- There is a lack of affordable housing in west and southwest Michigan as market values skyrocket.

The competition for properties is fierce.

The money made on high end construction homes.

That's putting a squeeze on low and middle income buyers.

The lack of affordable housing for attracting workers is impacting employers.

We discuss the problem and potential solutions on West Michigan Week.

The Grand Rapids Chamber of Commerce has been hearing from its members that the lack of affordable housing is a barrier for tracking today's necessary workforce.

Recent census data indicates over the last 10 years, Kent and Ottawa counties added 900,000 residents, yet built 7,800 housing units.

The cost of a home sold in Kent county has gone up 70% in six years.

Our guests say this is not sustainable.

So what are the solutions?

Joining us are Patrice Griffin, vice mayor of the city of Kalamazoo.

Ryan Kilpatrick is executive director at Housing Next.

It partners with local government developers and non-profits in west Michigan removing barriers to the creation of housing at all price points.

Josh Lunger is Senior Director of government affairs with the Grand Rapids Chamber of Commerce.

He's working with the state lawmakers seeking solutions, and finally Ivor Thomas is director of community development at Habitat for Humanity of Kent county.

It brings people together, building homes and collectively correcting the inequities around affordable housing.

Everyone.

Thank you for joining us.

This is, this has been an ongoing problem.

I hate to say an old economic term.

It's a supply and demand issue.

Josh, I'll reach out to you first.

You and I have been talking about this problem since back in May, Paint the big picture problem so everybody really gets it, and we'll just move on from there.

- Okay.

Well, thanks Patrick.

Its a pleasure to be here with you all today.

So what we know we've got data for Kent and Ottowa counties.

You mentioned the 90,000 people, that it's great to be part of the growing region.

I hope we continue to do that.

I hope we continue to grow jobs, attract people from within and outside of the state to move here.

But as you highlighted, the impact this is having, as we struggle to build the infrastructure, including housing to meet the growth is that prices are going to go up.

So for Kent and Ottawa counties, we know for Kent county, we need about 22,000 units, new units of housing by 2025.

For ottowa county, we're looking at almost 8,000 units.

So 30,000 units in just these two counties.

But as we were talking earlier, we know Muskegon is also pushing hard for more housing.

Barry County, Allergan County, And as I've been working across the state on our initiative with new state tools, through housing, Michigan, we know that everybody's experiencing it.

So you have to really look at all possible options to start moving forward, but the need is, is vast and it's urgent.

So appreciate the opportunity to talk with you all today.

- Patrice, you look at Kalamazoo, the growth dynamics that are happening there, there's a lot happening in Southwest Michigan.

What's it like there.

- Similar to what Josh lifted up, you know, Kalamazoo county, although, you know, I'm in the city, the county as a whole has seen a significant increase as well.

And we suffer some of the same issues that other communities suffer with respects to housing affordability, making sure that it is affordable to the actual neighborhoods that the housing is going to be placed in.

And basically we need to get on solutions that make our housing flow healthy, where currently it is not.

And there are various organizations and various solutions on the way, but we too are in the same, same strengths as other municipalities.

- The governor, Gretchen Whitmer, made a visit in July, I believe $100 million in federal COVID 19 relief aid available to build, I believe 2,000 affordable housing units across the state, but she chose Kalamazoo to make that presentation.

- Absolutely.

And it was wonderful to have our governor come to Kalamazoo and visit some of the affordable communities that are being built such as the Creamery, which does have a 24 hour childcare in it as well.

Because as we know with the workforce development, there's childcare, there are so many overlapping issues that fall into housing and how we need to look at that as a whole to expand our community.

- So holistically, how do we approach this?

Right.

We know what the problem is.

There's just, there just are not enough homes out there.

And I don't know if you can build enough fast enough.

When you take a look at this, are there even enough builders out there to make this happen?

So what is the approach?

I'm going to guess, all of you have maybe a different philosophy here.

And Josh, we'll get back to you with what you're doing in Lansing, but Ryan for you, what has the approach been?

Who are you working with?

We talked about developers, builders.

You're a nonprofit.

How do you make it all work?

- Yeah.

Well, it's about understanding the ecosystem and it's really about recognizing that we've gone for a little over 20 years in terms of under supply of new construction.

And so we've, we've been digging ourselves a hole for more than 20 years and getting out of it isn't going to be an overnight solution.

But what we need to do is, is essentially three-fold, we've got to think about getting as much additional supply online for every price point, right?

Not just market rate, but also middle income and low income households are in need of more supply.

We've got to think about stabilizing strategies for families who are currently at risk.

Josh talked about the data in Kent and Ottawa counties.

The fact that we need a little over 30,000 additional new housing units.

Meanwhile, we've got more than 65,000 households in those two counties that are cost burdened.

They're spending more than 30% of their income on housing.

And so using rent, stabilizing strategies, using other programs to ensure that households at risk don't fall through the cracks and lose housing.

And then lastly, finding new ways to creatively subsidize projects and investment.

And that's some of the work that Josh has been doing with the chamber on new proposals to help support new development and to preserve existing affordable housing.

But that also means getting creative with other partners, whether it's faith-based partners, nonprofits, for-profits, we've got to have everybody around the table and working collectively towards solutions.

- What are the biggest barriers right now?

Ivor, I'll get you in on this conversation.

What are you seeing from habitat's perspective?

- As the biggest challenges?

- Yeah, what are you seeing?

- Well, it's all of the above and you know, I really want to just thank all of the partners on this call because I think you're all addressing important components of this.

It's nothing we can solve alone.

There's definitely a shortage of housing supply.

But what we're discovering is that there are more loan ready families in these income groups than people understand.

It just takes a little bit more work to find them.

So we are looking at serving the 60 to 80% AMI group, which is something that historically we've stopped at 60%.

And that's helping a little bit with finding buyer ready families.

But the challenge is there it's, it costs more to build something than an low-income family can buy.

There's just, there's no secret to that.

Now.

What's good though, in terms of the opportunity is we're finding that we can build a home very close to the amount that it appraises for, which is normally a good thing when you're a non-profit, it's just that that appraisal amount is outside the reach of many, without some sort of a financing strategy.

So I guess what I would sum up, Patrick, is it's an issue of affordable houses, but houses are only as affordable as the incomes and the loans that people have to buy them.

So we're really trying to address both.

- Josh.

You've been making trips to Lansing, trying to work through this with a state lawmakers here in west and southwest Michigan, and beyond.

The problem is widespread.

What are you hearing?

What is some of the feedback that you are getting and what are some of the, the bills that might be out there to help with regulating or deregulating?

However you want to view this, to put more homes on the market.

- Yeah.

And I want to just reiterate, it's a great transition from what everyone else just said with the complexity of this issue.

If it was easy to solve, we'd have already have solved it, right?

It is going to be a long term commitment to dig our way towards a healthier housing market.

When we started partnering with the Home Builders Association of Michigan, the Michigan Municipal League, and some other nonprofits called, especially housing north out of the northern lower peninsula, our focus was okay, let's go out to all these groups we all partner with and say, what can we do that could be done quickly, fairly quickly, Lansing terms quickly.

And we took about 40 ideas, and we narrowed it down.

We went out to sponsors and we ended up with six.

Well, more than that, but six have so far moved, of bipartisan bills that have been through the Senate, and are now sitting in The House and we're hoping to have them, or at least a majority of them, done and signed into law by the end of the month.

And, and we really focused on a niche.

So we know there's tools for low-income like, well, income housing tax credits for that very low income households.

The market can provide anything, you know, 120% of the area median income and above.

And we need a lot of that, but we don't need more tools for that at this point, We have a peak demand, especially in west Michigan, of that kind of 50 to 120% of the area median income.

And what do we really have to deliver that product?

Not a whole lot.

Right.

And we've been, folks like Ivor, We've talked about what's going on in Muskegon, some things in Holland and grand rapids, and I'm sure Kalamazoo, they've gotten really creative to try to deliver that product.

But let's create some tools that are designed for that product.

And so we've got a package including west Michigan sponsorship from Senator Winnie Brinks and Senator Roger Victory, here in Kent and Ottowa counties, that have a set of tools that a local government can partner on a project with a for-profit or nonprofit developer and say, okay, well, you're going to build this.

We'll give you a property tax abatement if you meet these affordability requirements.

And so it's flexible enough.

Our whole thing has been flexibility and local control, because we know the need is going to be a little bit different in Muskegon and in Grand rapids and Kalamazoo than Travers city.

So by allowing for the local project to be site-specific, they can look at these are the realities, the economic and other realities of this specific proposal.

We can get more built more quickly than if we had done something more heavy handed and it's been well received.

We had super majority vote in the Senate.

Almost, I'd say three quarters of the Senate, both Democrats and Republicans voted for it.

And I'm hoping we exceed that in The House when we get it to The House floor, but working through some of these things with the departments with the administration has taken some time because we want to make sure this gets done and it gets signed into law, but I am going to be relentless.

And I told the legislators, this, that we want this done by October because we want to get these tools into use.

we want to get this done and then start looking at other ways we can address it, some of the workforce issues in the industry and things like that.

But I just got to say that, the collaboration and the group that's come together, we've got more than a hundred organizations supporting housing in Michigan, now.

It's like nothing I've ever seen before.

There is so much unanimous support that we need to do something, so let's get on it, while that interest is there.

- Will that be enough?

I mean, this market is so hot, right?

I mean, you, everybody wants to make money in a hot housing market while they can, so will those bills be enough to, to spur or to encourage those projects?

- I'll jump in.

And then I think Ryan, or maybe someone else can jump in too.

But what I think is the best possibility is we're going to create supply and area right now where we can't, where the greatest need is.

And what that's going to do is take a little pressure off the next rung down the ladder, the next one down, The less we do on the top end, the more pressure goes down.

If I'm trying to buy something at the 120 level, and there's six of me and, and I lose out, well, the only thing I can do is go down and, and you see the pressure build on those with the least resources, you know, we're all competing on cost.

Well, the folks with the most resources are going to be able to compete the people that don't have as much.

And so they, the folks at the bottom of the ladder, that proverbial ladder, they end up with the biggest burden.

So we're trying to address the area where the most constraint is and hoping that it has a positive impact on the whole housing market.

I'll let Ryan conclude with that rest of that statement.

- Yeah.

Well, I've been lucky to be able to work with Josh on some of these proposals and big kudos to Senator Brinks for putting forth a proposal that's really going to help us preserve some of our existing affordable housing that isn't currently income restricted.

And the opportunity to do that is really critical.

Because as Josh is referencing, when you have higher income households who want to live in neighborhoods that have historically been low and moderate income households, the competition is unfair, right?

I mean, if you're of limited income, it's very hard to compete with somebody who can afford to spend $1,200 $1,300 a month more than you can on rent or on a mortgage.

And so Senator Brink's bill is an opportunity to ensure that we can preserve the housing that is affordable today and for the long-term, but we simultaneously have to work on other adjustments to really support more supply everywhere at all price points.

And we want to focus on partnering, not only with our urban cores, but also with our suburban communities and our townships to find opportunities for every community in every region to participate in the housing solutions.

And to understand that when they allow a little bit more supply in their community, it takes the pressure off all of their neighboring communities.

And so we've seen a lot of good movement from some of our core cities, and now we need to see more movement from some of our suburban and township partners who can also come along and benefit from this residential growth opportunity while simultaneously reducing pressure on low and moderate income households.

- Patrice, what are some of the pressures in Kalamazoo, and will this work in your mind, is this going to get the ball rolling?

- I mean, absolutely.

We have some of the same pressures as a municipality.

It's our responsibility to create a place where affordable housing can be built.

So that's in zoning, that's in your fair housing laws, because there are so many barriers to housing that, you know, even if housing, all of the number of units were built, you still have to make sure people can access those units as well.

So there are multiple approaches that are needed, but as it's been lifted up here, it takes our nonprofit partners, which the city of Kalamazoo, we have been working together, the municipalities nonprofit partners.

And then we also have additional streams of income in our community.

So we have a housing millage that was recently passed, which is looking to gain about $800,000 a year over the next eight years.

And so that is money that is not within the confines of the federal government and all of the different restrictions that that may come with so that we may be able to do something creative.

Because what I do believe is that some of the historical implications that have come from some of the guidelines and some of the laws of the federal government have been passed down.

So it's really going to take some creative solutions, even outside of the federal funding to come up with ways that we are going to see a better trajectory for all of our communities.

- Yeah, that creative approach, right?

The thinking outside the box that we always talk about, but in this case, it does sound very unique and so specific to finding our way out of this.

Ivor at Habitat.

I've always seen Habitat for Humanity as this place for, you know, fixing up old dilapidated homes, making them usable, again, putting them on the market.

But when the market is so tight, how have things shifted at Habitat and how is Habitat thinking outside of the box?

- Well, first off, we're starting from the position of things cost what they cost, and there's no secret to defeating that cost.

So, we've trimmed down our designs to provide the spec and quality that we want at the cost that it costs.

So we're not lamenting too much about the costs thing that comes and goes.

I think for Habitat, it's really to dial in to the actual human situation, and to try and understand the human situation on top of all of the numbers and stats, right?

What is it to be a family that earns at, or below 80% area median income in our case?

Well, first off, you're part of a group whose opportunity to own a home is dwindling away statistically year, over year, over year.

And that's because your wages are essentially fixed maybe at the cost of inflation, or maybe not even at the cost of inflation.

And yet the cost of homes always goes up.

You might have a bad run, but look at those home values over time, they go up, up, up, up, up, and yet the buying power of this group is almost flat.

So we're really trying to look at how to close a gap between that cost and you know, what that dwindling wage can afford to buy.

Now on the opportunity side, though, it's important to remember, at least in habitats program, the families are paying 100% of their taxes and insurance, and they're essentially with our assistance paying 70 to 90% of the actual cost of the home back.

So all of these wages that people are making, doing, you know, the things that qualify in these income groups, even including starting your teachers, right?

This is their wages that are really paying for this product with a little bit of a gap.

We want to close that gap instead of reinvent the whole thing.

What's the gap, what's causing the gap?

Where can we come in and maximize getting our teachers, you know, people in starting jobs, nurses aides, all of these people that are doing these jobs that are critical.

A lot of them are essential workers, by the way, right?

How can we make their income work on the products that are out there?

- So are you doing more financing now than building?

Is that what I'm hearing?

- We're doing the same amount of building we're actually ramping up building, but we're also doubled down, doubling down on the different financing mechanisms that we can apply, so that each, we aren't overly providing help for one family.

And while another one we're under providing for, really to kind of customize the financing package for their income, for the situation.

But Josh hit it earlier, property taxes and insurance for a habitat home.

They're half of the cost, right?

Even when you pay off your habitat home, you're going to still be paying quite a bit for that.

So those advocacy are not only important for buying the home it's for staying in the home, you know and again, I think Patrice did some touching on that issue around wages.

And are you aware of people's wages?

- Yeah, just the whole idea that we are seeing some wage growth currently, and while there's more wage growth, we still now have employers who are saying, Hey, where's the housing and I, and I know that's where this all began earlier in the year when we started this conversation, what are employers saying?

And what are they telling you, Patrice, what are they telling you?

Josh?

- Well, employers in Kalamazoo, you know, the city of Kalamazoo is landlocked, which is very interesting.

So we have to be very creative with the housing that we provide, knowing that, you know, the wealth creation through home ownership, knowing that we need the number of units.

So we know that's gonna cost for more dense housing needs.

So how do we balance all of that?

And so I think, you know, again, we're just not unlike any other community, but being upfront about what our issues are, being creative in our solutions, understanding that there is no one silver bullet and that we all have to do our part in this, if we're going to make this work.

- Josh, how do you get employers involved?

I know some of the tax incentives will be there.

- Yeah, so, you mentioned the tax incentives.

That's another, that's another bill that I didn't mention earlier.

We've got the ones for the locals and the, the developers to partner on.

And then we've got one that it would be if an employer helps support housing, either directly or through a fund, their employee housing, we could, they could get a corporate income tax credit on that.

And that's something we're looking at funding one time as a pilot.

And I'm making that pitch.

I know that there's some community foundations that have expressed interest in this.

I think it could use, be used to support like the city of Grand Rapids' housing fund.

I've talked to some developers, who've had employers, manufacturers come to them and say, how can I partner with you?

The hard part is, I think Habitat experiences it more than most, too, is making the economics work is really hard.

And so it's tough to pull off.

We've seen employers in the state they'll make huge investments recently, especially in the more rural areas.

Cause they're trying to figure out how do I get someone to come here?

Now I will say, we're also trying to be optimistic, right?

It's growth challenges that are creating some of this problem.

We are positioned as a great community post pandemic.

Wages are up, they're up pre pandemic, there are more post pandemic or whatever state of pandemic we're in right now, wanting to be post pandemic, but we need to find ways to mitigate the increase in housing costs.

And so that's, again, that's going to be a top issue.

I think, especially as some of these other economic realities kind of take shape, I think employers are going to start seeing it more.

I've had employers come and say, Hey, I knew this was a big issue to working on, I really like that you are doing it.

For the first time I had an employee say, well, I'm gonna take this other job on this other state because I was able to find housing there that I could, that I could buy.

And it was for really good paying job.

I asked the question, you know, it's starting to become more real.

And so I think the priority is going to continue to grow, especially if we're unsuccessful in addressing it.

- Do you get the sense you were beginning to at least see some construction out there that is going to begin to impact the current market?

Are we seeing signs of this?

- Well, I want to point out and I think Patrice hit on it, the local zoning and some of that stuff that is something I don't want to gloss over today because it has such a big role in what we can build at what price point, what typology, which also affects the price point.

Right?

Ryan and I, and I don't know if Habitat partnered on this, but we were working with the city early this year.

It seems like an eternity ago, on the city of Grand Rapids, excuse me, on some rezoning the traditional business corridors.

And since that time, several projects have been moved forward, have been announced, or I've been told, will be announced as the other, you know, factors take effect, because it allows for residential by right.

And it allows a little more density.

Now we need every municipality, like Ryan was saying, to step up and say, hey, density can be a scary word to, you know, a few people that will show up at your planning commission, but it's a worthy conversation to have.

And we need people to show up and support those efforts, as well.

And that's something else, The last pitch I'll make just for anybody that's listening, maybe a state legislator, is we also want the state to look at, can we fund through one time dollars making the appropriate zoning changes that removes obstacles to housing?

So, if a city of Walker I'll use them just because they're nearby.

If they went through and rezoned a corridor, could the state cover that cost as part of its funding, because those changes could be generational in impact.

Whereas, you know, these subsidies are great, but you can only produce so much through that effort.

And again, it's an all of the above effort.

Alright.

- We'll have to end it there.

We need a tie, a countdown clock with so many guests on a zoom call, Patrice Griffin, vice mayor, city of Kalamazoo.

Thank you.

Ivor Thomas Habitat for Humanity, Ryan Kilpatrick with Housing Next, and Josh Lunger with the GR Chamber.

Thank you all, an important topic to discuss.

I think we've just touched the, touched the surface here, but thank you all for joining us and thank you for joining us.

We'll see you again soon.