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State lawmakers advance key housing bill package to help resolve supply shortage

BY Thursday, June 16, 2022 06:09pm

State lawmakers this week advanced a housing bill package that seeks to make it easier for developers to build new projects and address a widespread need for housing at various price points.

The four-bill package passed a House committee Wednesday on a 7-2 vote, moving it to the full House after the state Senate overwhelmingly approved the measures late last year. 

Jennifer Rigterink, assistant director of state and federal affairs at the Michigan Municipal League. COURTESY PHOTO

The bill package — which calls for expanding Neighborhood Enterprise Zones, property tax abatements for housing, and tax benefits for rural workforce housing — could be considered by the full House of Representatives next week.

The Housing Michigan coalition, a group of organizations working to create more pathways to developing workforce housing across the state, crafted the legislation. The group’s executive committee is made up of the Grand Rapids Area Chamber of Commerce, Housing North, the Home Builders Association of Michigan and the Michigan Municipal League

“We have a critical housing shortage in our state,” said Jennifer Rigterink, assistant director of state and federal affairs at the Michigan Municipal League. “In some areas, it’s an affordability issue and in other areas there is simply a lack of stock. We’re trying to help communities that are in dire straits for housing and give them more tools to attract developers to these projects.”

The incentives and tools in the bills would be customizable for local governments depending on residents’ housing needs, and focus on infill housing around existing infrastructure, said Joshua Lunger, director of government affairs at the Grand Rapids Area Chamber of Commerce. 

The tools are all meant to be controlled locally and address housing needs in the 60 to 120 percent area median income, Lunger added.

“I met with a community near Grand Rapids that has done a lot of the work they can do locally, and just because they are right outside of the city, they don’t have the opportunity to create the economic and community investments that they’ve zoned for,” Lunger said. “These tools are exactly what they need to catalyze the first housing investment on their corridor.”

A statewide trade group representing home builders says the legislation would help expand on existing programs. 

“Our builders and developers could utilize any of these tools — they’re all basically current concepts that we’re expanding,” said Dawn Crandall, executive vice president of government relations for the Home Builders Association of Michigan. “All of these tools fall in the 60 to 120 percent area median income range, a specific level that’s being targeted because they don’t really fall into any other programs that are available.”

Crandall noted a housing shortage across all price points, even at the high end, as the amount of units under construction falls far behind what is needed.

“Throw in inflation, and it becomes really hard to put pencil to paper without incentive tools that are negotiated with municipalities,” Crandall said.  

NEZ expansion

The bipartisan, four-bill package included Senate Bill 422, which would allow for property tax abatements for residential facilities and housing. Senate Bill 362 would provide property tax exemptions for some residential and rehabilitation projects, and Senate Bill 432 would allow for payments in lieu of taxes for rural workforce housing projects.

Senate Bill 364, sponsored by state Sen. Jeremy Moss, D-Southfield, would expand the state’s Neighborhood Enterprise Zone program, which was created in 1992 to incentivize housing development in “eligible distressed communities” through tax exemptions on new and rehabilitation projects.

The “eligible distressed communities” definition is based on population and poverty level of an area, but over the years legislators have been able to advocate for communities they represent to get on the list, Rigterink said.

However, eligible areas are typically more distressed urban core neighborhoods that have a high cost of developing. Michigan has 148 total eligible communities — mostly made up of cities — where developers can apply for incentives including Neighborhood Enterprise Zones, Brownfield Redevelopment incentives and Obsolete Property Rehabilitation Exemptions.

“(Neighborhood Enterprise Zones) are very limited to who can use them, but they are supposed to help with developments and rehabilitation projects in areas that aren’t the most desirable to developers because the cost is more than you will be able to get back for a project,” Rigterink said. “There are so many areas — such as the city of Southfield — that would take advantage of this tool in their existing neighborhoods but they are not able to.”

The bill would allow local units of government to designate a Neighborhood Enterprise Zone if it “encouraged compact development, contained five or more existing residential units per acre at the time of designation, was adjacent to existing development, could utilize existing infrastructure, and had access to municipal water and sewer services on at least one frontage,” according to a bill analysis.

While the legislation would expand the number of eligible communities for Neighborhood Enterprise Zones, it also includes some guardrails, Rigterink said, noting that a property would have to be adjacent to an existing development with existing infrastructure to dissuade sprawl.

“We don’t want to put a subdivision in a cornfield where there is no existing infrastructure,” Rigterink said. “We want to encourage compact development. This is more for infill and developments in existing built-out areas.”


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