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The vacant lot 935 Kalamazoo Ave. SE, near the Madison Area Neighborhood of Grand Rapids, is among 67 foreclosed properties that will be available for local housing nonprofits to purchase and redevelop following recent action by the Grand Rapids City Commission. The vacant lot 935 Kalamazoo Ave. SE, near the Madison Area Neighborhood of Grand Rapids, is among 67 foreclosed properties that will be available for local housing nonprofits to purchase and redevelop following recent action by the Grand Rapids City Commission. MIBIZ PHOTOS: KATE CARLSON

GR nonprofits seek land bank properties, state legislation to grow affordable housing stock

BY Sunday, September 13, 2020 05:51pm

GRAND RAPIDS — Local housing nonprofits are beginning to vet dozens of vacant properties made available through the state’s Land Bank Authority in an effort to fill the city’s need for affordable housing.

On Aug. 25, the Grand Rapids City Commission approved new criteria for how the state land bank can market properties for the city. Nonprofit housing organizations will now have the ability to purchase and redevelop up to 67 different foreclosed properties for affordable housing projects.

The city of Grand Rapids previously worked with the Kent County Land Bank until the county dissolved its land bank authority, prompting the city and the state Lank Bank into an agreement in October 2019. 

The sale of the properties will only be available for Habitat for Humanity of Kent County, Inner City Christian Federation, LINC UP, Next Step of West Michigan, Well House, Dwelling Place, New Development Corp., Genesis Nonprofit Housing Corp., and 3:11 Youth Housing

The nonprofits can purchase the properties if they demonstrate at least one of the following criteria: rehabilitation for 80 percent of the area median income for home ownership; rehabilitation for 60 percent of the area median income for renters; placement of the property in a Community Land Trust; and rehabilitation for emergency or transitional housing under an existing organization’s program.

Kent County Habitat for Humanity Executive Director Bev Thiel said the effort comes as the COVID-19 pandemic already pushes nonprofits to work collaboratively. 

“Providing people with safe, stable housing has been a bigger issue right now as we go through the pandemic, and anything the city can do is a high agenda item,” Thiel said.

Supply and demand

Habitat for Humanity seeks to acquire some of the land among the 67 properties, and its team is now going through the vetting process to purchase and develop it, Thiel said.

“We’re advocates for homeownership and this provides us with opportunities to get people in safe, decent homes as long as we continue our strong collaboration within the city,” Thiel said. 

Allowing housing nonprofits to purchase and redevelop foreclosed properties is in response to a recently published Housing Next study indicating Grand Rapids needs nearly 9,000 more housing units by 2025 to keep up with demand.

Of the 67 vacant properties now available to housing nonprofits to purchase and develop, about six are large enough for multiple housing units, said Housing Next Executive Director Ryan Kilpatrick. The rest would likely be suited for single family homes.

“These 60 properties are definitely not the end all solution (to affordable housing), but the hope is — using these properties as leverage — we can start to spark more affordable housing while the city focuses on other developments,” Kilpatrick said. “Every additional unit is a step in the right direction.”

Publicly owned property is a good leverage point to initiate additional housing construction, Kilpatrick said. The goal is to try to prioritize the lots that accommodate more than one single family home, but still make all of the properties available at the same time for housing nonprofits.

Removing barriers

Habitat for Humanity focuses on the homeownership side of affordable housing, and facilitates new builds of single-family homes, renovations and home repairs. Typically, Habitat procures a site for a home through its community development real estate department which is always looking for land acquisition opportunities, Thiel said. 

“Any time we can drive down the cost of housing for the family is the option that comes out ahead,” Thiel said. “Our staff has been in conversations with the city for some time around this potential opportunity, and the city has been a great collaborator to work with.”

Habitat for Humanity of Kent County has more than 1,200 families interested in getting a home through the housing nonprofit, a need it will obviously not be able to meet this year, Thiel said. The need far exceeds what any one organization can provide, she added.

“The need (for affordable housing) has remained relatively stable,” Thiel said. “What we’re starting to see is a broader base of folks who are experiencing affordable housing as a barrier.”

Meanwhile, Grand Rapids officials and housing nonprofits are rallying around statewide legislation proposed earlier this year meant to incentivize private investment in affordable housing. Under two bills sponsored by state Reps. Ronnie Peterson, D-Ypsilanti, and Aaron Miller, R-Sturgis, qualifying 501(c)(3) nonprofits would submit “community investment plans” to the Michigan Strategic Fund, while investors supporting a project could claim a tax credit equal to 50 percent of the investment, capped at $25 million.

Supporters say the legislation highlights the lack of funding available to housing nonprofits for acquiring and rehabilitating properties.

A Grand Rapids economic development official and New Development Corp. Executive Director Helen Lehman recently testified in support of the bills, saying it would help nonprofits achieve more of their housing goals by encouraging private investment in properties and projects.

“Right now, we have three vacant lots that could be utilized for affordable housing if the money was available. It simply is not,” Lehman said during a Sept. 2 House committee hearing. “We could use this to bring new private dollars into our community.”

‘Just the first step’

A large part of Grand Rapids-based Well House’s work already involves acquiring foreclosed properties through the land bank, but the new collaboration with the city should make the process a little easier, said Executive Director John Glover. Having more access to foreclosed properties will help Well House and other housing nonprofits lower the cost to acquire land for affordable housing developments, he said.

Acquiring a typical four-bedroom, one-and-a-half bath home typically costs about $160,000, but that could be significantly reduced by acquiring it through foreclosure, Glover said.

Well House has about 65 tenants across its 15 single-family homes, with most of its homes operating as shared living spaces.

Many of the properties in this new initiative will need a total rehabilitation or new build out on the lot, but Well House will work to acquire the properties it is interested in pursuing for affordable housing developments, Glover said.

“This is just the first step in what is truly going to be a multiple step process,” he said.

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