Should the city tap the brakes on Low Income Housing (LIHTC) projects?

[GRDadof3 2376]

In the last 4 - 5 years, the downtown housing market switched from market rate condos to rentals, mostly due to the housing market crash. There recently has been a slew of LIHTC funded projects downtown.

 

If you need a quick course on LIHTC, this is a good article:

 

http://mibiz.com/news/design-build/item/20356-federal-low-income-housing-tax-credits-fuel-expansion-of-downtown-grand-rapids

 

Here are just a few of the LIHTC projects approved lately:

 

101 South Division

2 apartment projects at Cherry and Division

Tapestry Square

Herkimer Commerce

Baker Lofts (diagonal from the Downtown Market)

Grandview Place (Front St and 10th Street on the riverfront)

 

And potentially another coming to the old Klingman's Warehouse.

 

Too many?

[Jippy 82]

GRDad, nearly all of the projects listed would be viable market rate projects in 2-5 years once the market has fully rebounded. It is simply a product of a narrow window of time in which the market is skewed towards affordable, but locked in for the next 30-45 years -- short-term market forces creating multi-generational impacts. 

 

Has anyone within city government identified this as something worthy of examining?  To reiterate my position, I am all for LIHTC projects integrated throughout the city. In fact, I would happily live next to one.  What I am not supportive of is high demand and strategically important locations becoming exclusive havens for affordable housing. 

 

The other consideration is that the state should be working on refining urban strategies to encourage mixed-income projects. Several years ago, I lived in an apartment building that had Section 8, workforce and market-rate apartments. It was the most diverse and enjoyable place I ever lived. The parking garage had a Mercedes parked next to a 1984 Carolla. Why can't we build those in downtown Grand Rapids?

[mpchicago 252]

Right now it seems like we are seeing an influx of low income aka workforce housing, especially in the Heartside area.  I would like to see some more market rate in Heartside, and Klingman's would be a great spot considering its proximity to the Downtown Market.  With that said, I think most of the buying power for the market will remain from outside the downtown area, even if there is more market rate housing downtown. 

 

The city, developers and stakeholders do need to come together to put a comprehensive housing plan together for all of downtown.  I believe the new South Arena plant includes a housing component.  Did they identify what type of housing was targeted for the area?  Are there any other market rate developments on the drawing board besides Morton?  I think Kendall is the only one under development currently?  We know 616 has plans for more, as they have a "back log if people dying to live downtown," but they haven't identified specific locations.  Assume we will hear more later this year.

[joeDowntown 838]

Definitely. While I think it is a good part of the mix, I think it is 99% of new housing starts downtown. I think they are walking a thin line here with over saturation in a concentrated area.

 

I think GR needs to have a housing plan, and if that means giving a fair playing ground of incentives for both market rate and income restricted, so be it. I hope they are seriously looking at the demand for market rate housing and how they can accelerate development. It's the linchpin to retail and everything else we want downtown.

 

Joe

[GRDadof3 2376]

Right now it seems like we are seeing an influx of low income aka workforce housing, especially in the Heartside area.  I would like to see some more market rate in Heartside, and Klingman's would be a great spot considering its proximity to the Downtown Market.  With that said, I think most of the buying power for the market will remain from outside the downtown area, even if there is more market rate housing downtown. 

 

 

 

The city, developers and stakeholders do need to come together to put a comprehensive housing plan together for all of downtown.  I believe the new South Arena plant includes a housing component.  Did they identify what type of housing was targeted for the area?  Are there any other market rate developments on the drawing board besides Morton?  I think Kendall is the only one under development currently?  We know 616 has plans for more, as they have a "back log if people dying to live downtown," but they haven't identified specific locations.  Assume we will hear more later this year.

 

 

The only thing really discussed in the Arena South project was that there "would" be housing in the plans, but not dilineation as to what kind and how much. Keep in mind it was just a blueprint with developers making the decisions as to what would be marketable and scalable.

 

I think the city needs a plan. Where a lot of cities have now adopted housing plans to force developers to include low-income housing, we're having the opposite challenge (in my mind). For instance I remember in Boulder Colorado housing was getting so out-of-control expensive, developers were required to do at least 20% (I believe) of their units as low income units. Or for every 10 houses they built in the city, 2 had to be for low income households. That program received a lot of flack from builders and free market thinkers.

[MJLO 477]

I cant imagine the demand for market rate being that low.   Maybe I just have a skewed view but it seems like the few market rate places downtown while seemingly exspensive all have waiting lists.  Not to mention most of my friends trying to get in downtown.

[tSlater 160]

I voted for a housing plan.  I wouldn't say there's too many low income, but there certainly isn't enough market rate.  What's needed is a housing plan that will encourage better balance which will not necessarily slow the growth of any particular income bracket.

[fakkelsey 5]

When I read in Boulder there was a 20% requirement for low income it reminded me of Cincinnati where I believe there is a 10% requirement. In Grand Rapids, unlike Cincinnati where there is almost no wait time at all to get into low income, has a low end (extreme) of maybe six months with some as long is 10 years. Does Grand Rapids need to cut back??!! No! As far is mixing the two together, Cincinnati seems to be doing very well with that throughout the city. Just like our Heartside is seeing some great changes, their OTR district has been revamped like crazy and both the poor and rich seem to live quite well in the same neighborhoods thus far. I believe it is important to always keep the struggling in mind.

[joeDowntown 838]

My point is that ALL new development should not be LIHTC and I don't believe concentrating a majority of it into a six block area is a good idea. I completely agree with a mix of low, medium and high rent (hopefully on the same block). What we're doing right now is concentrating it around the homeless shelters (which, IMHO shouldn't be concentrated together either).

 

Joe

 

When I read in Boulder there was a 20% requirement for low income it reminded me of Cincinnati where I believe there is a 10% requirement. In Grand Rapids, unlike Cincinnati where there is almost no wait time at all to get into low income, has a low end (extreme) of maybe six months with some as long is 10 years. Does Grand Rapids need to cut back??!! No! As far is mixing the two together, Cincinnati seems to be doing very well with that throughout the city. Just like our Heartside is seeing some great changes, their OTR district has been revamped like crazy and both the poor and rich seem to live quite well in the same neighborhoods thus far. I believe it is important to always keep the struggling in mind.

[GRDadof3 2376]

When I read in Boulder there was a 20% requirement for low income it reminded me of Cincinnati where I believe there is a 10% requirement. In Grand Rapids, unlike Cincinnati where there is almost no wait time at all to get into low income, has a low end (extreme) of maybe six months with some as long is 10 years. Does Grand Rapids need to cut back??!! No! As far is mixing the two together, Cincinnati seems to be doing very well with that throughout the city. Just like our Heartside is seeing some great changes, their OTR district has been revamped like crazy and both the poor and rich seem to live quite well in the same neighborhoods thus far. I believe it is important to always keep the struggling in mind.

 

Heartside suffers from a very high retail vacancy rate, a high drug bust rate, and a high artist turnover/vacancy rate in the "Avenue for the Arts." Can't be a coincidence. Too much concentration of low income households, IMO.

[CarpenterJoseph 1]

While waiting lists in the hundreds are good. I think what hasn't be mentioned here is that demand actually needs to be much higher and product variety needs to diversify more as well. Not to mention available jobs downtown needs to pick up outside of the traditional banking, legal and finance sectors. I see health care employment driving this in the near term. 

 

Some kind of housing plan might be useful, but what we're seeing is mostly driven by incentives. If LIHTC is the strongest tool going, I don't think the product is going to change. 

 

Still, it's more people more incremental growth of services downtown that could bring around a shift. 

 

How's my logic? 

Edited April 29, 2013 by CarpenterJoseph

[fakkelsey 5]

Many old city neighborhoods that are being redone (or in Chicago's case, being torn down and completely rebuilt) suffer with many of the same issues but change is happening. Who would of thought ten years ago Wealthy would be a thriving restaurant zone or Iona would be the highlight of the weekends? 

 

 I think some key issues is providing safer and cleaner appearances like horse cops or block walkers that the city has none of except a couple bikes here and there. Trash and questionable crowds certainly have a big impact on shoppers. In the OTR district in Cincy this is changing quick where crowds of all sorts now mingle the same streets but the smaller the city, the absence of cops, trash build up and rundown buildings scare most away. That is why any development is better than no development at all. There is a difference between the homeless sector and the poor sector, that being the poor sector still spends money on needed basics at local stores. It is true some people just do not want to help themselves, a big reason why Guiding Light changed how they run things. Fact is, all bigger cities have these issues and unless a city is willing to spend money on relocating the entire homeless population (which a few are trying) it will always be an issue. Because of that, even more low income in the area will help some.

 

I see parking by the Arena (in the back of) really being the key right now for great full market  developments. That area is prime. Though Wealthy and Division area could start a comeback with the new market and new retail on Wealthy. If that becomes a success it could help S. Division development. For now though, there is no sense of holding out on empty buildings when they can be revamped and used for any good cause. There is plenty of room in the Heartside for both poor and rich on either side of the  131. 

 

Grand Rapids has come a long ways since just a decade ago. We could really use some basics downtown though rather than more eateries. With more and more people moving downtown hopefully that will become a reality sooner  than later. I believe Grand Rapids is really just beginning to see the change that will take place throughout the core, making Grand Rapids the best city in the state, if it isn't already there. Many outsiders are beginning to notice Grand Rapids now than ever before.  

[GRDadof3 2376]

Many old city neighborhoods that are being redone (or in Chicago's case, being torn down and completely rebuilt) suffer with many of the same issues but change is happening. Who would of thought ten years ago Wealthy would be a thriving restaurant zone or Iona would be the highlight of the weekends? 

 

 I think some key issues is providing safer and cleaner appearances like horse cops or block walkers that the city has none of except a couple bikes here and there. Trash and questionable crowds certainly have a big impact on shoppers. In the OTR district in Cincy this is changing quick where crowds of all sorts now mingle the same streets but the smaller the city, the absence of cops, trash build up and rundown buildings scare most away. That is why any development is better than no development at all. There is a difference between the homeless sector and the poor sector, that being the poor sector still spends money on needed basics at local stores. It is true some people just do not want to help themselves, a big reason why Guiding Light changed how they run things. Fact is, all bigger cities have these issues and unless a city is willing to spend money on relocating the entire homeless population (which a few are trying) it will always be an issue. Because of that, even more low income in the area will help some.

 

I see parking by the Arena (in the back of) really being the key right now for great full market  developments. That area is prime. Though Wealthy and Division area could start a comeback with the new market and new retail on Wealthy. If that becomes a success it could help S. Division development. For now though, there is no sense of holding out on empty buildings when they can be revamped and used for any good cause. There is plenty of room in the Heartside for both poor and rich on either side of the  131. 

 

Grand Rapids has come a long ways since just a decade ago. We could really use some basics downtown though rather than more eateries. With more and more people moving downtown hopefully that will become a reality sooner  than later. I believe Grand Rapids is really just beginning to see the change that will take place throughout the core, making Grand Rapids the best city in the state, if it isn't already there. Many outsiders are beginning to notice Grand Rapids now than ever before.  

 

If all the parking lots behind the arena became all low income housing, would you be happy with that? Right now there is nothing to prevent that from happening, and with the ease and payouts that developers are getting from the LIHTC program, there's no reason to think they won't go for it. Do you think that would make a healthy downtown neighborhood?

[SupercityGR 81]

If all the parking lots behind the arena became all low income housing, would you be happy with that? Right now there is nothing to prevent that from happening, and with the ease and payouts that developers are getting from the LIHTC program, there's no reason to think they won't go for it. Do you think that would make a healthy downtown neighborhood?

 

NO. But I think building some mixed buildings and filling the great sea of arena south could do some good. The area around the arena has been booming lately. I could see some nice new apartments, condos, small office buildings, and dare i say a drug store there. I say lets build apartments and make half them rent restricted, and half market rate. Bammm problem solved

[GRDadof3 2376]

NO. But I think building some mixed buildings and filling the great sea of arena south could do some good. The area around the arena has been booming lately. I could see some nice new apartments, condos, small office buildings, and dare i say a drug store there. I say lets build apartments and make half them rent restricted, and half market rate. Bammm problem solved

 

That would require a housing plan, for which the city has none.

[joeDowntown 838]

If the above happened, I think it would set the city back 20 years. Like I keep saying, LIHTC is a piece of the puzzle, but I think it should be about 10% of the puzzle, and right now, with developments either in progress, it's around 95% (maybe more?). Not good. We need some heavy investment in market rate and mid-level housing. It scares me how much land is being swallowed up by LIHTC right now without anything to balance it out.

 

Joe

[fakkelsey 5]

If all the parking lots behind the arena became all low income housing, would you be happy with that? Right now there is nothing to prevent that from happening, and with the ease and payouts that developers are getting from the LIHTC program, there's no reason to think they won't go for it. Do you think that would make a healthy downtown neighborhood?

 

 

I agree with wistle-stop but I am really only replying because you read my post wrong concerning the area by the arena.

 

What I said was """" I see parking by the Arena (in the back of) really being the key right now for great full market  developments. That area is prime.''''

 

The meaning of this is as stated. Full market, not low income. There is plenty of room for both. The arena area, again, is prime for good FULL MARKET developments. I hope this helps clarify my post.

[GRDadof3 2376]

I agree with wistle-stop but I am really only replying because you read my post wrong concerning the area by the arena.

 

What I said was """" I see parking by the Arena (in the back of) really being the key right now for great full market  developments. That area is prime.''''

 

The meaning of this is as stated. Full market, not low income. There is plenty of room for both. The arena area, again, is prime for good FULL MARKET developments. I hope this helps clarify my post.

 

Fair enough. I'm only stressing the point that if that's what you WANT, then the current system and trends, as they are headed, point to a different direction. I think leaving things to chance is dangerous, and as Joe said, having all low income in that area would be the death toll for downtown (ie downtown GR of the 1980's).

 

If the condo market ever comes back, and when people try to resell their condos, it's not going to be pretty to have so many low income units in close vicinity. That pretty much seals the fate of the condo market returning. Try selling a single family home in a neighborhood of all section 8 housing and see how that goes. Same with a market rate condo in a "government subsidized" low income downtown neighborhood.

 

Not trying to be alarmist, but that's the reality if things are left as is in my opinion.

[fakkelsey 5]

Sorry but I must confess GR dad, I have only just read in fullness the article at the beginning. You are right with your concern. I did not realize the extent of low income housing that was going on and being planned. I am a bit overwhelmed myself. STILL though, would that mean many of the new housing projects going on DT would be non existent without these? Would that of helped the city? If these developments have made this huge of a difference and there is no current major proposals of full market, than....

 

You know what I am saying? I do understand your concern more now and am not at odds with your concern, only perhaps the numbers based on the desire or need of full market as it is. I will say one thing. Full market always finds away in when it desires.

[GRDadof3 2376]

Sorry but I must confess GR dad, I have only just read in fullness the article at the beginning. You are right with your concern. I did not realize the extent of low income housing that was going on and being planned. I am a bit overwhelmed myself. STILL though, would that mean many of the new housing projects going on DT would be non existent without these? Would that of helped the city? If these developments have made this huge of a difference and there is no current major proposals of full market, than....

 

You know what I am saying? I do understand your concern more now and am not at odds with your concern, only perhaps the numbers based on the desire or need of full market as it is. I will say one thing. Full market always finds away in when it desires.

 

Actually, I think business owners/developers will go where they can make the biggest profit for their investors. And right now, I think going with LIHTC has a bigger payoff than doing a market rate project.Market rate doesn't necessarily mean bigger profit.

 

Particularly rental properties where developers are in for the long haul on getting a return. The rents you get are lower, but it might be more than made up in the tax credits.

 

There are a couple of examples of a pro-forma (business plan) for two development projects at this link. What would really be interesting to see is how a LIHTC project pro-forma compares to a market rate project.

 

http://www.michigan.gov/mshda/0,4641,7-141-5587_5601-21934--,00.html

 

Again, I'm not against tax credits, profits, developers or low income housing.

[fakkelsey 5]

There is a HUGE difference between 40% and 100%. I cannot help but see your above post being true based on this. Thank you very much for the link. Yes, it would be interesting to see a chart with full market. Most cities seem to lean on full market for tax credits. Interesting link.

[GRDadof3 2376]

See now look, low-income apartments are helping young hipsters find housing, that Michigan needs to retain.

 

http://bridgemi.com/2013/07/warehouse-lofts-in-grand-rapids-fill-fast-due-to-affordable-housing-program/

[gvsusean 40]

I think that the low-income housing credits are just fine.. Most of the people that lived in Metro Park with me were just part time students... they made just too little to stay in the apartments. But, they weren't poor because they would go home and eat at their parents house, they had a car from their parents when they were in high school, and all the clothes they had were gifts.. their money went to rent and entertainment...obviously, this isn't true of everyone.. But, it sure seemed like the majority when i was there...

Edited July 24, 2013 by gvsusean

[GRDadof3 2376]

I think that the low-income housing credits are just fine.. Most of the people that lived in Metro Park with me were just part time students... they made just too little to stay in the apartments. But, they weren't poor because they would go home and eat at their parents house, they had a car from their parents when they were in high school, and all the clothes they had were gifts.. their money went to rent and entertainment...obviously, this isn't true of everyone.. But, it sure seemed like the majority when i was there...

 

Don't get me wrong, low income people are not bad people. I grew up in a low income household. I've been below low income (poor). I'm just reiterating that locking all these buildings into long term low income housing will be considered a bad move in 10, 20 years, IMESHO.

 

The example they use is a woman who is a graduate of Kendall College and is working as an optician. I'm going to go out on a limb and guess it's not the job she envisioned when she got her bachelor's degree. This is the key to economic development?

 

My question is, what's wrong with middle income people?

[gvsusean 40]

Don't get me wrong, low income people are not bad people. I grew up in a low income household. I've been below low income (poor). I'm just reiterating that locking all these buildings into long term low income housing will be considered a bad move in 10, 20 years, IMESHO.

 

The example they use is a woman who is a graduate of Kendall College and is working as an optician. I'm going to go out on a limb and guess it's not the job she envisioned when she got her bachelor's degree. This is the key to economic development?

 

My question is, what's wrong with middle income people?

are middle income apartments a feasible option for developers. Its crazy how much these rehabs cost and the only reason they aren't all high cost is because of the tax credits.. .Should we have incentives for developers who target the middle?