The economy in Northern Michigan may differ greatly from West Michigan’s, but leaders in both areas of the state have started to grapple with a common challenge: a lack of affordable housing.
As in the greater Grand Rapids region, the inability of workers to find available affordable housing has reached crisis levels across the northern Lower Peninsula, in both rural markets and in cities like Traverse City and Petoskey.
Quick solutions to the housing problem have proven elusive, and in the meantime, major regional employers such as health care provider McLaren Northern Michigan increasingly are struggling to fill open positions.
“We’ve heard it time and time again, even in high-level positions,” said Carlin Smith, president of the Petoskey Regional Chamber of Commerce. “Companies have spent time and money recruiting, they made an offer, but it was ultimately declined because the potential employees couldn’t find a suitable place to live. It’s happening and impacting employers at all levels, and I’m bold enough to say we’re in a crisis position.”
To date, most efforts aimed at addressing affordable housing have focused on the southern half of the Lower Peninsula, leaving Northern Michigan communities on their own to create options and retain jobs, sources said.
However, with a new $500,000 fund and more institutional support on the way, the Northwest Michigan Rural Housing Partnership (NMRHP) is gaining steam to push the cause forward.
The partnership developed as a collaboration of Traverse City-based regional planning agency Networks Northwest and the Northern Michigan Community Health Innovation Region, along with other public, private and nonprofit contributors, including Grand Rapids-based Frey Foundation.
The partnership’s efforts will be focused on a 10-country region that includes Antrim, Kalkaska, Grand Traverse, Leelanau, Benzie, Manistee, Charlevoix, Emmet, Missaukee and Wexford counties.
“The Frey Foundation has had grantmaking impact in Northern Michigan since its inception,” Holly Johnson, executive director of the Frey Foundation, told MiBiz. “Specifically, we look for ways to support Charlevoix and Emmet counties — but we care deeply about the entire (Northwest Michigan) region.”
The Frey Foundation’s investment in the partnership aligns with its recent $150,000 investment in a Grand Rapids housing trust led by the Inner City Christian Federation that’s designed to encourage low-income homeownership in the city’s core neighborhoods, as MiBiz previously reported.
In 2015, the Frey Foundation also helped fund a study that was later published in Bridge Magazine called “Poverty in Paradise,” which outlined affordable housing as one of Northern Michigan’s key challenges, along with public transportation and available daycare.
“(Frey Foundation) is actively working to bring awareness and address the lack of workforce housing in all of the communities that we support,” Johnson said. “Our work in Kent (County) looks different than our work in (Northern Michigan) because the needs, scope and partner agencies are better served with custom approaches.”
In general, the economics of developing housing that meets the needs of low- to middle-income residents in the region has rarely made financial sense for would-be developers, according to sources. Investors have proposed and ultimately walked away from countless projects because of a widening financing gap associated with building workforce housing.
In some cases, the plans died because of pushback from local planning and building authorities, or because of conflicts with the area master plan, according to Scott Smith, an Emmet County resident and longtime affordable housing advocate.
Smith sits on the board of the Emmet County Land Bank Authority, the Brownfield Redevelopment Authority and the Emmet County Housing Council. He’s also one of the core voices within the Little Traverse Bay Housing Partnership (LTBHP), an affordable housing advocacy group that has carried the torch for the issue in the area.
Smith and his collaborators within the LTBHP are joining forces with the new Northwest Michigan Rural Housing Partnership and tentatively slated a roundtable discussion for late January, as this report went to press, to bring area stakeholders together in smaller groups to begin discussing ways forward.
In the past, gap financing such as the Low Income Housing Tax Credits and other incentives were the only tools that made affordable housing projects development viable. Yet as building costs continue to increase and a shortage of talent in the building trades grows, these traditional financing tools are becoming scarcer, sources said. Beyond that, the credits often go to projects in denser cities where the scale of development is larger.
In seasonal communities like Petoskey, it’s easy for an issue like affordable housing to get swept under the rug, Smith said.
“Almost all of (Michigan’s) housing policies and funding are biased to the southern region of state,” he said. “There’s always a number of issues, but personally, I’m interested in the financing gap in this community. There should be some creative ways to provide grants or other funding for projects.”
Given the great amount of wealth in Northwest Michigan, the community should be able to find a way to create an investment mechanism, similar to short-term bond funding, that could give investors a return, Smith told MiBiz. While return rates would likely be lower, they could still be competitive with money market investments, he added.
“How those would be structured and the kind of tools we can use are the tricky and difficult questions,” Smith said.
Still, Smith and others working on the partnership are optimistic the new organization will help identify region-specific answers to the problem.
“We’re nearing the end of setting up the organizational details, which is always time consuming, and hopefully in early 2019, we’ll get to the real work,” he said. “These are all issues we can work through, but we have to start thinking in new and different ways.”
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