The $14.5 million acquisition of 177 homes in the Grand Rapids and Lansing areas required a “leap of faith” from Ryan VerWys and his team at the Inner City Christian Federation (ICCF).
VerWys, the president and CEO of the Grand Rapids-based nonprofit housing and community development organization, other staffers and numerous philanthropic partners spent much of last summer and fall completing due diligence work for the acquisition of the homes.
Their goal: returning the properties to local ownership.
“I feel like any time you grow as an organization, you’ve got capacity challenges,” VerWys said, noting that the acquisition roughly doubled ICCF’s rental property portfolio.
Over time, ICCF plans to implement a program to convert many of the homes to affordable ownership opportunities for existing tenants.
“We will grow into this. We’re trying to do this in a very prudent way,” he said of the acquisition.
In recognition of the deal and its complexity, ICCF was selected as a winner in the MiBiz Best-Managed Nonprofit Awards in the category for organizations with annual revenues of more than $3 million.
MiBiz broke news in June that ICCF was in talks to buy the housing portfolio from Residential Dynamics Group LLC, a Chicago-based real estate investment fund that quietly amassed the homes in the wake of the 2008 economic downturn.
ICCF closed on the $14.5 million acquisition in late November.
VerWys said his organization competed against 12 other bidders for the RDG portfolio, all of them out-of-state investors. The opportunity to get the homes back under under local ownership instead of another institutional investor drove ICCF’s pursuit of the deal, he added.
“It achieves local ownership of the properties,” VerWys said of the property acquisition. “It stabilizes and preserves the current rents for the hundreds of individuals and families that — if we didn’t buy the homes — would have seen their rents go up. That’s kind of the simple, easy win.”
The ICCF acquisition comes as many real estate and government sources have described Grand Rapids as being in the middle of an affordable housing crisis.
To that end, research from Apartment List, a San Francisco-based apartment listing and research firm, found that rents in Grand Rapids rose 1.7 percent in December on a year-over-year basis.
While higher rental rates have been a boon for landlords and apartment developers, organizations like ICCF contend that the increased costs act to displace many long-time residents.
“For us as an organization, we exist to be a servant leader in the community,” VerWys said of ICCF’s core mission. “We’re called to love our neighbors, and our neighbors are experiencing a housing (issue); we should do something about that.”
To help finance the acquisition, ICCF tapped The Barnabas Foundation, a Crete, Ill.-based Christian philanthropy organization, for its senior debt in the form of a 35-year term loan, said VerWys, adding that its debt repayments will help finance other philanthropic initiatives, creating a “double impact.”
The organization also leveraged grants from CDV5 Foundation, Peter C. and Emajean Cook Foundation, Dick and Betsy DeVos Family Foundation, Doug and Maria DeVos Foundation, Frey Foundation, National Christian Foundation of West Michigan, David and Carol Van Andel Foundation, Jandernoa Foundation and the Wege Foundation.
While ICCF has frequently tapped Low Income Housing Tax Credits (LIHTC) for its affordable housing projects, VerWys said seeking public funds and grants for the RDG acquisition would have been too time-consuming.
While the RDG portfolio acquisition was time-consuming, ICCF also continued its work on other housing developments around the city over the last year.
The organization is working on LIHTC-funded, multifamily affordable housing projects in Grand Rapids’ northwest and southeast quadrants. It’s also in the exploratory phase for projects at Eastern Elementary and the former Department of Social Services building at the intersection of Franklin Street and Madison Avenue in Grand Rapids.
Those projects come at a time when officials in the city of Grand Rapids have emphasized adding to the area’s housing stock with more affordable housing inventory and up-market projects.
VerWys acknowledges that nonprofit developers like ICCF can certainly impact the supply of housing, but they need to work with many partners to solve the large-scale issue of housing affordability.
“I’m encouraged that there’s a collaborative spirit among the nonprofit housing developers. There’s even some collaboration with for-profit developers,” VerWys said. “It’s a collaborative effort to produce mixed-income housing. We know nonprofits aren’t going to solve the affordable housing crisis by ourselves. The policies the city is exploring currently will hopefully … bring others to get involved in solving the issue.”
Inner City Christian Federation
Mission: Equitable opportunity, affordable homes, thriving neighborhoods
Service Area: Grand Rapids
Executive director: Ryan VerWys
Number of employees: Between 45 and 50
Annual revenues: $4 million
Management best practices:
- Servant leadership: I believe my role as a leader is not about position or privilege. It’s really about service and helping the people around me excel at their strengths. I’m thankful that being the leader of an organization like this doesn’t require me to be the smartest person in a room all the time.
- Asset-based community development: That’s an approach to community development that says rather than starting with what we don’t have in the community or with our deficits, we should start with the strengths and gifts that are there already.
Board of directors: Kevin Einfeld, BDR Custom Homes Inc.; Andrew Miedema, Mercantile Bank; Jack Bosscher, Calvin College; Arlen-Dean Gaddy, Jennifer Maxson & Associates; Teresa Jones, CRCNA; Jason Kuiper, InOnTime Inc.; Tom Paarlberg, Greenridge Realty; Johana Rodriguez Quist, Kent School Services Network; Don Van Stee, Don Van Stee Painting; Eric Washington, Calvin College
Editor’s note: This story has been updated to correct the location of the former Department of Social Services building.