plus ground level retail to what is currently a privately-owned parking lot at 141 Vester. This location is between Belle’s Lounge by Valentine Distilling Company and Hambo Coney Island, kitty corner from the backs of Ferndale Elks and Howe’s Bayou. Plans include plans include 39 studios, 30 1BR, and 3 2BR apartments plus a multi-purpose room and fitness room.
The development removes 76 parking spaces, plus falls short of it’s own required parking spaces by 26. Local businesses are concerned that taking away parking and adding more residences without sufficient parking is going to harm their businesses. And two of them have teamed up to sue.
Michael Hennes of Howe’s Bayou and Rifino Valentine of Valentine Distilling Co. have retained Varnum LLP to sue the City and the developer to stop the project based on the removal of parking they expect to impact their businesses. Howe’s is preparing to celebrate 25 years in Downtown Ferndale, and Valentine has been there for a decade.
The PUD (Planned Urban Development) known as Vester Flats was approved by City Council in 2022, with two council members- Raylon Leaks May and Laura Mikulski casting dissenting votes.
While the PUD is approved, a Neighborhood Enrichment Zone (NEZ) designation is still pending. The NEZ would allow for a tax incentive in exchange for having a certain percentage of the development having affordable housing units. A hearing on the NEZ took place April 10, and a vote must be taken by council at a future meeting.
The City’s Communications Director Kara Sokol told Oakland County Times that because they had just learned of the lawsuit it was too soon to make comment.
PARKING
The project, including parking and the NEZ designation, was discussed at the April 10, 2023 City Council meeting as well as the previous Planning Commission meetings.
At that meeting Mayor Melanie Piana said that discussions were happening with other property owners in that quadrant of downtown to find parking solutions, and that an RFP (Request for Proposals) was in the works for potentially developing the city-owned parking lot behind Como’s with a parking deck. She also suggested business owners promote the DOT parking deck, which is in the SW quadrant of the downtown, across both 9 Mile and Woodward Avenue from Howe’s and Valentine.
“I recognize parking is still a concern,” Mayor Piana said. “While I might be a walking, biking, transit advocate, that doesn’t mean I am thinking we are in a utopia where no parking is needed. This is always about balancing the changing dynamics of our downtown with housing over private car storage, which is one of the challenges we’re facing.”
At the same meeting, Valentine spoke of the increasing need for parking, evidenced by surveys done by the city. “We heard stories that nobody drives any more. Everybody walks. Everybody bikes. We even hears stories of, well, there’s an app where people can rent out their driveways as a solutions for parking. As a business owner those don’t even come close to solutions.”
A study paid for by the City in 2006, indicated this quadrant of Ferndale was the most in need of additional parking. Permit parking for residents was also added in recent years due to the demand on that street. The City passed an ordinance several years ago that if developments fell short of required parking spaces they would be required to pay into a fund intended to help the City finance parking solutions, called “in lieu.”
In this case, the developer has agreed to pay $66,000 to the city’s parking fund.
Valentine and Hennes say making the parking situation worse violates the City’s own ordinances, and the move could put them both out of business. Other business representatives attended the April 10 meeting as well to share similar concerns.
“While I was the chairman of the Ferndale Downtown Development Authority, we commissioned parking experts to analyze current and future parking needs. The studies clearly show a significant parking deficit on the East side of Woodward, often greater than 100 spaces, and the only thing that has changed is we have added more businesses,” Hennes said in a June 9 press release.
“At the end of the day, all we want is the city to follow their own ordinance,” Valentine stated in the same release, “This development eliminates approximately 76 parking spaces. This represents 40% of the parking in this area, and there is no plan to reallocate these spots. In addition, a variance was granted to the Developer, because they are 26 parking spaces short of their own parking requirements for the planned development. This is going to create a major disruption not only for the businesses, but also the residents in this part of town.”
According to the press release, the lawsuit asks for a temporary restraining order to stop the development “until the matter of parking following the ordinance enacted in 2019 has a plan behind it. And that “if the City is not going to follow its ordinance or is going to allow the long-standing businesses to be harmed, then Mr. Valentine wants the businesses to be fairly compensated for their losses arising from the new development.” The lawsuit names ordinance 24-222 which outlines requirements for replacing parking that is taken away when a property changes uses. This includes:
- “Whenever use of a building or lot is changed to another classification of use, off-street parking facilities shall be provided as required by this article.
- If the intensity of use of any building or lot is increased through the addition of floor area, increase in seating capacity or other means, additional off-street parking shall be provided for such increase in intensity of use.
- Off-street parking facilities in existence on the effective date of the ordinance from which this article derives shall not be reduced below the requirements of this article.
- An area designated as required off-street parking shall not be changed to another use unless equal facilities are provided elsewhere in accordance with the provisions of this article.”
INCENTIVE
While the PUD has already been approved, the matter of the NEZ remains in need of a council vote for approval.
According to the Oakland County Assessor, the value of the NEZ (the total tax reduction for the property owner) is approximately $1,724,501 over 15 years. The cost for the developer to provide eighteen (18) affordable units (due to the accordingly lower- than-market rent rates) over fifteen (15) years is $1,454,000.
Of the estimated $1,721,957 in tax savings, The City of Ferndale’s portion would be $432,262, and other taxing authorities, such at Oakland County, Oakland Community College, SMART, etc, would be the rest.
Currently, the property is a parking lot, with an annual tax bill of approximately $8,809.91, of which $2,589.26 goes to the City.
The way NEZ incentives work, according to City of Ferndale documents, is that “The State of Michigan publishes an annual mill rate which can be applied to properties within an NEZ district – the 2023 rate is 26.9 mills.
“Ferndale’s current mill rate within the Ferndale School District, which includes the subject site, is 70.0487 mills. Although the mill rate will decrease for the duration of the fifteen (15) year NEZ term, the tax revenue generated from the site will be a net positive due to a higher tax assessment from the new construction and site improvements.
“The 26.9 mills collected from the site will be distributed to all taxing jurisdictions proportionally. CED Staff estimates that the City of Ferndale will collect $432,262 from the subject site over the next 15 years, with the other taxing jurisdictions proportionally collecting an estimated $1,721,957 over the same time.”
The incentive would require the building owners to have 18 units of “affordable housing,” which is based on the renter’s income and on the market rate of rentals for Oakland County. An example given by developer Matt Walters at the April 10 meeting was that market rate for a studio was $1250 per month, but a person with low income could rent it for $783 per month.
The subsidized rent would be required for 15 years, which is also the time of the tax incentive, which is intended to offset the profits lost by offering the low income rates. At the end of the 15 years low income residents would likely be asked to move as the tax break would end. Because of this the City negotiated that the developer would have to set aside $20,000 to be used as a grant to help the displaced residents. The total grant of $20,000 could be split up between all 18 renters, or it could be distributed differently if they so chose, for example only giving grants to longer-term residents.
Another public benefit agreed upon as part of the NEZ is $20,000 into a public art fund, and constructing three of the units to be wheelchair accessible.
At the April 10 meeting, Walters told City Council that if the NEZ does not pass that the project would still move forward, but without the affordable units.
At the same meeting, Valentine stated that a “tax incentive to destruct their whole quadrant of the city, it just makes no sense.” Valentine posted an online petition at www.Change.org on the subject, which got over 2,000 signatures as of Saturday morning.
The vote on the NEZ has been postponed, and City Council is expected to meet with their attorney Monday.
Learn more about the City of Ferndale, including meeting information, agendas, etc at https://www.ferndalemi.gov/
Note: Both Downtown Ferndale and Howe’s Bayou are advertisers on Oakland County Times. The info contained here is fair and accurate to the best of our abilities. Update: The story originally stated that the vote for the NEZ was rescheduled, it was actually not yet scheduled, and the story was updated to reflect that. We’ve also added in the specific ordinance number (and link) that the lawsuit is in regards to.