GRAND RAPIDS — Within three days of opening applications, 500 people applied to live in the new Garfield Park Lofts’ 36 units of affordable housing.
This came as no surprise to Jeremy DeRoo, executive director of Linc Up, a Grand Rapids-based developer of affordable housing. The three-story building at 100 Burton Street SE contains two- and three-bedroom units with rents subsidized for residents earning at or below 30 to 60 percent of the area median income.
“It speaks to the shortage we have of quality affordable housing in our city,” DeRoo said.
Though 6,000 housing units have been added to the city of Grand Rapids in the last six years, affordable housing is still quite in demand. Recent research has shown increasing density of housing at all levels frees up some affordable housing, but housing advocates say this leaves out opportunities at the lowest income levels.
Research from the Upjohn Institute in Kalamazoo shows a ripple effect of new, multi-unit buildings in 12 large U.S. cities. Economist Evan Mast found that building 100 new market rate units opens up the equivalent of 70 units in neighborhoods earning below the area’s median income. In the poorest neighborhoods, it opens up the equivalent of 40 units, Mast found.
“The big contribution (of the research) is just to say that when we build this high-end stuff, which is most of what new construction is, it does empirically affect other parts of the housing market,” Mast told MiBiz. “We don’t have a super-segmented world where what happens with the luxury condo buyers has nothing to do with an electrician. We do seem to see connections between different parts of the housing market.”
Mast’s research also showed the benefits of new housing units don’t reach everyone equally, something advocates and affordable housing developers echoed to MiBiz. In the poorest neighborhoods with high vacancy rates, Mast found adding vacant housing units might not impact prices significantly, and it could compound a neighborhood’s deterioration.
Vacated units would not lower rents in areas that are already charging the minimum cost of housing, or the lowest rent required to keep a habitable unit on the market, Mast found.
If the minimum cost of housing cannot be fulfilled, residents need other solutions such as rent vouchers, public housing or landlord incentives to lower prices.
“Unless somebody is losing money by giving the property away or subsidizing the maintenance of the property, there’s no way the market can supply housing to low-income families,” DeRoo said, adding that even if housing was free, those making 30 percent or less of the area median income would not be able to take on the cost of even maintaining the home.
Supply increases “definitely” help families that are above the low-income threshold, particularly now with a housing shortage in Grand Rapids, as well as around the state and country, DeRoo said. Middle income families are struggling to afford housing, and are the ones who could stand to benefit most from increased density, he added.
The demand for housing is underscored by Grand Rapids’ population growth, which surpassed 200,000 residents for the first time last summer, according to U.S. Census Bureau estimates. As well, wages have not increased as quickly as the value of housing.
“We’ve used up our supply of vacant properties,” DeRoo said. “Now there is still pent-up demand that has no supply. Although there has been an increase in supply, it doesn’t seem fast enough to keep up with an increase in demand, which is still putting an upward pressure on rents.”
Creating more density, while it helps some populations, isn’t a silver bullet, said Ryan VerWys, president and CEO of the Inner City Christian Federation, a Grand Rapids-based nonprofit housing and community development organization. He said providing density as the only solution occurs because the market does not tend to care for lower-income people naturally.
“It’s got to be density plus intentionality about including options for low-income families,” VerWys said. “(It needs to be) density plus the low-income housing tax credit, which helps developers build new homes or apartments that are affordable to low income-families, or things like Habitat for Humanity or other subsidized housing options at the same time.”
A hard sell to neighbors
While the need is there, adding housing density is often a hard sell to neighbors.
A recent example came when neighbors vehemently opposed a proposed development by Columbus, Ohio-based Woda Cooper Development Inc. for a 70-unit apartment building at 1865 Eastern Avenue SE for low- and moderate-income tenants.
The Grand Rapids Planning Commission tabled the site plan and special land use approval during a recent meeting, after neighbors expressed many concerns with the size of the building, and how it would fit in with the neighborhood, as well as parking and crime. Woda Cooper sought to demolish a funeral home currently on the site, which is zoned low-density residential. The development could be permitted with a special land use permit.
ICCF has experienced “mixed” reactions when it comes to developments the organization has proposed for lower income families, as some neighbors are cognizant of the housing issue and invite heavier density. Others want to preserve character or other sameness and fear density will negatively affect their neighborhoods.
For developers and local municipalities, the balance between neighbors and housing needs comes with “middle-of-the-road” solutions, VerWys said, like allowing for accessory dwelling units and other forms of modest density increases.
“Neighborhood character is funny in that it’s a fluid and dynamic thing,” he said. “Urban environments are not static. Part of what makes neighborhoods vibrant is that there are a variety of types of housing so people from a variety of situations can live in a community together.”