[$10 Million State Investment Boosts Workforce Housing in West Michigan]
Efforts to increase the availability of workforce housing in West Michigan have received a significant boost with a $10 million state investment. The Michigan Strategic Fund board approved the allocation, which will go towards a loan fund specifically designed to support developers constructing rental housing for moderate- to middle-income residents. The investment comes as the region experiences significant business growth, including a $1.7 billion expansion at a Holland battery plant. This expansion, along with other economic developments in the area, has created a demand for more housing options.
The program, aimed at addressing critical housing gaps across Ottawa, Allegan, and Kent counties, seeks to provide access to capital at a time when rising construction and labor costs are making it challenging for developers to finance workforce housing projects. It is important to note that the loans provided through this program will have to be paid back.
The $10 million investment will be channeled through IFF, a community development financial institution based in Chicago. IFF, which already has an office in Grand Rapids, has partnered with Kent and Ottawa counties on similar housing loan funds. As a mission-driven lender committed to community-centered lending and real estate consulting, IFF will use the fund to provide loans for rental housing units targeting residents with incomes between 60% and 120% of the area median income. For example, in Kent County, this translates to a maximum income of $102,360 for a three-person household, according to state data.
Chris Uhl, an executive director at IFF, expressed his enthusiasm for the state’s investment and hopes to leverage it, along with contributions from Kent and Ottawa counties, to attract corporate investments into the fund. This collaborative effort aims to tackle the pressing needs in workforce housing and bridge the gap between supply and demand.
The $10 million investment granted by the state consists entirely of public funds. However, there is optimism that businesses in the region may choose to invest in IFF’s housing initiatives. It is hoped that the state’s commitment will encourage further private sector participation.
The Michigan Strategic Fund, affiliated with the Michigan Economic Development Corporation (MEDC), plays a crucial role in approving state incentives, grants, tax breaks, and investments aimed at fostering economic growth in the state. The MEDC estimates that around 50,000 new housing units are needed in Kent and Ottawa counties to meet current demand.
The catalyst for establishing the $10 million housing fund was the $1.7 billion expansion at LG Energy Solution’s battery plant in Holland. This expansion includes the construction of a new 1 million square foot battery production facility, which is expected to create approximately 1,000 jobs by its completion in 2025. Other business expansions in the region, such as Gentex’s $300 million expansion, are also contributing to the growing need for workforce housing.
While the timing for IFF to begin issuing loans using the state’s $10 million investment was not explicitly mentioned, there is anticipation that it will commence sometime this year. As for the average loan size and the number of projects to be funded annually, those specifics are yet to be determined as they will depend on the applications received and the housing needs identified across the three participating counties.
This is not the first time that IFF has partnered with local governments in West Michigan to invest in housing initiatives. Recently, the Kent County Board of Commissioners entered into an agreement with IFF to manage its affordable housing loan program, depositing $17.5 million into the fund, which is expected to reach $58 million through matching funds provided by IFF.
Housing advocates in West Michigan have expressed their support and appreciation for the state’s investment in IFF. They recognize the growing need to accommodate middle-income workers in sectors such as advanced batteries, automotive, healthcare, and education, where earnings typically range between $40,000 and $75,000 per year. However, the rising costs of labor and building materials have posed challenges for developers in securing financing for workforce housing projects. The $10 million investment from the state is seen as a significant step in solving this problem and facilitating the development of much-needed housing options for the region’s workforce.
According to the agreement between the MEDC and IFF, a minimum of 20% of the rental units funded by the $10 million loan will be allocated to residents with incomes up to 120% of the area median income. This provision ensures that a portion of the housing will be accessible to moderate-income individuals and families. While it is expected that many projects supported by the program will exceed this 20% requirement, there may be cases where the cost of development in high-opportunity neighborhoods necessitates a greater portion of market-rate units. Nonetheless, all projects receiving funding through the program will include a minimum of 20% workforce housing units.
The $10 million state investment in the loan fund represents a vital signal of commitment to addressing the workforce housing needs in West Michigan. It is hoped that this initial investment will be the catalyst for further private sector engagement in supporting these housing efforts. The collaboration between the state, local governments, and IFF sets a positive precedent for future public-private partnerships in this important sector.
