TL/DR –
Grand Rapids’ policy to prioritize the redevelopment of vacant property into affordable housing is reportedly gaining traction among developers. The policy, adopted in 2022, gives priority to the sale of vacant property owned by Michigan’s State Land Bank to qualified nonprofit housing developers for the first six months on the market, with the stipulation that the properties must be developed into affordable housing. Since the policy’s adoption, one vacant home has been rehabilitated and sold at market rate, while four affordable homes are currently under construction, with 15 more applications are under consideration.
Grand Rapids Affordable Housing Initiative Gains Momentum
Grand Rapids’ policy to revamp vacant property into affordable housing is progressing, with increasing developer interest, according to city officials. City commissioners have recently approved the sale of two vacant properties for development into new homes for buyers earning below the area median income.
This approval adds to three other developments also greenlit. There are over a dozen more vacant properties in Grand Rapids awaiting review for potential housing development applications.
“Given the growing interest and awareness, I’m optimistic that many of these applications can progress,” remarked Jono Klooster, interim economic development director for Grand Rapids.
The Grand Rapids City Commission implemented a policy in 2022 that prioritizes selling vacant property owned by Michigan’s State Land Bank first to nonprofit housing developers for affordable housing projects.
The properties are available to any developer after six months but must be used for affordable housing development. After a year, the properties can be sold to anyone, with priority given to projects promoting affordable housing, homeownership, local ownership, and emerging developers.
So far, the city has sold lots to nonprofit developers for $5,000 each to build affordable homes, also assisting with subsidies from federal funds. One vacant home has been renovated and sold at market rate, and four affordable homes are currently under construction.
“The policy is resulting in the outcomes we want. Four new homes are being constructed for households earning 80% area median income or below, which is our top priority,” said Klooster.
According to the Michigan State Housing Development Authority, 80% area median income in Grand Rapids ranges from $53,040 for a single household to $75,760 for a household of four. However, the city recognizes that more housing is needed at all price points. A 2023 study suggests Grand Rapids requires roughly 13,880 additional housing units by 2027.
The policy also provides pathways for those looking to boost homeownership and convert vacant property into housing, even at market rate without income restrictions.
“If we had only required affordable housing, some properties would likely remain unoccupied. Instead, we now have households living in them, which is a positive outcome, and we need more of that,” Klooster added.
Developers are required to finalize their building plans and financing before the city approves the sale, reducing the chances of a property staying vacant. “We didn’t want to sell property until a project was ready to be built. So far, it seems the program is working as intended,” Klooster said.
Presently, the city has 62 vacant properties held by Michigan’s State Land Bank, with five under option for sale. Four of these properties require rehabilitation. Eighteen properties are not currently available for sale, awaiting potential zoning reform, which may allow construction of duplexes.
The city is also exploring ways to provide opportunities for new developers keen to enter the field. A significant challenge remains the current construction cost, which can sometimes exceed a home’s appraised value. City staff are seeking additional funding resources to mitigate this and considering allowing more density as part of the solution.
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