The Push for Affordable Housing

REGION – Housing officials across the region are taking aggressive measures to provide affordable homes, condos and apartments, tapping into tax credits and subsidies and incentivizing developers to build more low-cost units into their projects.

The tools they are using vary greatly from one community to another, ranging from the rehabbing and sale of foreclosed homes to the totally new construction of multiple family buildings and houses.

Yet each is adapted to the individual circumstances in a community, says Sarah Lucas, housing coordinator for the Northwest Michigan Council of Governments.

The cost of housing has long been out of step with wages in the region, especially burdening young families and workers in the largely seasonal service economy. The combination of high housing costs and low wages has produced what Lucas calls the "drive till you qualify" phenomenon.

People working in Traverse City often discover that they need to look for housing far from their place of employment to find apartment rents and mortgage payments they can afford.

Officials and developers are tackling the problem, and ambitious projects like Gateway in Frankfort and Midtown in Traverse City are charting the course.

Still, the addition of the eight affordable condo units at Midtown Centre, 32 units at Gateway and more than two dozen affordable homes in Leelanau County barely puts a dent in the demand.

As a result, city and county governments are looking for more ways to add affordable units or homes to the market.

Last year, Traverse City, for example, began easing some of its rules for residential projects – provided that they incorporate low-cost housing. In a recent request for proposals from developers interested in buying the city-owned depot property near the corner of Eighth and Woodmere streets, city commissioners even added this caveat: that at least 10 affordable units be incorporated into any development plans.

In general, developers of affordable housing can expect to build more units on a given amount of space, which can translate into higher profitability, says City Commissioner Jody Bergman, who is a member of the city's standing committee on housing.

The housing committee is also looking at zoning changes that would allow the construction of smaller units – including cottages and so-called "granny flats" – in the city, even though similar proposals have run up against opposition from some residents and commissioners in the past.

"It has always been difficult in the city because there are not a lot of open tracts, and you are dealing with infill," she says. "If you don't push for affordable housing, it is never going to happen."

Bergman also sees the Neighborhood Enterprise Zone extending along Eighth Street from Rose Street to Franklin as an affordable housing measure, since the zone's residents can qualify for tax breaks.

And Grand Traverse County has a new policy in the works that would allow it to take the proceeds from the sale of homes foreclosed for tax reasons, put them into a trust fund, and then make grants for the renovation of homes in disrepair and for related activities.

"The idea would be to make the program as flexible as possible and be able to respond to needs as they arise," Lucas says.

In Frankfort, the Gateway project was coming online as this article went to press, opening up the first of its units to tenants. Rents at the four-building complex range from $390 to $650 a month, depending on the tenant's financial situation and the size of the apartment. The largest have three bedrooms and 1,200 square feet of space.

Gateway is designed to provide housing for Benzie County employees, who generally have a hard time finding quality, low-cost housing, say co-developers Joe Hollander and Art Jeannot.

The partners attracted investors with the prospect of federal-income tax breaks. The incentives make it possible to offer both low rent and an attractive, relatively low-risk return, Jeannot says. The pair is using a similar approach for a planned affordable housing project in Gaylord.

Given the freefall in the real estate market over the last two years, housing in general has become more affordable. It is, in fact, possible to find rents that are lower than subsidized rates, Hollander says.

But, he adds, many properties in the market are in dire need of repairs and renovation, especially if they have been in foreclosure.

"It's not just about affordability," Jeannot says. "It is about quality. There are plenty of landlords out there who do not invest in their properties."

Leelanau County has assured quality by building new homes – 25 of them over the past seven years. It relies on grants from the Michigan State Housing Development Authority to subsidize construction costs. In a typical case, a house might cost $200,000 to build, but the new owner would only have to get a mortgage for $120,000, says Housing Coordinator Ron Crummel.

A family of four with an income under $50,000 would qualify for the home. "But they would also have to have good credit," he says.

Kalkaska County is tackling both the problem of deteriorating foreclosed homes and the shortage of low-cost housing with a state grant program, says Patricia Lowery, housing director for Kalkaska and Antrim counties.

A low-income individual or family can apply to buy a foreclosed home with a standard mortgage and may qualify for a forgivable grant of up to $30,000. It is used to renovate the home, and the buyers are not required to pay it back if they occupy the home for 10 years.

She has brought several homes in Mancelona into the program, and she is now hoping to do the same in the Village of Kalkaska. BN