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Land banks increase focus on affordable housing developments

BY Sunday, November 22, 2020 07:10pm

Land banks are emerging as an important resource to help fill the affordable housing shortage communities are facing in West Michigan and across the state.

Michigan’s first land bank was started in 2004 in Genesee County with the goal of reverting tax-foreclosed properties to productive use. Of Michigan’s 83 counties, 46 now have land banks with similar missions. The state also operates a land bank for the 37 counties, including Kent County, without a land bank authority. 

COURTESY PHOTO

Over the last few years, community leaders and housing advocates have realized the opportunities for affordable housing projects on land bank-owned properties, said Housing Next Executive Director Ryan Kilpatrick. 

Land banks are beneficial for facilitating affordable housing projects because they are a public entity with a primary goal of serving the community and not maximizing profit, Kilpatrick said. 

“One of the things that’s great about land banks is we can be pretty flexible,” said Calhoun County Land Bank Authority Executive Director Krista Trout-Edwards. “We do consider things outside of the highest bid.”

A housing project is less likely to be affordable if the development is left to the private sector, Kilpatrick said. The high demand for affordable housing also can’t be met solely by the private sector alone, especially with high construction costs, he added. 

“In a lot of ways I think we’re still figuring out this tool which has now been around for 10 years, but it has really transitioned from a model of blight elimination to a model of equitable development in the last three to four years as we’ve really begun to acknowledge the rate of development in our core urban areas,” Kilpatrick said.

Acting as developer 

A recent Housing Next study shows Grand Rapids needs at least 5,340 more rental units and 3,548 more owner-occupied units in the next five years to meet housing demand. Housing North, a nonprofit that spans 10 counties in the northwestern Lower Peninsula, showed last year the region would need about 15,000 housing units in the next five years, mostly in rental units. 

“The idea of land banks a decade ago was to address the immediate health and safety concerns of removing dangerous buildings and having an entity that could have and hold these properties,” said Kalamazoo County Land Bank Executive Director Kelly Clarke. “A decade in, there is an affordable housing crisis in Kalamazoo and across the state and country.”

Kalamazoo County’s land bank has served as the developer for several affordable housing projects, Clarke said. Most recently, the land bank was the developer of 24 units of senior housing in the county, and is engaged in redeveloping a number of existing structures throughout the city.

“That role has allowed us to engage in efforts that align with our values, which is to ensure residents near properties both influence and benefit from redevelopment,” Clarke said. “We typically include a process at the beginning of our projects that allows the community to come up with a vision for what they want to see in the redevelopment.”

Residents have regularly articulated a strong desire to see more mixed income and affordable housing projects, Clarke said. 

“When we have reached out to the community during the strategic planning process we’ve heard people say they want us to stay engaged in transformational projects, and in a limited capacity we’re able to do that,” Clarke said. “It doesn’t always make sense for us to be the developer — we typically limit ourselves to one project at a time.”

Overcoming challenges

The biggest challenge to building affordable housing continues to be resources and funding, Clarke said. Land banks can help offset some of these costs in some cases because the 2004 state law allowing for the authorities provides counties with a toolbox to address vacant and defunct land.

Sometimes simply making available land known to the wider community so nonprofits and developers know about it is enough to kick off an affordable housing project, Clarke said. Funding tools such as brownfield financing can be used when parcels are under the ownership of a land bank authority, which can fund remediation and site cleanup costs to prepare a site for development.

In Calhoun County, the land bank authority played a role in working with the city and helped advocate for changes in local ordinances to allow for more density downtown, said Trout-Edwards. 

“We were able to show what could happen on our existing properties there,” Trout-Edwards said.

For the Ingham County Land Bank, the goal is always to sell a property for an affordable home or development if possible, said Director Roxanne Case. 

“When we use grant funds, we do request that those properties are sold as affordable housing,” Case said. “When we complete developments, we request, encourage and push the developer to sell or lease some of their units as affordable housing.”

The numbers do not always work for developers to do that, but it is always the goal and what the land bank advocates for, Case added.

“We’re constantly trying to figure out a different avenue to help any developer achieve that,” Case said.

Covering the state capital also makes the Ingham County Land Bank unique, Case said.

“Because of that, I feel like we strive for better housing because it is the capital city, so we try and use that to our advantage because politics do come into play,” Case said. “We try to use that to our advantage as much as we can. We have a really good partnership with the city of Lansing, which I believe makes us more effective.”

Leveraging funding tools to create more affordable housing is also a goal for the Michigan State Land Bank Authority. Creating more affordable and workforce housing is “a priority and need for communities all over the state,” said state land bank Executive Director Emily Doerr.

“Construction costs have gone way up, but we still need to build affordable and workforce housing in Michigan, so we need all the tools we have on the table so that way a developer can partner with us and other statewide agencies for funding tools,” Doerr said. 

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