Inside Track: Nonprofit director draws on development experience

Ryan Kilpatrick’s work and familiarity with urban settings led to his position as executive director for Housing Next, which strives to create housing at all price points.
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Housing Next in Ottawa County looks at barriers to housing, including government policy, tax structures and incentives. Courtesy 616 Media

The one-man powerhouse of Housing Next, Ryan Kilpatrick, is working to reduce barriers to the creation of housing at all price points, utilizing his experience in building bridges between nonprofits, developers and state and local authorities.

Prior to leading Housing Next, Kilpatrick served as senior community assistance specialist for the Michigan Economic Development Corporation. In that role he facilitated business development for urban mixed-use projects in West Michigan, reviewing pro formas, grant requests and helping projects acquire financing through the state’s gap financing tool.

“A lot of these urban mixed-use projects tend not to produce the rate of return that a traditional investor is looking for in order to have their return match their level of risk,” Kilpatrick said. “In order to get that project done, it needs some gap financing from the state.”

When he first started, the MEDC was working with Rockford Construction on redeveloping the old Morton Hotel building in downtown Grand Rapids into what is now the Morton Apartments. Rockford purchased the property in 2011, and the renovated building opened for leasing in 2014.

Kilpatrick also was involved with the development of Rockford’s Bridge Street Market, next door to its Grand Rapids headquarters, and the development of the Hyatt Place Hotel in Grand Rapids built by Orion Construction.

For the Bridge Street project, Rockford wanted the Inner City Christian Federation to come along and build the affordable housing project behind it, Kilpatrick said. But the developer was having trouble convincing the Michigan State Housing Development Authority and MEDC to work together on those sites.

“I got to know Ryan VerWys over at ICCF and the team at Rockford and help to make sure both the MEDC and MSHDA were going to invest in the same project to get a mix of affordable and market rate housing next to the grocery store,” Kilpatrick said.

RYAN KILPATRICK
Organization:
Housing Next
Position: Founding executive director
Age: 40
Birthplace: Grand Rapids
Residence: Grand Rapids
Family: Married to Amber Zidarevich; children Henri and Ben
Business/Community Involvement: Community Catalyst consultant, Grand Valley State University Design Thinking Academy adviser, GVSU master’s in social innovation program adviser, Grand Rapids Board of Zoning Appeals member, Downtown Grand Rapids Inc. Alliance for Investment committee member, Grand Rapids Child Discovery Center fundraising committee member.
Biggest Career Break: Former Grand Rapids Economic Development Director Kara Wood recommended him to the vice president of community development at the Michigan Economic Development Corporation.

The MEDC is mainly involved in helping to incentivize market-rate housing in urban districts, but through that work in 2015-2016, Kilpatrick began to realize he was solving problems for one need, but helping to create additional needs.

“As we help to generate more activity and vibrancy in those neighborhoods, it caused some prices to escalate in those neighborhoods, and we didn’t have good mechanisms to preserve existing affordable housing or help to build more affordable housing alongside the existing market rate,” he said.

Because of his developmental work, Lakeshore Advantage President Jennifer Owens, sought out Kilpatrick to discuss with a group of Ottawa County entities the formation of a new organization called Housing Next.

“We started to talk through how does housing get built and not get built? What are the barriers? And the more we talked the more it felt like there might be a good fit between my background and what they were looking for to run this new organization,” Kilpatrick said.

Kilpatrick was aware the Ottawa County United Way had done work via a collective impact model to try to understand the barriers to housing across Ottawa County. The Community Foundation for the Holland/Zeeland Area was looking to invest in the creation of something new that would help drive housing supply at all price points across the county.

Kilpatrick was introduced to Mike Goorhouse, president and CEO of the Holland/Zeeland foundation, who wanted to better understand barriers to housing. After six months of conversations about the dynamics at play, Kilpatrick got the request for him to apply as executive director for the newly formed Housing Next.

The Housing Next Leadership Council appointed Kilpatrick as executive director in 2017.

Housing Next has three primary objectives in the housing ecosystem, Kilpatrick said. The first is to understand the data to quantify where housing is needed, how much is needed and at what price point, and which partners in the marketplace can help produce that type of housing.

The second component is recognizing where public policy is helpful or harmful to getting the kind of housing supply communities need.

“Then it’s working with local municipal officials to unpack those policies, understand why they’re written the way they are and see if we have some ways to augment those policies to enhance our ability to produce more supply with the private sector,” Kilpatrick said.

Third is putting projects together with for-profit and nonprofit developers — after policies are in place — making sure there are financial resources to get the project done.

“When we don’t have financial resources, then we have to figure out what is the story we need to tell around this project, and who do we need to tell it to in order to close the financing gap and get the deal done,” Kilpatrick.

In the first year of Housing Next, Kilpatrick worked with Black River Flats in Holland, a proposed multifamily housing project, which was well on its way but had issues with financing.

The project’s owner/developer, Scott Geerlings, president of Midwest Construction in Zeeland, was concerned with the amount in taxes the project would have to bear once it was complete.

“There weren’t good comparable sales in the market at that time for new apartment construction,” Kilpatrick said, “So the only way to assess the project was based on the construction value, and that was going to give him a really high taxable value on the front end, and he was concerned he couldn’t pass that cost onto his tenants, because that would raise the princes above what the market could afford.”

Housing Next worked with Midwest Construction and the city of Holland to put together a brownfield tax increment financing (TIF) plan, where Geerlings’ costs related to infrastructure would be tax-reimbursed to him over a 10-year period, while he agreed to maintain at least half of his apartment units at 80% area median income.

“Historically TIF doesn’t get used for those kinds of projects,” Kilpatrick said. “It’s often much more oriented toward contaminated brownfield sites that need a lot of cleanup. So in this instance we used the tool a little bit creatively to ensure we were making the financing work for the developer and also guaranteeing a maximum rent level for the residents.”

Kilpatrick said larger lot sizes tend to be a point of high cost for developers. If a developer has to build out sewer, water and roads across more land, there’s no other option but to pass those costs on to the end buyer. One of Housing Next’s strategies for dealing with this is working with local municipalities to pass zoning updates.

“For example, if the local zoning code says you’ve got to have a 100-foot-wide lot, is there a reason for that? Are we perpetuating something that’s really important to the community, or would the neighbors be just as comfortable with an 80-foot or a 70-foot-wide lot,” Kilpatrick said. “And if we reduce those lot widths, what are opportunities to add homes into the neighborhoods where we already have infrastructure?”

In those instances, municipalities may only add one or two houses per block, but on a regional scale, those one or two houses can add up to the thousands, Kilpatrick said.

Multifamily housing can benefit from this approach as well. Kilpatrick said when he was in college, he rented the upstairs unit from the owner of a two-unit building. Allowing for those situations on a regular basis, without forcing homeowners to go through extensive regulatory hurdles, will make a big difference, he said.

“Instead of spreading buildings out across multiple acres of land, sometimes it can be valuable to bring those buildings up a little bit closer to the street, concentrate residential development in one part of the site and preserve the rest of the site as recreational space,” Kilpatrick said.

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