Legal Aid asks MSHDA to investigate fair-housing issues at GR properties

BY Wednesday, August 21, 2019 10:14am

GRAND RAPIDS — Legal Aid of Western Michigan is asking a state agency to investigate alleged fair housing violations that negatively affect minorities and people with disabilities at properties owned by Midland-based Live Downtown Grand Rapids LLC

Live Downtown Grand Rapids and its affiliate Brookstone Capital LLC have received millions of dollars in federal tax credits administered by the Michigan State Housing Development Authority, but after developing 10 projects in Grand Rapids, they “seem to not be interested in properly serving the low-income community in Grand Rapids,” according to an Aug. 8 letter Legal Aid sent MSHDA. 

20 Fulton East PHOTO BY: SYDNEY SMITH

“This disinterest manifests itself in policies that impact, and perhaps target, minorities and disabled applicants and tenants, that encourage students and young professionals as tenants, and that permit fees that low-income tenants struggle to pay,” John Smith, strategic litigation attorney at Legal Aid, wrote to MSHDA. 

The request follows a pair of lawsuits that Legal Aid, a nonprofit that provides free legal services to low-income residents, filed over the last month against Live Downtown in the U.S. District Court for the Western District of Michigan that allege the company violated the U.S. Fair Housing Act. The lawsuits target practices at two of the company’s properties: 101 South Division Lofts and 20 Fulton East.

In its letter to MSHDA, Legal Aid asked the Michigan housing agency to conduct its own investigation and “stop these bad practices.”

Smith told MiBiz the letter to MSHDA is intended to “address problems that we have identified that are broader than, and in addition to the issues we raised in the lawsuits.”

Live Downtown declined to comment on the pending litigation, saying: “We have engaged with legal counsel and we have no further comments at this time.” When asked about the MSHDA letter specifically, 20 Fulton Property Manager Stacey Chapman provided a statement to MiBiz about Live Downtown’s “quality affordable housing that is well-designed, well-managed and high-quality construction.” 

“We have a highly skilled, engaged and diverse workforce in Grand Rapids who provide exceptional customer service to our tenants,” Chapman wrote. “As a team, we embrace and practice honesty, fairness and respect for others.”

Misty Elliott, media affairs manager for MSHDA, said in an email to MiBiz that “a team is working on a response” to the Legal Aid letter and declined to comment further.

SYSTEMIC PROBLEMS

The lawsuits accuse Live Downtown of excessively restrictive policies for reviewing applicants for tenancy and eviction policies that have left minority and disabled households underrepresented in the company’s properties compared to other developments that have received federal low-income housing tax credits (LIHTC). MSHDA allocated the tax credits for both Live Downtown properties included in the lawsuit. 

The lawsuits represent a systemic issue with Live Downtown’s policies, Smith told MiBiz, which is why Legal Aid followed up its lawsuits with the letter to MSHDA. 

“We see this developer who is accepting significant federal dollars to provide low-income housing and affordable housing, and we’re concerned they’re applying screening standards and eviction standards that seem to negatively affect the very people they accepted that money to serve,” Smith told MiBiz

According to the letter to MSHDA, Legal Aid alleges Live Downtown’s policies led to screening discrimination, race-based eviction discrimination, poor response to reasonable accommodation requests and family status discrimination. Legal Aid also alleges Live Downtown charged unreasonable and non-customary fees, including those for balconies, washer/dryers and amenities. Legal Aid says MSHDA policy does not appear to allow developers receiving affordable housing tax credits to charge tenants for some of those fees.

LACK OF REPRESENTATION

In an analysis of MSHDA data, Legal Aid found that minority communities are “more negatively affected” by Live Downtown’s policies than other groups. Legal Aid found 1.51 percent of households in Live Downtown’s properties have a resident with a disability. In similar properties, 9.47 percent of households have a resident with a disability. 

Also, there are half as many black residents in Live Downtown properties than at similar LIHTC properties in Grand Rapids, according to Legal Aid. The nonprofit also found some of the two-bedroom units were occupied by just one adult, or two adults with no children. 

Legal Aid says Live Downtown is not renting to minorities on the scale it promised when it was awarded LIHTC, according to the letter.

MSHDA has a “very robust” system of vetting and checking on developments that apply for and receive tax credits, said Chad Benson, LIHTC allocations manager. A team checks whether the development as proposed is financially feasible and that it would be compliant with housing policies.

An analyst assigned to the development tracks its progress throughout construction to make sure it’s meeting timelines and other requirements, Benson said. When Benson’s team signs off, another group at MSHDA monitors the development through a 15-year compliance period, and would continue to track the deal for as long as the development has committed to staying affordable, which is a minimum of 30 years.

“It’s a pretty robust process of analyzing the deal that comes in, and then also monitoring the deal as it continues through operations,” Benson said.

On Aug. 8, Elliott told MiBiz via email that there have been no changes in tax credits for the two properties involved in the lawsuits.

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