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Original article URL: http://bridgemi.com/2013/07/warehouse-lofts-in-grand-rapids-fill-fast-due-to-affordable-housing-program/
22 July 2013
For years, the massive century-old brick furniture warehouse stood vacant in Grand Rapids as one developer after another took a pass.
Thanks to a federal tax credit program, Baker Lofts opened for business earlier this year and is filled with dozens of tenants paying affordable rent. That includes Leigh Ann Cobb, 24, who could not otherwise afford the two-bedroom apartment for which she is charged $538 a month. Fair market monthly rent in the Grand Rapids area for a two-bedroom apartment is $739.
“If you don’t have a full-time job, it’s impossible to afford something that fits your budget,” said Cobb, who earns $10 an hour in a 30-hour-a-week job as an optician. A graduate of Kendall College Art and Design, Cobb uses the extra bedroom for fine arts projects while she saves for a possible return to school.
“Now I feel like I am finally coming out on top a bit.”
While no one strategy can fill the need for affordable housing, the Low Income Housing Tax Credit program has posted an impressive record since its inception in 1987. Indeed, the Joint Center for Housing Studies of Harvard University stated in 2009 the program is “widely regarded as the most successful affordable housing production and preservation program in the nation’s history.”
It has developed about 2.4 million housing units since its inception in 1987, including 85,000 affordable units units in Michigan. In Detroit, that includes projects like the $37.5 million renovation of the historic Bell Building, a project that will provide 155 units for homeless individuals; and the $28 million renovation of the Parkview Tower & Square to provide 350 units for families and the elderly.
In Grand Rapids, housing organizations like Dwelling Place Inc. have turned to low-income tax credits for most of its affordable-housing projects. That includes properties like the $29 million Herkimer Hotel renovation and expansion in Grand Rapids, in which 122 studio apartments are being converted to 122 one-bedroom units; Reflections, a $14 million 60-unit Grand Rapids apartment complex for senior citizens; and Verne Barry Place, a 116-unit Grand Rapids supportive housing complex.
Baker Lofts came together when Ann Arbor-based developer LC Companies secured $2.8 million in low-income tax credits. That helped leverage about $25 million in equity for the $30 million project. Investment came from JP Morgan Chase and RBC Capital Markets, an arm of the Royal Bank of Canada. The project also was aided by $2.8 million in historic preservation tax credits.
“It was essential,” LC president Mike Jacobson said of the low-income tax credits. “Without it the project would not have been profitable.”
To qualify for credits, developers must guarantee that either 20 percent of the units be rent-restricted for households at or below 50 percent of the area median income, or that 40 percent of the units be rent-restricted for households at or below 60 percent of the area median income. Depending on the project, tenants range from the homeless, elderly or disabled on fixed incomes to those who are employed but earning low incomes.
Of 87 units in Baker Lofts, half are for households at or below 40 percent of the area median income – $16,720 for a single person in Kent County – and half for households at 60 percent of area median income — $25,080 for a single person. Depending on income level, monthly rent is either $447 or $671 for a one-bedroom unit and either $538 or $805 for a two-bedroom unit.
Nearby, the Inner City Christian Federation is developing a $13 million affordable housing project whose financing hinged on $1.2 million in low income tax credits. It is providing 90 rental units in 45 duplexes at below-market rates in a development scattered over several blocks.
“Without low income tax credits, it simply wouldn’t be possible,” said Jonathan Bradford, president and CEO of the nonprofit housing organization.
While noting the success of LIHTC, Harvard’s Joint Commission for Housing Studies said the need for affordable housing has only grown more urgent in the past decade. In a 2012 report, it notes that approximately 10 million low-income households competed for 5 million affordable units in 2010. The number of renter households earning $15,000 or less grew by 2.2 million from 2001 to 2010, according to the U.S. Census Bureau.
“Today’s housing policy is not sufficiently attending to the housing needs of all of the United States. There are very many for whom housing is a constant threat,” Bradford said.
Ted Roelofs worked for the Grand Rapids Press for 30 years, where he covered everything from politics to social services to military affairs. He has earned numerous awards, including for work in Albania during the 1999 Kosovo refugee crisis.