The Grand Haven Area Community Foundation’s $1.5 million investment in Michigan Community Capital (MCC) is expected to pave the way for the development of workforce housing in Northwest Ottawa County.
The first project could be built on land owned by the city of Grand Haven. City leaders expressed support for the concept during a June 1 council meeting, giving City Manager Pat McGinnis the go-ahead to prepare a purchase agreement with MCC so the nonprofit can move forward with developing the plans.
The agreement will be back before the council June 15 or July 6 for a vote, he says.
Critical price point
The 32-home development is being eyed for land near the city-owned Grand Haven Memorial Airpark. The goal of the project is to provide entry-level homeownership opportunities for people who often struggle to afford market-rate homes.
“We did a housing needs analysis for the county and found that this is the price point that is most critical right now. One of the reasons that we don't have private developers doing this work at this price point is that it doesn't make financial sense," says Ryan Kilpatrick, director of Housing Next.
The slab-on-grade homes will be two to three bedrooms, with one to two baths. The design is inspired by the modest homes built after World War II for returning GIs. The smaller footprint is in line with the average household size in Ottawa County, which is 2.2 residents per household.
The foundation’s investment, which will have to be paid back, lets MCC avoid the interest and fees associated with traditional bank financing. The $7 million project will also require raising a significant amount of additional funding, says Marilyn Crowley, MCC’s vice president of investments.
New territory for MCC
Hadley Streng, GHACF president, is co-chair of Housing Next, created three years ago to look at increasing attainable housing in the county for workers, who make 60-100% of the area median income. The organizations began talking to MCC a year ago about tackling an Ottawa County housing project. Building homes is new territory for the Lansing nonprofit that has a track record of developing and investing mix-used multi-family rental projects.
Previously, the foundation’s investments have been in national and global stocks. Investing in MCC keeps the money local.
“Solving the workforce housing crisis takes innovative thinking, and we believe this milestone, together with collaborating with other organizations throughout Ottawa County, will help get us there,” Streng says.
The goal is to have the homes, priced between $150,000-$250,000, target a critical sector of the middle-income workforce in the area. The housing shortage for this group puts a strain on economic prosperity and job growth.
Keeping down costs
At least half of the homes will be reserved for households that earn 80% or less of the area median income, which would be up to $46,880 annually for an individual and up to $66,880 for a family of four. The house payment — including principal, interest, taxes, insurance, and utilities — would be no more than $1,150 for a single adult and $1,600 for a family of four.
MCC is asking the city to make the land available at little or no cost, allow reimbursement of infrastructure costs – such as road, water, sewer, stormwater installation – using the Brownfield tax increment financing, and reduce the cost of the $320,000 utility connection fee for the project. Without that support, each house will cost an additional $35,000 to $50,000 to develop.
The nonprofit plans to attach a restriction to the homes to ensure they remain in the affordable price range.
“It's not something that someone's going to get in and get a really good deal, watch the property appreciate over three or four years, and then get out and double their money. Those affordable features will be passed on through a structure that's legally binding, which I think that is remarkable,” says McGinnis. “This will serve families for decades to come.”