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Wanted: A Vision for Affordable Housing

'Cheap' rural housing can financially trap struggling families

November 24, 2010 | By Glenn Puit
Great Lakes Bulletin News Service

Glenn Puit/MLUI
  Jennifer Swy would like to live in a house with a yard, but high prices are pushing her family into the countryside, where rents are lower but other expenses are much higher.

Part Two of a series

Jennifer Swy remembers when having a stable home was a far-off dream. The 24-year-old entered foster care at age 9 and jumped from family to family until her late teens. Today, she is mother of three, and she and her husband now have their own dream.

“We’d like to own our own home and give the kids their own yard to play in,” said Ms. Swy, who currently lives in an apartment near South Airport Road, in Traverse City.

Another local woman, 23-year-old college student Kayla Abel, and her husband have a similar dream, although it’s about renting, not buying, a home.

But living either dream in Traverse City, where jobs and schools are close by, seems to be out of both couples’ reach: Housing costs in northern Michigan’s largest city are too high.

So the Swys are searching for their starter home out in the countryside, where land and home prices are cheaper. The Abels, who currently do live in Traverse City, are moving to Leelanau County, pushed by their home’s high rent and utility costs. Their stories are hardly unique, however. One in four homeowners and one in three renters in Grand Traverse County are officially “overburdened” by their mortgage or rental payments.

No wonder, then, that so many people who participated in The Grand Vision, a two-year, citizen-based land use and transportation project that produced a 50-year outline for growth in the six-county Grand Traverse region, said housing was on their mind, too.

A large majority of the 15,000 who attended Grand Vision workshops or filled out preferential ballots said they wanted more housing for working families. A startling 81 percent of participants said they wanted that growth in existing community centers, while 64 percent wanted more walkable neighborhoods. A subsequent scientific survey of residents throughout the region backed those numbers.

However, the Vision and its many proponents are bucking a longstanding trend of growth and development sprawling outside existing cities and villages. In fact, the Northwest Michigan Council of Governments projects that 21 of the Grand Traverse Region’s 24 community centers will see population decline or stagnation from 2000 to 2009, leaving just 24 percent of residents living in incorporated villages or cities.

To meet that challenge Grand Vision supporters are forming a new partnership between public, private, and non-profit organizations that support affordable housing. Known as the Grand Vision Housing Task Force, the group wants better financing tools and zoning ordinances that make it more profitable and easier to build more in-town housing for families like the Swys and Abels.

Difficult Choices
Ms. Swy’s search for a dream home quickly taught her a basic real estate lesson.

“The further out you get, the less it is,” she said. “There’s a huge price difference in the housing.”

The “driving ‘til you qualify” lesson comes with another one: Living in the cheapest homes means spending lots of time in a car getting to work. A recent survey indicates that the average northern Michigan worker spends 40 minutes a day on a round-trip commute —nearly 100 hours of driving a year for a working parent.

Ms. Abel and her husband and grandmother pay $950 in monthly rent in downtown Traverse City. Add in $400 in monthly utility bills, and the Abels find themselves looking for housing in Leelanau County, where, hopefully, they can pay less rent on a more efficient place.

They did look around Traverse City, but realized that they couldn’t afford it.

“If it was just the rent, and not the utilities, we could, but it’s kind of steep,” Ms. Abel said. “If something else comes up and you don’t have the money, what do you do?”

Sarah Lucas, a regional planner with the Northwest Michigan Council of Governments, said the search for low-cost housing forms a vicious circle. In exchange for cheaper mortgages or rents, families usually spend more money on their energy bills and more time and money in and on their cars. Living in a home that is near work, school, and shopping can eliminate the need for a second car—potentially saving thousands of dollars annually in the family budget.

Ms. Lucas added that the housing market collapse made little difference to families like the Swys or Abels.

“Much of our housing stock remains unaffordable to low and moderate-income families, especially in Traverse City,” she said. “And tighter credit restrictions and down payment requirements mean that it's more difficult for buyers to qualify for a mortgage.”

Wanted: More Affordable Housing
So folks like the Swys and the Abels will continue to be outward bound until they can find quality, affordable homes in those villages or cities. By most definitions, a home is “affordable” if it consumes less than 30 percent of household income.

A comprehensive 2009 assessment of the Grand Traverse region’s housing needs demonstrates a significant need for additional affordable housing.

According to the housing needs assessment, Traverse City needs 300 to 500 more rental units for low- to median-income families, as well as rehabs of many substandard single-family homes, older apartment buildings, and mobile homes—places with lower rents but much higher utility bills. However, a 2008 study by the City of Traverse City found just 37 of 231 homes on the local market listed below $125,000.

The assessment found similar needs in other community centers:

  • Rural Grand Traverse County needs about 75 additional rentals and 300 ownership units for low to medium-income families in Kingsley and Fife Lake.
  • Antrim County needs 60 additional rentals and 200 ownerships in Ellsworth, Central Lake, Elk Rapids, Bellaire, and Mancelona.
  • Leelanau County needs 80 additional rentals and nearly 200 ownerships in Empire, Suttons Bay, and Northport.
  • Benzie County needs 70 additional rentals and 250 ownerships in Frankfort, Elberta, Honor, Benzonia, Lake Ann, and Thompsonville.

Financing Teamwork
While the numbers are plain, the solutions are complex, requiring long-term planning and partnerships between government, non-profits, and the private sector.

The Grand Vision is fostering some of those partnerships, thanks to Ms. Lucas, who leads the Vision’s housing task force, comprised of community leaders, developers, and advocates.

The network has set goals for accelerating affordable housing development: establishing financing tools to help developers overcome high land costs; and building community support for streamlined zoning and inspections to ease other development costs.

Art Jeannot, co-owner of a successful, new, 36-unit affordable housing complex in Frankfort, is particularly interested in ways to finance such projects. Mr. Jeannot, who said that his project, Gateway Village, seems to have an amazing ability to improve people’s lives, thinks it’s crucial to find investors willing to finance similar projects.

“Workforce or affordable housing was a need identified in all communities that participated in the process,” Mr. Jeannot said of the Grand Vision project. “In some cases it is housing for people with special needs, families or individuals living in substandard conditions or people that make too much to qualify for government assistance but do not quite make enough to afford quality housing.”

But, even before the Grand Vision process began in earnest in 2007, Grand Traverse County already was successfully using several public financing tools designed to promote more affordable housing in its cities and villages. In Traverse City, the county used state brownfield redevelopment funds to turn two eyesores—an abandoned iron foundry and a shuttered state mental hospital—into three of the town’s hottest properties: the Rivers Edge and Midtown condominiums, and Grand Traverse Commons. All three are examples of how smart public investments can re-energize downtown housing.

More recently, Grand Traverse County formed a Land Bank Authority, a new, state-sanctioned tool that can convert vacant, abandoned, and tax-delinquent properties into productive use. The county is considering using the Authority in an innovative way by funneling money from sales of those properties into an Affordable Housing Trust Fund.

Sonny Wheelock, a member of the Grand Traverse County Ways and Means Committee, supports that idea. He said a real benefit of using money collected from tax foreclosure sales is that it allows the county to get matching funds through grants and other sources. That makes the fund a much more potent tool for boosting affordable housing stock.

“I think what we have to realize is how innovative this is,” Mr. Wheelock said. “Taking money from tax foreclosed properties and turning it into leverage for affordable housing—it's unheard of throughout Michigan and the country...and it will make a difference in our community.”

The regional housing task force will work to bring these tools to other communities.

Streamlining for Success
The other key to affordable housing, according to Kim Pontius, director of the Traverse Area Association of Realtors, is zoning that’s less restrictive for affordable housing developments. He favors “inclusionary zoning” giving developers higher-density zoning in exchange for including affordable units in their plans.

“We have to think differently about what people want and how to provide it,” Mr. Pontius said, “by leveraging some New Urbanist-type thoughts into our downtown areas and getting more residential built.”

Max Strickland, a longtime northern Michigan home construction and “green building” leader, added that building inspection needs streamlining.

“There seems to be a lack of concern on the part of some building officials regarding holding up jobs and making sure everyone is ready for inspections,” Mr. Strickland said. “That’s due to cutbacks in staff, but it is a serious impediment. If you can't get your inspection or permit, it raises costs, and that certainly affects affordable housing.”

There’s another problem with zoning, according to T.J. Ewing, who served on the Cleveland Township Planning Commission and works in the construction industry: generally, in reviewing other government planning and zoning documents, he’s observed that community master plans often call for affordable housing, but zoning ordinances often instead favor high-end housing.

“Rarely have I seen it get to the nitty-gritty of zoning, jurisdictions, and districts that name affordable housing locations and contain the underpinnings of how developers can use some of the programs out there,” Mr. Ewing said. “You might see some concepts of affordable housing, but there is a disconnect when it is brought down to the details of a zoning document.”

Mr. Pontius also said it’s crucial to steer housing development toward community centers, where streets, sewer and water, public safety and utility services should already exist.

Without them, he warned, developers quickly encounter “a high expense to tie into sewer systems, to the point where the project is fiscally unstable.”

But the greatest challenge facing affordable housing in northern Michigan is gaining communitywide acceptance and understanding of its value. Ms. Lucas said the Grand Vision can help educate the public on how children, families, and communities benefit from affordable housing.

“The housing task force has been a support network for housing ‘implementers’ that addresses issues that are common across the housing spectrum, like policy, funding, and awareness,” Ms. Lucas said. “These things may seem intangible, but have huge impacts on the ability of housing providers, private partners, and local governments to get things done.”

Glenn Puit is a policy specialist for the Michigan Land Use Institute. Reach him at glenn@mlui.org. You can read Part One of Families on the Edge: Designing Communities that Work here, and meet Joe Bagby, of the Michigan Youth Opportunities Initiative, who introduced us to Jennifer Swy and Kayla Abel, here.

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