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By Nathan Peck | MiBiz
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KALAMAZOO — A group of public and private entities is working to help revitalize a difficult portion of the city’s core.

Kalamazoo County Treasurer Mary Balkema, Kalamazoo County Land Bank, the Home Builders Association of Greater Kalamazoo and other nonprofits in the area are partnering for the $4.1 million, 24-home Marketplace at Washington Square project. The project has tapped four of the top area homebuilders to construct the first eight homes on an undeveloped, 7-acre plat in the city’s Edison Park neighborhood.

The program draws $4.1 million from the $15 million Kalamazoo received in a Neighborhood Stabilization grant last year, but takes a different tack than many stabilization programs. Typically, the land bank contracts with area contractors for gutting and rehabilitation of the existing homes, and the results have been mixed in Balkema’s estimation. The projects are awarded to the low bidder, which sometimes yields subpar results, as smaller operations may not have the resources to finish the project.

“The results have been so-so. The model is broken,” Balkema said. “We wanted to know how do we get the great builders back into the city. This model is for the homes to be the best on the block.”

The fallout of the recession has hit urban cities hard, with falling property values pushing many low-income residents under water. Balkema’s office has 500 parcels in delinquency from the 2008 tax bill, and last year 189 properties were auctioned off.

Balkema and Kalamazoo County Land Bank Authority Director Kelly Clarke have struggled to get qualified, established builders to take part in stabilization projects. Few developers wanted to deal with the paperwork and regulations associated with the federal programs. The Home Builders Association handled the selection process and is helping administer the federal programs. The slow economy has provided opportunities for the home builders to look to these smaller projects, said Dale Shugars, EVP of HBAGK.

“This would not have happened if the housing market had not been down 3 years in a row,” Shugars said. “The timing was right, (and) it was the right leadership at the right time. It was hard for established builders to compete on price against much smaller companies just starting out.”

The program addresses that issue by setting a profit margin of 10 percent for the developer. A friendly competition has sprung up among the builders to both outdo one another and finish first — especially ahead of the June Parade of Homes. The first contracts were awarded to Jim Roberts Construction, Roberts Development Group, Durwood Custom Homes and Glas Associates for their commitment to Project Hope, a collaboration between the Home Builders Association and the Michigan Prisoner Re-entry Initiative to provide training and work experience to ex-offenders.

At a time when new housing starts in the city totaled 2 in 2010, the eight new homes going up mark an opportunity to help stop the freefall in home values in the area. The Edison Park neighborhood faces many challenges, but the new homes should help solidify the real estate market in the area, said Clarke. Businesses and nonprofits are taking a new look at the area, and it’s helping that Kalamazoo Loaves and Fishes is moving into the area.

“We are in the worst housing market since the Great Depression. We’ve had the national collapse, we’ve had the international collapse,” Clarke said. “We recognize that this is not exactly a traditional way to go about this, but we are in unprecedented times.”

The homes will be sold to people making less than 120 percent of the area mean income, which is $73,200 for a family of four. The project dovetails with Bronson Hospital’s push to get its staff to live near the hospital and help further stabilize the neighborhood. Balkema said.

“We know that blighted properties bring down surrounding homes’ values by $10,000,” Balkema said. “This isn’t about gentrification, it is about stabilization.”

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TAGS:

• dale shugars
• durwood custom homes
• finance
• glas associates
• home builders association of greater kalamazoo
• jim roberts construction
• kalamazoo
• kalamazoo county land bank
• kelly clarke
• mary balkema