Construction, Economic Development, and Real Estate

Who really lives in 'low-income' housing?

January 16, 2013
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GR construction firm brings Traverse City's Cottage 36 to life again
The Cottage 36 project used Michigan State Historic Tax Credits and MSHDA Low Income Housing Tax Credits and will be submitted for LEED certification. Photo by Alexis Macaluso

There has been a lot written lately in local media about the development and construction work happening in our core city. Much of the work going on in Grand Rapids is residential development, and a good portion of that has some sort of government financing.  

The most effective program right now seems to be Low Income Housing Tax Credits. The program awards federal tax credits to developers, which are then sold over a period of time to finance development costs.

In exchange for these credits, developers agree to hold rents lower than market rates and only rent to those who have incomes meeting certain guidelines, generally not exceeding 60 percent of area median income.  

The word “low” in the tax-credit program is somewhat misleading. In Grand Rapids, 60 percent of AMI for a single person is roughly $13 an hour — or $27,000 a year.  A family of four would be roughly $19 an hour — or $39,500 a year.

This is not what we usually think of when we think of “low-income housing.” Many of these projects could more accurately be called “workforce housing.” This is housing for those in the service industry or young professionals, bartenders, school teachers, stylists, part-time students, etc.

In many places, these projects provide affordable housing in areas that otherwise wouldn’t be available for people in those income brackets. Downtown Grand Rapids is one of those areas where many of our retail and service workers have to commute in from Wyoming, Grandville, or Kentwood — or areas where housing is more affordable. The projects utilizing LIHTC financing allow people to live where they work — something that’s healthy for society as a whole.

We experienced a poignant illustration of this when we recently finished a project in Traverse City with LC Companies called Cottage 36. The project revitalized a building that had been neglected for years into 29 one- and two-bedroom apartments.

We heard many stories about the value of this project for the community, but none more stirring than the realtor who told of dozens of Coast Guard families he talked to each season. These families came to him distraught at not being able to find housing they could afford anywhere near their work in Traverse City. This project was one of the only options available for the young men and women who chose to serve our country in the Coast Guard.

Once we begin to better understand who the people are who live in “low-income housing,” we may start to think differently about the role this housing plays in our communities.

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