Roundtable: The Affordable Housing Debate
Finding a place to live – make that an affordable place to live – has become public issue number one in the Grand Traverse region. In recent months, the Detroit Free Press has splashed northern Michigan’s housing woes across its pages. A recent proposal to include an affordable housing component in a controversial nine-story mixed use development in downtown Traverse City hit a roadblock when a challenge over the permitting process landed the project in court.
Affordable housing, or lack thereof, affects young professionals trying to build careers here to employers trying to grow their businesses and attract talent to northern Michigan.
The TCBN sat down with local housing and planning professionals, along with a couple of realtors, to talk about the challenges – and some possible solutions – to Up North’s affordable housing dilemma.
They included: Tony Lentych, executive director, Traverse City Housing Commission; Shelly Brunette, realtor, Real Estate One; Steve Scheppe, realtor, Century 21 Northland; and Sarah Lucas, regional planning department manager, Networks Northwest.
BN: The first issue around affordable housing seems to be defining what we’re talking about. What does affordable housing actually mean?
Brunette: It differs from person to person. Some say it is for the minimum wage worker. Others say it’s what a consumer as a first-time homebuyer can afford, which is not a minimum wage worker. So what are we trying to tackle?
Lucas: It’s problem number one, defining affordable housing. It generally means spending no more than 30 percent of your income on housing. But there’s so much variation in incomes that is kind of meaningless. So we try to be more specific, which is why we’ve started talking about workforce housing … that’s also a broad term but we’re talking more about low to moderate income parts of the workforce.
Also, because it’s become such a business issue – so connected to our labor issues and our workforce issues – that term seems to resonate with people. The other thing is when you talk about “affordable housing” there’s all kinds of stigmas that immediately come to mind.
Brunette: A lot of people who are renting are paying 70 percent of their income, or more!
Lentych: And that’s an issue of missing stock. If you look at supply and demand, if there was a supply rents would come down or affordability for first-time purchases would come down.
BN: How did we land in this housing situation?
Lentych: We’ve got a unique problem here; it’s also a very desirable problem. A lot of people with wealth want to be here. But where does the young professional coming back from college live, or the person who worked here his entire life and is now retired? If we don’t think about that intelligently, it won’t matter that everyone wants to be here. That will only last so long. There won’t be the services, the amenities, the health care workers.
Scheppe: The majority of people I come in contact with look at it as a rental issue. They don’t see it from the perspective of home ownership. It’s almost like they’re trying to put a band-aid on the situation … “If we just had more rentals …”
Someone trying to purchase a home at an entry-level budget … there is nothing to sell them. There’s been a lot of rental property, apartment construction over the last few years but it’s still of course not meeting demand.
Brunette: The demand is so high it’s driving those rents up, so they are not affordable anymore.
Lentych: And our problem is only going to get worse as the desirability factor continues to go up. It’s a good problem to have, but we just have to be intelligent and intentional about our solutions. I want people to think about this. We can’t ignore it. Supply and demand is a little out of whack here.
Brunette: That’s the sixty thousand dollar question … the solutions. Because building costs have also skyrocketed.
BN: So how do we move toward solutions?
Lucas: It’s such a complex problem, there’s not one solution. We kind of lose peoples’ attention spans when we start to talk about solutions because some of them are not very glamorous and some of them people don’t want any part of. But you have to tackle it from all these different angles in order to address land costs, building costs, zoning issues, public opposition and financing issues with higher-density, multi-family or workforce housing.
Lentych: Think of what it would be like to be a developer and volunteer to address this issue. Look what you are setting yourself up for around here. You’re going to be attacked. Every decision you make is going to be criticized. People are going to look for what you’re really in it for. If I were a builder, developer I know exactly what I’d be doing, which is what they’re doing now … trying to serve the higher end market. Nobody bothers you there. I don’t begrudge their decision one bit.
Scheppe: It’s that whole philosophy of not in my backyard. It’s the whole thing of educating people who these people are who are seeking affordable housing.
Lucas: A lot of them are already here. They are working at the banks, the restaurants … One thing we hear a lot is we’ll be bringing in people from outside the community. But we are talking about the people who are already working here, but driving 30 miles one way to work, living in a tent in the summer – which is becoming an increasingly common story.
One of the things I struggle with as a planner is we’re not talking about silver bullet fixes. These are structural changes that bore people to tears. You don’t see the impacts for a long time afterward but we need to talk about how to develop capacity here to actually create some of this housing. We need to talk about building understanding among the public. We need to talk about financing these projects.
Some of the solutions that are out there we’ve explored pretty in depth in this region. I think we are actually way out ahead of the game in comparison with the rest of the country. But we need community support.
BN: What is the outside impact of this local housing issue?
Lentych: I think we’re going to get a reputation of being a difficult place to work. A talented developer may not want to work here. If you’re desirable and easy to work with you’ll get the best … they’ll come with their own financing … difficult to work with … it’s a spiral, and not in the right direction.
Scheppe: And there’s also the workforce side of things … people are only going to wait so long for opportunities here. At some point they’re going to say it’s just no feasible for me to come to Traverse City. There have been a couple of scenarios in my real estate career where people had the option to move to TC but after they tried to find housing they couldn’t find anything.
Lentych: You just nailed an even bigger point. Imagine you’re a young entrepreneur, starting a biz, going to have employees. How would you grow it around here? If we’re going to have an economic development model that you should be able to attract people who want to move here or already live here … we’re going to have some big issues with that.
That’s why it’s important to have these conversations. As much as I get frustrated when I talk to people who are always the naysayers or wanting to stop these things it’s still worth the argument if we want to have a desirable community for everybody. I really think this is one of the few places in the United States that can have it all. We can have great neighborhoods for everybody.
BN: What is new, different, changing in the conversation?
Lucas: As far as some of the solutions, we’ve been hearing a lot about the “missing middle” in affordable housing. Essentially it’s multi-family housing that fits in with single-family housing. It’s stuff that can be done zoning-wise by right if you structure it the right way. Then you don’t have some of the barriers you have when you try to do a larger development. So that’s why its one of the things I think is more promising for affordable development or workforce housing. It makes so much more sense to spread the density out throughout the rest of the community.
Lentych: You have single-family home ownership and then you have huge multi-family rentals and then you’re just looking at what’s in between … what are the options that can be created and unique. It can be something as simple as accessory dwelling units or 12-14 unit buildings or things like housing on second and third stories above commercial.
Lucas: This approach is really good for higher traffic corridors. Lots of properties along Eighth Street and Garfield that would be perfect. Transitional, higher-density residential transitioning into lower-density residential. There’s less opposition to multi-family development generally in commercial districts … though not necessarily downtown. But, as Tony said, we don’t have a lot of experience with that type of development here.
BN: What about grant dollars or other state/federal funding for affordable/workforce housing?
Lucas: We’re kind of at a disadvantage here for a lot of reasons. In grant environment, we don’t rank as high as say Flint or Detroit.
Lentych: Our biggest barrier is land cost. There is no program out there to help buy an expensive piece of land. Old gas stations here still go for a lot of money. This is an odd place. When you look at the tools communities have to rebuild themselves, some of them don’t fit here or we’re competing at a huge disadvantage.
Lucas: So that’s where housing trust funds would give us a huge advantage. They are a public source of revenue dedicated solely to housing programs and sources of revenue vary by community. Grand Traverse County set one up last year and attached it to its land bank authority so when they sell tax-foreclosed properties, the profits of the sale go into the fund [There is nothing in the fund currently]. The beauty of a housing trust fund is we’re not then competing with other priorities in the rest of the state. Its local money responding to local priorities and it’s a lot more timely.
Lentych: People criticize this, but the reason we’re going for a public policy fix is the nonprofit world really can’t afford to play in this market. To grant a developer a half a million dollars that maybe will get you 12 to 15 units in 24-30 months … what else could they do with that money? They could support a whole host of other charitable activities. Building is expensive and there are very few charities that are set up to subsidize building.
Lucas: So that’s one angle on the financing issue, the other in dealing with the capacity issue is of a type of organization called housing partnerships and they provide technical assistance to developers. They can help connect them to financing sources, can walk them through some of the political processes.
Lentych: The other side of that is they can raise dollars … they can do loan pools. Let’s say you have five banks that kind of want to play but don’t want to do anything on their own. You can certainly do things like that with a housing partnership. It’s seen as more neutral, not government controlled and not advocating for certain things. And advocacy is a huge part of it … we should be collectively screaming down in Lansing. We are a rural community that is doing well but we still need some help.
Brunette: So our solution is money …
Lentych: It is, and we have to get out of the way. We have a developer who wants to put $40-plus million dollars with an affordable housing component down there on the corner (RiverWest) and he’s being stopped at every level.
Scheppe: We get that resistance countywide – and in the surrounding counties. It’s not just the city.
Lucas: I was reading an article about opposition to affordable housing. You can bank on certain arguments when these things come up … property values, neighborhood character, the people who are going to live there, traffic. These are the things people are going to be concerned about. How can we handle them on the front-end?
BN: Let’s pretend … financing all set, zoning all set. You can build an affordable housing development wherever you want. Where do you do it?
Lucas: Eighth Street, Garfield. All those corridors the city has studied. There is a lot of under-used space, empty parking lots, deteriorating buildings – those are all really good opportunities for re-development. Close to jobs, other neighborhoods.