For Housing Next Executive Director Ryan Kilpatrick, 2018 has been about laying the groundwork to get more affordable housing online in Ottawa County. Next year is “where the rubber hits the road,” when more than 600 new housing units will come online, with more yet in the pipeline, Kilpatrick said. Since January, Kilpatrick has worked with multiple municipalities to increase the amount of affordable housing in the county. He expects more tangible results to emerge in 2019.
Has the affordable housing shortage in Ottawa County gotten better or worse since you started in January?
Technically worse. We’ve got businesses that are still growing. We’ve had some housing supply come online, but not as much growth as we’ve had in our business sector. The gap between the amount of demand and the amount of supply is growing, so technically we have less housing availability now than we did a year ago. Each time one of our businesses grows, it’s likely that they’re going to have to look outside of the county for employees. The growth is great, but we’ve got to be able to keep up with them in terms of the amount of housing supply we provide.
What tangible progress do you expect to see in 2019?
We should have at least 600 new units coming online. We’ll probably start construction on those in mid to late summer. And that’s just projects we have direct involvement with. We’ve got lots of folks in the market that are earning 60 to 80 percent and up to 100 percent of the area median income who are still priced out of the market. But I think there are ways to build housing that meets demand for those market segments without needing to go after a lot of state and federal subsidies just by putting together creative projects, partnering with local employers, doing some scrappy stuff.
What can Housing Next do to break down barriers for affordable housing?
First is working with municipalities. We’ve got six communities across the county that are working on zoning updates. Three communities are working on master plan updates. That’s really the critical first step, for local municipalities to unpack the regulations they have on the books and really begin to understand how minimum lot area, minimum setbacks, minimum working requirements, minimum floor area requirements all impact affordability because they impact size and design and density. Those are the key leverage points that allow us to shave 10 or 15 percent off construction costs. What we’ve got to do is stop using metrics that are based on market demand in the 1980s and start using metrics that are based on market demand in 2018.
Aside from outdated local regulations, what other barriers are you seeing?
One of them is thinking through local incentive policies. Right now, the cost of construction is high. In our cities, as we all know, taxes are higher than they are in townships. But that’s where a lot of this segment that wants walkable urban places wants to be, close to downtowns. So it’s thinking through what are the best ways to utilize the economic development incentives to spur the kind of growth that’s necessary, but still produces net positive tax gains for the municipality. We’re working on this for Holland to really understand and unpack how we ensure that net revenue is positive to the city, while not saddling the project with such a high tax burden in the first couple of years before stabilization that the project never gets off the ground.
Are you seeing developers take new approaches to fund projects?
There’s a lot of talk at the state level right now about creating some innovative financing packages. (Michigan State Housing Development Authority) and the (Michigan Economic Development Corp.) are working together to try to leverage their 4 percent loans from that housing tax credit program with traditional MEDC tools like brownfield TIF (tax increment financing) and CRP (Community Revitalization Program). And then we’ve got Michigan Community Capital that’s investing in workforce housing with equity investments. The Michigan Land Bank is doing a lot to support local land banks and municipalities.
What municipalities are responding most to Housing Next’s work?
One of the biggest bright spots is in Grand Haven Township. They’re working right now on a zoning overlay that is called a ‘missing middle overlay zone.’ They want to allow for more two-family and four-family and small apartment buildings to occur in established neighborhoods in and along key corridors. That’s what we’ve been missing for 30 years. Had we allowed those types of buildings to be constructed where they made sense in a lot of our urban neighborhoods, we’d have significantly more supply available in those high-demand markets than we do now. Having a township do that first is really exciting.
What should the newly-elected administration know about barriers to affordable housing?
The MEDC would probably give you the two examples of Coldwater and Grayling where they’ve created this new problem: They incentivized these big manufacturing deals to occur in locations which didn’t have any housing. By giving a manufacturer a big economic development incentive to create a lot of jobs, they solved one problem, but didn’t recognize ‘now we need to build a bunch of housing to satisfy the demand that we’ve induced.’ We’ve got to think about all of those problems on the front end. Before we execute on big economic development incentives, we’ve got to also have a plan for housing in place, so that we can execute on those things simultaneously and not build the factory, add the jobs, and suddenly realize, well we can’t attract the talent because nobody can live here.
This year, you laid a lot of groundwork. What is 2019 about for Housing Next?
Next year is really going to be where the rubber hits the road. We’ve got several projects in the pipeline now. We’ve got several ordinances in the process of being updated. Getting those things right is going to be important, because from a zoning perspective, those policies are going to be in place for decades. From the development side, we want to be really intentional about building mixed-income neighborhoods with a diversity of housing choice so that we’re not building more apartment complexes that are concentrated pockets of poverty, but we’re building neighborhoods that have a multitude of choices embedded within them.
Interview conducted and condensed by Sydney Smith.
MiBiz real estate & development news coverage is supported by the Michigan Economic Development Corporation, offering comprehensive suite of programs and services to support your company needs for continued growth. Visit michiganbusiness.org/pure-partnership for information. This sponsorship is advertising. It has no effect on editorial consideration in MiBiz.