A state housing board has approved a pair of new subsidy programs aimed at fueling affordable housing development.
At its Sept. 29 meeting, the Michigan State Housing Development Authority board approved the Housing Tax Increment Financing program and Pilot Housing TIF Gap Lending program to create and preserve rental and homeownership projects statewide.
The Housing TIF program was created under an amendment to the state’s 1996 Brownfield Redevelopment Financing Act introduced in March and signed by Gov. Gretchen Whitmer in July. It encourages the redevelopment of blighted and dilapidated properties by allowing tax revenues captured through local brownfield redevelopment authorities to fund housing development activities for households whose income is no more than 120% of the area median income.
The brownfield law previously only covered commercial and industrial development activities.
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The new Housing TIF program “will transform underutilized properties into quality, affordable housing, help spearhead economic activity, aid in environmental protection and much more,” Amy Hovey, MSHDA’s executive director, said in a statement. “With the support of the legislature, the Whitmer administration and now the MSHDA board, we can deploy this valuable resource across the state, creating more places of opportunity for Michiganders.”
Eligible housing development activities could include the following:
- Reimbursing owners of rental units for qualified rehabilitation.
- Upgrading public infrastructure and safety features.
- Demolishing and renovating existing buildings and site preparation for projects serving income-qualified households that are buying or renting.
- Covering relocation costs for income-qualified households for up to one year.
- Buying blighted or obsolete rental units to promote rehabilitation or adaptive reuse of the units for income-qualified households.
- Reimbursing developers to fill financing gaps for the development of units priced for income-qualified households.
- Reimbursing developers for infrastructure and site preparation costs for housing development for income-qualified households on eligible property.
The program gives MSHDA oversight of work plans or combined brownfield plans if the development includes housing to be rented or sold below market rate, or is subsidized.
The Grand Rapids Area Chamber of Commerce helped spearhead the brownfield law amendment, along with the Housing Michigan Coalition.
“This legislation takes a major step forward to allow for local private-public partnerships to support the development and rehabilitation of workforce housing,” Joshua Lunger, the Grand Rapids Chamber’s vice president of government affairs, told Crain’s Detroit Business in June. “Increasing the supply of attainable housing will have a positive impact on communities, residents and job providers across West Michigan.”
The Housing Michigan Coalition also includes West Michigan housing advocacy nonprofit Housing Next.
Housing Next Executive Director Brooke Oosterman said the new program gives developers tools that were unavailable before the brownfield law amendment, and comes as construction costs are rising faster than developers can keep up.
“Our excitement about the TIF legislation, specifically, is it really shows the importance of housing in our region and our community and the state, frankly, in that it changes the definition of brownfields as it relates to housing,” she said. “We really do need to look at all of the available tools. In Michigan, moving forward, this critical tool is going to mean that we will see an impact on the housing supply around what is affordable for those who need it most.”
The MSHDA board on Sept. 29 also approved the Pilot Housing TIF Gap Lending program, which will allow MSHDA to provide funding to developers via construction loans and permanent tax reimbursement loans.
Any project using this program would be subject to income restrictions for households not exceeding 120% of the area median income.
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