Signature Associates

As Grand Rapids eyes big downtown investments, residents push for more affordable housing

Posted By: mlive on October 6, 2024.  For more information, please click here to read the source article.

The vision for a reimagined riverfront in Grand Rapids is coming to life.

Construction is now underway on Acrisure Amphitheater, and plans are in motion to activate a nearby stretch of the Grand River with pedestrian trails, high-end housing, a hotel, offices, retail and more. Just west of the river, near the downtown YMCA, an 8,500-seat soccer stadium and more upscale housing is envisioned.

But there’s one thing you won’t find in the plans: on-site, low-income housing.

“At the heart of this conversation is the question of, ‘Who is the city for?’” said Cameron Conner, 28, an organizer with Together West Michigan, a group that advocates for issues like affordable housing. “Is it for the rich and famous who can afford these $2,000-a-month luxury condos in downtown? Or is it for people everywhere else across the city?”

The riverfront developments are part of a vision for the city’s Market Avenue corridor developed by Grand Action 2.0, a private economic development group, in partnership with city of Grand Rapids, Kent County, the DeVos and Van Andel families and others.

Together, the projects would represent about a $1.4 billion investment in the city.

Community leaders say the developments would help achieve a host of goals, including adding more downtown housing, activating the riverfront and providing more arts, cultural and recreational activities. The investments also seek to make Grand Rapids a vibrant community that’s attractive to new families and businesses.

However, if completed, the new developments and other planned housing are expected to push Grand Rapids below a 2015 goal of maintaining 30% of its downtown housing for residents earning below $84,600. And while there’s significant demand for housing at all price points in Grand Rapids, including upscale market-rate units, some residents have concerns.

“We would lobby for a much higher level of funding for affordable housing, which is a much louder crying need than riverfront development for high-end tenants,” said Glenn Swier, 69, a retired social worker who lives in Grand Rapids.

Rather than making low-income housing available on-site, the developments — which are either seeking or have been approved for big public subsidies — could contribute millions to the city’s affordable housing fund or reserve 20% of their units for residents earning up to $70,500.

What’s proposed downtown?

The riverfront development consists of two mixed-use projects proposed by Grand Action 2.0 and Fulmar Property Holdings, a company comprised of members of the DeVos and Van Andel families.

Together, the developments would create about 1,406 high-end apartments and condos, as well as a hotel, office building, retail space, 2,500 parking spaces and more. Those project elements would be housed in five, mixed-use high-rise towers.

Rental rates for the units haven’t been finalized, but they could range from $1,762 for a studio to $3,401 for a two-bedroom.

Public subsidies, through the state’s Transformational Brownfield Plan, would be used for both developments.

That program reimburses a developer for eligible construction costs over a 30-year period with a host of state and local tax revenue generated because of the development. If the development doesn’t occur and no tax revenue is generated, no money is provided to the developer.

To get the maximum public subsidy — $544 million for Fulmar Property Holdings and $252 million for Grand Action 2.0 — each project must have an affordable housing agreement with the city of Grand Rapids.

As of now, neither would reserve units for low-income housing.

Rather, Grand Action’s agreement would set aside 20% of its 735 apartments for residents earning 100% of Kent County’s area median income. That translates to $70,500 for a one-person household and $80,600 for a two-person household.

Those units would rent for $1,762 for a studio to $2,267 for a two-bedroom.

Grand Action could also satisfy the agreement by making an $8.4 million payment to the city’s Affordable Housing Fund over two decades. Those dollars could be used to build affordable housing anywhere in Grand Rapids.

For its affordable housing agreement, Fulmar Property Holdings, whose $738 million project includes up to 671 high-end housing units, would make an $8.5 million payment to the city’s Affordable Housing Fund over 20 years.

Project officials say they could build about 5.6 times more affordable units by contributing to the affordable housing fund, rather than attempting to preserve on-site apartments for low-income residents. Fulmar’s Transformational Brownfield request has been proposed but not yet approved by the city.

Residents want more low-income housing

One resident said Fulmar’s affordable housing contribution should be bigger.

“When you compare that to a $735 million project, this is a slap in the face,” Deb Van Duinen, 66, a retired teacher and member of Together West Michigan, said during a recent city meeting. “We can do better than that.”

Before the city approves the Fulmar Property Holdings subsidy request, there should be a “robust public conversation that is very clear on how this development is part of a grand vision for the whole city and why this opportunity cost is worth paying,” she added.

Grand Rapids Economic Development Director Sarah Rainero said city staff are evaluating the proposed affordable housing agreement with Fulmar Property Holdings. Until that work is complete, it’s too soon to say whether the size of the contribution is adequate, she said.

“Right now, we’re in the thick of just evaluating it,” she said.

City staff said they have not created a formula for what constitutes an adequate affordable housing agreement through the Transformational Brownfield program. Rather, each project is evaluated individually based upon financial details such as the project’s cost, the rate of return on the investment, and more.

“You need to keep that flexibility because every development’s financial picture is different, “said Grand Rapids Deputy City Manager Kate Berens.

She said the city’s goal is to strike a balance between maximizing the affordable housing investment while still making a developer’s project financially feasible.

While none of the apartments and condos would be reserved for low-income residents, the units would help meet a big demand for market-rate housing, advocates say.

A 2022 study by Bowen National Research, commissioned by Housing Next, estimated Grand Rapids needs 7,951 rental units by 2027 to keep up with demand.

The biggest chunk of that demand, 28%, is for market rate units serving residents earning $84,600 and up, the study says.

“There’s an incredible demand at all price points,” said Brooke Oosterman, executive director of Housing Next, an organization that supports the creation of new housing in Kent and Ottawa counties. “When we look at our housing needs assessment, we recognize that there’s housing needed at market rate, middle income and deeper levels of affordability.”

Milinda Ysasi, who sits on the Grand Rapids City Commission, said she would like to see low-income housing incorporated into developments across the entire city. However, she noted “different properties of land have different values.”

“A center city property is going to be inherently more expensive,” she said, referring to property at Fulton Street and Market Avenue where one of the developments is planned. “So, I think it’s our job to look at all of our investments and to say, ‘How do we connect people to all parts of our community?’”

She noted that includes city investments in free downtown-area shuttles and other transportation methods such as e-scooters and e-bikes.

“Those are going to be the things that help us to equalize things, and to make sure no matter if you live in the 3rd Ward, the 2nd Ward or 1st Ward, you’re going to be able to experience the activities that are happening downtown,” Ysasi said.

New units would tip balance of downtown housing

If all the new market-rate units are built, the percentage of downtown housing serving lower-income residents would fall below a goal outlined in GR Forward, the 2015 master plan for downtown Grand Rapids. That goal says 30% of the downtown housing supply should be maintained for residents earning below 120% of Kent County’s area median income. For a two-person household, that’s an annual, pre-tax income of $96,720, according to state data. It would total $84,600 for a one-person household.

The new housing would reduce the percentage of downtown housing serving that group to 25%, said Bill Kirk, a spokesperson for Downtown Grand Rapids Inc., which coordinates downtown development.

“With the number of housing units downtown poised to increase from just under 5,000 to over 7,000 with projects planned or currently under construction, it will be important to prioritize affordability where possible in the future,” he said. “That said, with the amount of development adjacent to downtown that includes plans for affordable units and new tools like the city’s affordable housing fund, we’re hopeful that we can stay near the 30% goal.”

While the new housing currently planned near the riverfront and soccer stadium is market rate, Rainero, the city’s economic development director, said there could be additional spinoff housing built near the river in the future. No plans have been made, currently. But in March 2022, when the amphitheater and riverfront development were still conceptual, former Deputy City Manager Eric DeLong said city-owned property south of the amphitheater at 509 Wealthy St. SW could one day be developed into low-income housing.

“We think that’s a great spot for, potentially, a low-income housing tax credit investment,” he said. DeLong noted there is “already interest” in those “same kind of investments” along Market Avenue SW south of Wealthy Street SW.