Opinion | Bill would make workforce housing harder to build. Whitmer should veto it

Gov. Gretchen Whitmer and the State of Michigan have made attainable workforce housing development a major priority, and the Michigan State Housing Development Authority has been a real leader and partner: flexible, responsive, and willing to work with the small and mid-sized developers who deliver workforce housing. I am one of those developers, and I have seen it firsthand.

Jon Wright is managing partner of Spear Partners, a modular workforce-housing developer. (Courtesy photo)

That is why House Bill 6074 is a mistake. Building new housing in Michigan’s lower-income, workforce neighborhoods is already hard. HB 6074 makes it harder.

However well-intentioned, this bill will not create more homeowners. It will produce less housing and make it harder to attract private capital when Michigan needs more of it.

Everyone serious about building housing in Michigan should oppose this cap. We share the goal of more homes and more owners, but this bill works against both.

I own single-family rentals, and today I build new attainable workforce housing in the City of Warren. We are partnering with the city to rebuild the long-neglected south end of town.

Developers like me need the build-to-rent option to build new housing because in much of Michigan, new for-sale construction does not pencil, because construction cost exceeds what buyers can pay, and appraisals lag replacement cost.

Right now, rental is how the housing gets built. Build-to-rent is not a move away from homeownership. It is the sequence that makes ownership possible again: Stabilize the block, deliver housing that otherwise would not get built, reduce the risk that keeps capital away and set the conditions for owner-occupancy to return.

I plan to sell some of these homes to owner-occupants at the end of the hold period, but this law limits my ability to sell what I build. Restricting the exit discourages the investment.

South Warren looks like many other parts of Michigan. These neighborhoods were built when several things aligned: stable employment, a GI bill down payment, VA and FHA financing, low construction costs, and zoning that allowed small lots. That alignment is gone, and much of the stock has fallen into neglect. After decades of decline, deferred maintenance, and the 2008 financial crisis, investors bought many of these houses. Those purchases put a floor under falling values and supplied capital that kept these blocks from declining further. Unlike other parts of the country, Michigan is not seeing large-scale institutional buyers of single-family homes.

HB 6074 caps rental ownership at 100 homes and treats every owner above that line as an institutional investor. This restricts exactly the mid-sized, well-capitalized owners who stabilized these neighborhoods. It makes their homes harder to operate and their portfolios harder to sell over time.

Renters lose the most. Push the well-capitalized, mid-sized owners out of the market, and the number of well-maintained rental homes goes down. Lower-income tenants get left with the substandard properties that undercapitalized landlords cannot afford to keep up. In these neighborhoods, the real issue is housing quality and the risk of further decline. It ignores how many Michiganders actually live.

Congress reached a better answer. The final compromise version of the 21st Century ROAD to Housing Act dropped a blanket ban. Instead of forcing responsible operators out, it lets them keep operating if they provide good-quality housing and give their tenants the chance to buy. That keeps well-capitalized operators in the market and moves renters toward ownership at the same time. HB 6074 misses that balance.

If Michigan wants to protect homebuyers, and I want that too, it should mirror the federal approach with clear carve-outs for responsible institutional owners. Require them to do two things:

Offer current tenants the chance to buy before selling to another investor, and
Report rent payments to the credit bureaus, so renters build the credit history they need to qualify for a mortgage and buy a home.

That is how renters become owners. A hard cap does not do it. It removes the capital that maintains the housing families live in today.

Gov. Whitmer should veto this bill and ask the Legislature to return a version that mirrors the federal approach. If she does not, the Legislature should fix it before it leaves session this year. As written, this provision runs against everything Michigan says it wants: more homeownership, more development, and more investment in the state.

Gov. Whitmer and members of the Legislature: Help us make it easier to invest in Michigan.