Fund Could Create More Deeply Affordable Housing in Downtown Detroit

Fund Could Create More Deeply Affordable Housing in Downtown Detroit

There could be more deeply affordable housing coming to downtown Detroit pending a Downtown Development Authority vote today. // Stock photo

Hundreds of new deeply affordable housing units could be built in the central business district over the next several years if the Detroit Downtown Development Authority (DDA) board votes today to approve final guidelines for a new financing tool for qualifying projects within the limits of DDA. , Detroit Mayor Mike Duggan announced.

“We have a clear vision to create a city, including our downtown, where Detroiters of all income levels can afford to live side by side in the same buildings as people with much higher incomes,” says Duggan, who chairs the DDA and appoints the board. the members. “This new funding gives us the opportunity to make downtown living accessible to Detroiters of all income levels.”

The move comes as overall demand for multifamily housing downtown remains high, as evidenced by a low vacancy rate of 5.9 percent, down from a 12.1 percent vacancy rate in 2020. If approved, the loan program would mark the first time the DDA would target financial support for affordable housing downtown since the DDA was created in 1976 at the instigation of then-Mayor Coleman Young.

According to city ordinance, housing developments that receive city land with rebates or direct city support of $500,000 or more are required to set aside 20 percent of the units for residents earning no more than 80 percent of the median income. of the area.

Under the DDA program, loans will be available for developments where at least 20 percent of the housing units will be reserved for households making between 50 percent and 70 percent of the area median income.

This translates to a household income between $31,350 and $43,890 for an individual or $44,750 and $62,650 for a family of four. The new DDA incentive would only apply to developments located in the DDA’s downtown development zone that offered rentals to residents earning incomes below that level.

To qualify for a loan, the development must:

Be a multi-unit residential development within the DDA footprint that will include at least 10 affordable housing units. Set aside at least 20 percent of its units for residents earning between 50 percent and 70 percent of AMI

The maximum credit amount would be $200,000 per affordable unit, determined on a sliding scale, with larger credits provided for developments that make the units available to residents at lower income levels as follows:

80 percent AMI does not borrow. 70 percent of AMI receives 20 percent of hard construction costs 60 percent of AMI gets 30 percent of hard construction costs 50 percent of AMI gets 40 percent of hard construction costs

“This new tool will allow us to create more affordable housing units at lower rents than we could achieve without it,” says Kenyetta Bridges, executive vice president of the Detroit Economic Growth Corp. “We are also fortunate to have developers who are prepared to immediately use this new loan program to help them lower the rents of these units.”

The DDA board will also vote to approve the first loans under the program, totaling $23,765,000, using the new facility for three mixed-income residential projects to be developed by a joint venture between Related Cos. and Olympia Development of Michigan.

These projects will offer a combination of 139 deeply affordable housing units at 50 percent AMI. Securing the units at 50 percent AMI means that an individual living in one of the units will pay about $850 in monthly rent at a time when the market rate is closer to $2,400.

These projects include 2250 Woodward, with 58 of the total 287 units available at 50 percent AMI; 2505 Cass, with 27 of a total of 131 units available at 50 percent AMI; and 408 Temple, with 54 of 261 units available at 50 percent AMI.

“Although these residents will pay much lower rents, thanks to this program, they will enjoy the same amenities as those paying market rate, which is the beauty of mixed-income housing,” says Bridges.

Another aspect of the DDA’s new loan parameters is a path toward loan forgiveness based on living in affordable units by existing Detroit residents.

“A unique element of this loan program is that developers would give priority to existing Detroit residents. A portion of the loan can be forgiven when the developer shows that the affordable units are being rented to someone who has been a resident of Detroit for at least three years,” Bridges says. “This is a new approach in Detroit that we’re very excited about. proud.”

Leave a Reply

Your email address will not be published. Required fields are marked *