Affordable housing initiatives ramp up in Michigan amid shortage

As housing costs rise across the state, there are efforts to help underway in the second-largest city in Michigan.

The Grand Rapids City Commission approved three new recommendations on Tuesday that leaders hope will encourage the development of more affordable housing units.

Lawmakers voted to offer incentives for “small-scale development” that would favor two-family dwelling units, as well as a “density bonus” for the development of affordable units. The commission also approved a streamlined approval process for “accessory dwelling units” (ADUs), such as an apartment above a garage.

The initiatives were passed amid a massive housing shortage in Michigan and around the country, in which there’s an estimated lack of about 7 million rental units according to a 2018 report from the National Low Income Housing Coalition (NLIHC).

Housing officials in Michigan say demand for their services is at a peak. That’s led to more collaboration between municipalities around the state, along with new strategies aimed at modernizing how housing gets built.

For officials in Grand Rapids, the development and enactment of policies that allow for more units — in areas of the city where they make the most sense — have been long-time goals.

“Providing a range of different housing types and opportunities for affordable living are top priorities for us,” said Suzanne Schulz, Grand Rapids’ managing director of design, development and community engagement. “We are pleased that the City Commission has approved these three progressive solutions to create housing choices for all.”

Grand Rapids Mayor Rosalynn Bliss has previously said that lack of affordable housing is “the greatest issue [she has] wrestled with since sitting in this seat.”

She also noted that in her capacity as mayor, she and the City Commission have spent “hours and hours” working to figure out “what we can do at the policy level and at a governmental level to prevent displacement and gentrification, ensure affordable housing throughout the city [and] that people aren’t pushed out of neighborhoods.”

Low-income housing

Around Michigan, roughly one-quarter of “very low-income” people — defined as earning between 31 percent and 50 percent of the state’s $54,909 area median income — are considered “severely cost-burdened” by their housing costs, according to the NLIHC report.

Those numbers are in line with the current landscape that Andy Martin sees. He’s the director of rental development for the Michigan State Housing Development Authority (MSHDA), the state’s main housing agency.

“We’re seeing as much, if not more, demand than ever” demand for affordable housing in the state, he said.

“It’s been really strong, and part of that is just because the economy is really strong right now,” Martin continued. “There’s housing shortages in different places, we have new jobs popping up in places. That’s obviously great for those locations, but it also creates more pressure on trying to find housing locations.”

MSHDA, as well as other public and private groups, have encouraged modular housing as one way of developing affordable housing more quickly. With modular homes, much of the housing is built offsite and then shipped and assembled in a matter of days.

Earlier this month, MSHDA rolled out its “MOD” pilot project, which will award a maximum of 10 local municipalities and nonprofit corporations a five-year loan of up to $196,000 to build a spec modular housing model.

Coldwater, in the state’s sparsely populated southern region, received the first grant under the program in response to a large food processing company setting up shop in the area. The investment has led to employment growth in that part of the state, but it’s also put a strain on the limited housing supply of the mostly rural area.

The program is “designed to provide an efficient workforce housing solution and attract income-eligible homebuyers into Michigan communities,” MSHDA Executive Director Earl Poleski said in a statement.

Private sector interest

Private companies also are exploring the possibilities presented by modular housing.

Grand Rapids-based startup Urbaneer recently announced a partnership with two other construction contracting firms in the area to build smaller modular, single-family homes that can offer “more life per square foot.”

As part of the announcement, Urbaneer executive Bruce Thompson and his collaborators showed off one of its first projects: Thompson’s own newly-built modular home in Grand Rapids’ historic Heritage Hill neighborhood.

The three-bedroom, four-bathroom bungalow home offers about 800 square feet of living space on the main floor, as well as a small basement and second story. It features moveable walls, and fold-out beds and tables that allow living rooms to transform into dining rooms or bedrooms.

The homes, which start at about $280,000, might not alleviate the affordable housing crisis, but Thompson and others say that offering more options at different price points can help.

“We’re trying to do something that’s compact … but with the right approach on pre-engineering,” Thompson said, referring to the modular style in which the homes are manufactured.

The increase in interest from both private sector companies and municipalities developing their own housing strategies is good news for state organizations like MSHDA, Martin said. He added that historically, local units would have turned to the agency for help with that.

“But what we’re seeing is a lot of municipalities helping to try and chip into this, I guess because of employment opportunities going on locally for them,” he said. “Or they’re coming to the realization that there’s so much demand on MSHDA’s limited resources that it’s going to take efforts of other municipalities to help come together to bring some of these projects to fruition.”