GRAND RAPIDS — The city of Grand Rapids is partnering with the Grand Rapids Community Foundation on what has been a years-long process of creating a fund to increase the amount of affordable housing.
The city’s Great Housing Strategies initiative first recommended creating a dedicated housing fund in 2015. The Grand Rapids Housing Commission helped move the fund forward in 2018, but momentum on the project slowed when the former Kent County Land Bank Authority disbanded.
About $900,000 sits in the housing fund today, but a proposed policy change soon to be considered by the Grand Rapids City Commission could help grow the balance to at least $20 million by 2025.
“We are ready to move forward with a slightly different direction — still with the housing fund and involvement with the Housing Commission, but in a different way,” said Grand Rapids Deputy City Manager Eric DeLong.
The City Commission will likely vote in June on a new operations policy for the Grand Rapids Housing Fund and establish a new board to make spending decisions. The Grand Rapids Community Foundation will act as the fund’s fiduciary.
“Essentially, the city would invest these dollars into the Community Foundation, which would then be the steward and try to earn as much money as possible through portfolio management so that there is additional interest earned that could be spent within the community and they would be the steward long term,” said Ryan Kilpatrick, executive director of Housing Next, which partners with local governments, developers and nonprofits to remove housing barriers.
The plan is to create a non-endowed designated fund that would allow the city to access the fund at a greater level than an endowed fund, explained Grand Rapids Community Foundation Vice President of Development Marilyn Zack. Other funds have been set up at the Community Foundation for the benefit of the city, but this will be the first relationship the nonprofit has had with the city as a fund holder, Zack said.
“Our role is to simply steward those dollars, take care of them and make sure they have the very best performance,” Zack said. “We will not inform the grant-making decisions.”
Kilpatrick said some years could see significant spending — up to one-quarter or one-third of the fund — based on the city’s significant housing needs. Other years could see far less spending.
About 5,340 rental units across every price point need to be added to Grand Rapids’ housing stock by 2025 to keep up with demand, according to Housing Next’s recent housing needs assessment for the city. Combined with home ownership units, about 9,000 total additional housing units will be needed over the next five years.
Meeting that demand will require more than $1 billion invested in rental housing and about $250 million for gap financing, according to the study.
“We have a big goal in front of us,” Kilpatrick said. “$20 million is our first start, that’s our down payment. We want to be looking for additional state and federal funds to get to housing supply and stability.”
Given those funding disparities, the Housing Fund board will need to prioritize funding in a way that serves the greatest number of households with the greatest needs, while also acknowledging that the current funding can’t solve everything, Kilpatrick said.
Meanwhile, roughly half of the renters in Grand Rapids are cost-burdened — meaning they spend more than 30 percent of their income on housing — and a little more than 30 percent of renters in the city are spending more than half of their income on housing, according to the housing needs assessment.
Homeowners are far less cost-burdened overall than renters in Grand Rapids, according to data in the housing needs assessment. The amount of homeowners who spend more than 30 percent of their income on housing is at 19 percent, and the number of homeowners who dedicate more than half of their income to housing costs is at 7 percent.
The number of cost-burdened Black households far exceeds white households, which needs to be a priority in how the Housing Fund is used, especially in disadvantaged neighborhoods, Kilpatrick said.
“We want to bring more people into this process of growing housing supply and wealth creation across the city,” Kilpatrick said.
The proposed 11-member Housing Fund board would help with this decision making, with three members appointed from each ward in the city, one member appointed by the mayor, and five members appointed from the community. The city manager and executive director of the Housing Commission would also have a seat on the board.
“My hope is we’ll be bringing in some major lenders from our community to be talking through the barriers of homeownership, both from the cost side related to wages or down payments,” Kilpatrick said.
Neighboring communities in West Michigan are also working on ways to address the lack of affordable housing, but Kilpatrick said he is not aware of another city or township
creating its own dedicated housing fund.
DeLong noted that decisions on housing investments will come back to the City Commission for consideration. The goal is to target property acquisition, preservation, pre-development loans for qualified and experienced nonprofit housing organizations, gap financing for housing projects, and to pay for city fees for things like water and sewer connections for housing projects.
Meanwhile, a new fund board would create “much more independence” and opportunities to raise funds, Mayor Rosalynn Bliss said when the housing fund plans were recently presented at a City Commission meeting.
“This opens us up to the possibility of greater investments,” Bliss said.
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