The lack of affordable housing supply is increasingly important for members of the Grand Rapids Area Chamber of Commerce, which is now helping lead a legislative effort to give municipalities more tools to advance projects.
Affordable housing advocates in West Michigan and across the state formed the Housing Michigan coalition to push several bills that are now before state lawmakers. The coalition is led by local and statewide groups including the Grand Rapids Chamber, Home Builders Association of Michigan, Michigan Municipal League and Housing North.
A multi-bill package introduced last month by a bipartisan slate of lawmakers would allow for a variety of tax incentives to grow affordable housing supply. The key themes involve giving local governments more flexibility and control over affordable housing programs while expanding “workforce housing” for people who may have difficulty obtaining market-rate housing but make more than what qualifies for affordable housing.
Josh Lunger, director of government affairs at the Grand Rapids Chamber, and other members of Housing Michigan testified this month to the Senate Committee on Economic and Small Business Development.
“We started working on the housing issue locally quite a while ago,” Lunger said. “Our members have been raising this issue for several years. It’s a talent and quality of life issue that intersects with so many of our other issues.”
Patchwork of policies
Lunger noted that only some cities have the tools to award tax incentives to affordable developments while most municipalities are unable to directly support workforce housing. For example, Senate Bill 360 — sponsored by Sen. Roger Victory, R-Hudsonville — would offer tax credits to employers that contribute to a local housing trust fund or that offer employees an option to participate in a “qualified employer-assisted housing project.”
“In West Michigan where I serve, wages have increased nearly 6 percent since 2015, but the average price of a home has increased by over 60 percent during the same period of time,” Victory said in a statement. “We can attract industry, but the question is how do we connect them with the workforce?”
State Rep. Mark Huizenga, R-Walker, who’s sponsoring a companion bill in the House, added in a statement: “Kent County is facing a critical shortage of affordable housing. This plan represents a common-sense public-private partnership to address the needs of my constituents.”
Taken together, the bills are meant to fill in some of the housing policy gaps and be customizable to give local control to each community’s housing needs, Lunger said.
Currently, brownfield incentives are the main tool that developers can use to ensure a level of affordability for tenants, but the incentives are limited to projects in certain areas. Low Income Housing Tax Credits from the Michigan State Housing Development Authority are also available, though advocates say the program has become increasingly competitive.
Neighborhood enterprise zones are similar to brownfield tax increment financing, said Ryan Kilpatrick, executive director of Housing Next. Both tools rely on the same enabling legislation, the Obsolete Property Rehabilitation Act, which defines communities that are eligible to use neighborhood enterprise zones based on prior U.S. Census data.
Senate Bill 364 — sponsored by Sen. Jeremy Moss, D-Southfield — would expand the ability for local governments to designate neighborhood enterprise zones for “compact development,” effectively opening the tool to any city, town or village across the state.
“We’ve got tax breaks available for commercial and industrial reinvestment, and principal residences have the ability to take a reduced tax rate,” Kilpatrick said. “The one constituent group that always tends to pay full taxes no matter what is low-income renters.”
The customization baked into the legislation that accounts for varying area median income (AMI) among cities is also important, Kilpatrick said.
Passing savings on
The proposed Attainable Housing and Rehabilitation Act — Senate Bill 362, sponsored by Sen. Winnie Brinks, D-Grand Rapids — would allow local governments to establish attainable housing districts that would give developers tax relief if they reserve a certain amount of affordable units for income-qualified households.
The threshold of affordable units would be set by the local unit of government, but could not fall below 30 percent of the project. “Income-qualified households” is defined in the legislation as a household that earns an annual income of 120 percent or less than the AMI.
Abating property taxes in some way would be a huge help for Inner City Christian Federation, a Grand Rapids-based nonprofit that fills a variety of housing needs, including developing and rehabilitating properties into affordable units.
“Five years ago we bought the Eastern Elementary building, and for us it takes some time to do the financing to renovate something into affordable housing,” said ICCF CEO Ryan VerWys. “During that time, we pay full property taxes on a building.”
ICCF paid about $110,000 in property taxes on the elementary building before it was converted into affordable housing, VerWys said. Any savings on property taxes for a nonprofit would directly allow it to do more work toward affordable housing, he added.
“If we see these policies go through, it would help us tremendously,” VerWys said. “Any savings would be passed on to our residents.”
VerWys also believes the bills would provide more incentives for landlords who are interested in making their properties more affordable for renters.
“It’s a new set of tools in the tool kit and in some ways it is enlisting help from the marketplace of landlords or property owners with some kind of incentive that they could use to reduce rent or target their property to a low-income family,” VerWys said.
Kilpatrick is optimistic that the legislation will advance in the Legislature given its bipartisan support.
“What’s really important about the Housing Michigan coalition is that it’s a broad group of stakeholders that came together and wanted to focus on priorities that would get bipartisan support,” Kilpatrick said. (MiBiz)