Call it an unintended consequence of a strong economy that has generated jobs but not enough rental units to keep pace with the growing workforce. Ottawa County has a housing shortage, which has created an affordable housing crisis.
Between 2009 and 2017, employers across Ottawa County added a total of nearly 40,000 jobs to the market, reflecting a 34% increase, while new units being built countywide averaged less than 1,000 annually for that same eight-year stretch.
Complicating the scenario is the growth of low-wage jobs. Nearly a third of those new jobs were in the service sector, where the average wage is just $12 per hour. That income level makes it nearly impossible for a single earner working 40 hours per week to afford market rate housing, experts say.
With demand outpacing supply, the deficit is driving rents higher. Nearly 44% of renters are paying more than 30% of their income on housing, according to a countywide Housing Needs Assessment released last year by Housing Next.
The ALICE threshold
United Way has coined this situation as living below the ALICE threshold, an acronym for Asset Limited, Income Constrained, Employed. It essentially describes people whose basic living expenses — such as rent, food, transportation, and childcare — outpace their low wages, leaving them with barely enough income to survive. They are one car breakdown or medical emergency or extra expense from falling into poverty.
The poverty line income for a family of four living in Michigan is $24,600, while the ALICE threshold for a four-person household with an infant and a preschool-age child is $62,616, according to the Greater Ottawa County United Way.
“It’s just not sustainable, and they’re having to make choices between housing and childcare or food or transportation,” says Drew Peirce, executive director of the Good Samaritan Ministries.
In Ottawa County, 31% of full-time workers fall below the ALICE threshold.
Housing Next, created in 2018 to address the county’s affordable housing crisis, has set a goal of adding 7,500 units by 2023. In the past two years, the organization has had a hand in supporting a dozen projects that will add 2,000 new housing units at a range of price points.
Here are housing projects that include a total of approximately 400 affordable housing units that are expected to be completed in 2020.
- 236-unit mixed-income development at Waverly Avenue and 24th Street in the city of Holland. A Low Income Housing Tax Credit award will be used to ensure 30% of the units are affordable to households earning less than 60% of area median income. Roughly 30% of remaining units will be targeted as affordable to households earning 60% to 100% of AMI, with market rate housing making up the balance of the project. Rental rates are expected to range from less than $625/month to $1,800/month or more.
- 460-unit development next to The Shops at Westshore in Holland Township. Roughly 30% of the overall unit mix is expected to be affordable to residents earning less than 60% of the area median income. Phase 1 construction is expected to begin in 2020.
- 120-180 unit development on Lakewood Boulevard west of U.S. 31 in Holland Township. The units are being targeted for people earning between 60% and 120% of average AMI.
- 100-unit development on Felch Street, west of 120th Avenue in Holland Township. Roughly 75% of the units will be reserved as affordable to households earning between 40% and 80% of AMI or less. The remaining units will be market rate. Development lead is Magnus Capital. Construction is expected to begin in 2020.
- 216-unit development on the south side of Holland, near M-40. Brownfield tax increment financing, which will be used to reimburse costs of infrastructure, has been set up in exchange for a guarantee that at least 50% of the units are reserved for households earning 80% of area median income or less for 10 years. Geerlings Development is the lead developer, with support from Midwest Construction. Site work began in 2019.
- 156 units on the north side of Grand Haven Township. While the development doesn’t have income restrictions, it has been designed with rental rates starting around $600/month (affordable for households earning about 40% of area median income or more). This project includes one 24-unit building that will be leased by Gracious Grounds, a local nonprofit organization devoted to providing safe and supportive housing for adults with special needs. Construction began in early 2019, and development work is led by commercial real estate agent Chad Bush and Main Street Capital Group.
More projects are in the pipeline for northwest Ottawa County. The delay is due in part to the size of the market combined with higher land costs in the Grand Haven and Spring Lake areas, according to Ryan Kilpatrick, Housing Next’s founding executive director.
Housing Next was created to do work facilitating regulatory changes and improvements to local zoning, and working with development partners from the for-profit and nonprofit sectors.
“We’re not exclusive in terms of who we are willing to work with. If a developer wants our support or assistance, we’re happy to come alongside, as long as we can stick to our priorities,” Kilpatrick says.
Those priorities are affordability and a mix of price points. While affordability is important, the organization isn’t trying to create a concentration of low-income or moderate-income housing, but rather a range of price points.
Housing Next is focusing on working with the county’s most populated communities — the cities of Holland, Grand Haven, and Hudsonville and Grand Haven Township — as they rework local zoning codes to remove barriers to affordable housing.
“Both the cities of Holland and Grand Haven are going through comprehensive zoning rewrites, and they’re taking a lot of input from Housing Next as to what they can be doing,” Kilpatrick says.
And the county is also taking an active role in addressing the issue. Last year, Ottawa County Commissioners voted to re-establish the Housing Commission, appointing a five-member board.
The key to creating affordable multi-family housing is taking advantage of government tax credits and building efficiently, according to Scott Geerlings, whose businesses, Geerlings Development Co. and Midwest Construction, are partnering on a few projects with Housing Next.
“I can’t just do a $20 million project and give up $2 million, but if you cut 10% by being efficient, these projects can make sense and can meet the need,” Geerlings says. “The bottom line is we need to watch every penny on these projects.”
Shaving off 10% requires everyone collaborating to create an efficient design and building process that reduces wasted materials. There is a big savings when waste can be reduced from 20 dumpsters to three, and space is better utilized for heating/cooling systems and duct work.
“If you have those plans in advance, and everyone is working together, it saves time and materials, and eliminates a lot of change orders later that can increase costs,” Geerlings says.
Housing Next is also partnering with nonprofits that are addressing the county’s homeless population.
One example of this collaboration is with Good Samaritan Ministries, which recently started a nonprofit property management arm for affordable rental units. A three-year grant for the program is funded by the United Way’s responsive grant fund, with donations from the county’s two community foundations. Good Samaritan has hired an experienced property manager, and a local property management firm is providing support.
The new effort will complement the nonprofit’s work helping Holland-area homeless residents transition into rental housing with support that includes case management and rent subsidies that decline over time. The program has a 95% success rate, Peirce says.
Those who qualify for the services funded with federal dollars must be either living in their cars, staying in transitional housing, like the Holland Rescue Mission, or fleeing domestic violence.
As it is nearing the halfway point of a five-year pilot program, Housing Next is working to be transparent about its efforts. It recently gave an update in a letter to the community, written by Kilpatrick and the organization’s co-chairs, Mike Goorhouse, CEO/president of the Holland/Zeeland Community Foundation, and Hadley Streng, president of the Grand Haven Area Community Foundation.
The three leaders credited countywide collaboration for creating amazing progress in just a few short years.
“We are energized and grateful for the many voices championing this cause and for those taking actions, big and small, to help make housing more affordable for all. Together, let’s stay committed to making the list of accomplishments twice as long in the years to come,” they wrote in their letter.
You can read more about the Housing Next’s efforts in the organization’s full 2019 Summary Report at housingnext.org/about.
*This original article is from Rapid Growth and can be found by clicking here.