HOLLAND — A new fund aims to cover pre-development costs to incentivize developers to add affordable housing in the Holland and Zeeland areas, MiBiz has learned.
The goal for the Holland/Zeeland Housing Pre-Development Fund Inc. is to create projects that would make financial sense for a public or private developer to take on after pre-development work is completed.
The pre-development work can include site control, environmental inspections, site planning and securing local planning approvals from a municipality, said Ryan Kilpatrick, executive director of Housing Next, an initiative focused on supporting housing solutions in Ottawa County.
“Very often, the development community is going to build what they know is successful in a market,” Kilpatrick told MiBiz. “It’s a risk and it takes a lot of front-end work to convince a municipality that it’s the right project. Our goal would be to position a development appropriately for the right group.”
Housing Next, the Community Foundation of the Holland/Zeeland Area and several investors helped organize the fund, which is targeting to raise $2 million, according to federal securities filings. The group as of early July said in the filing that it had secured more than $1 million from investors.
The six investors in the fund include the Community Foundation, Holland-based financial/investment services firm Brooks Capital Management LLC, the West Coast Chamber of Commerce, and members of the Padnos family who own Holland-based Louis Padnos Iron and Metal Co. Two other investors asked to remain anonymous.
The capital should be enough to accomplish the mission of the fund, said Mike Goorhouse, president and CEO of the Community Foundation. The investors are hoping to initiate “hundreds” of units across the targeted communities, he said.
“If we were instigating 500-600 units over the next five years, we would account that as big-time success,” Goorhouse said.
Increasing affordable housing in Ottawa County has been a major topic of concern among business, municipal and philanthropic leaders in recent years. Housing Next was created to facilitate the development of housing at all income levels, and has been working with local municipalities to create frameworks for evaluating affordable housing developments when they are proposed.
A housing needs assessment completed in January by Bowen National Research showed that between 2000 and 2017, Ottawa County added 20,230 households, outpacing state growth trends. By 2022, the county is projected to add nearly 6,000 additional households.
“This is significant growth that will add to the demand for housing,” according to the study.
The county is currently experiencing limited available inventory among multifamily rentals, as well as pent-up demand for housing that serves low-income renters. The few multifamily vacancies that exist in the county are primarily market-rate units, according to the assessment.
The goal of the new Holland/Zeeland Housing Pre-Development Fund is to help build more mixed-income units. Developments for extremely low-income people will still require philanthropic assistance, according to Goorhouse.
The fund is not meant to be a “silver bullet,” but rather “another tool in the toolbox,” Goorhouse said.
“It is a collective response to what is clearly a barrier,” he said.
Investors hope to invest in developments with a minimum of 50 units. They have already identified some possible properties for projects and are hoping to choose sites where municipalities are supportive of the developments.
“We’re really excited we were able to put this together,” Kilpatrick said. “We think there’s a lot more to do in addition to this. We’re hoping to improve this model so we can expand on it.”