Residential project follows unique path

Collaboration, creativity pave way for workforce housing in Newaygo.
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River Hills Estates in Newaygo is the first in the state to use brownfield incentives to help control the cost of construction. Courtesy Sable Homes

Sable Homes of Rockford, Newaygo County and the Michigan Land Bank Authority came together to execute a first-of-its-kind use of brownfield incentives to support construction of 20 new workforce homes in the city of Newaygo.

The Newaygo County Commission gave its unanimous support to incentives to help pay for infrastructure and site preparation costs at Phase II of River Hills Estates, a new neighborhood of market rate homes in the city of Newaygo.

“Homes in River Hills Estates are designed to be affordable for ‘missing middle’ home buyers who may be moving out of multi-family housing or a small first home into a larger family home,” said Newaygo County Administrator Christopher Wren. “The incentives will be passed along to home buyers by keeping overhead costs low. Maintaining home affordability helps Newaygo County residents.”

North River Hills contracted with Fishbeck, a Grand Rapids-based environmental, engineering and construction firm, to steer the brownfield plan amendment through Newaygo County’s brownfield redevelopment authority.

“Because this particular approach had never been done, we kind of had to noodle through how it was all going to work,” said Susan Wenzlick, Fishbeck project manager.

Brownfield incentives have helped reduce development costs for contaminated and blighted property since the 1990s. Michigan law says a property that’s contaminated, blighted, functionally obsolete, historic, or owned by a county or state land bank qualifies for brownfield incentives. Incentives can be used to pay for demolition, lead and asbestos abatement, environmental costs, and in some cases for infrastructure and site preparation.

The North River Hills project is unique because the property was intentionally conveyed to the Michigan Land Bank Authority to become eligible for the incentives and allow market-rate homes to be built at a lower cost for the benefit of Newaygo residents.

“We could not sell home lots for a high enough price to cover site preparation and infrastructure, so Home Builders Association CEO Bob Filka suggested reaching out to the Michigan Land Bank Authority,” said John Bitely, president of Sable Homes and North River Hills LLC, which owns the property. “With the land bank’s help and support from the Newaygo County Brownfield Redevelopment Authority, we’re using brownfield incentives for the funding gap.”

Newaygo City Manager Jon Schneider said the collaboration will afford the city a new inventory of homes that are affordable for the “missing middle,” or families of teachers, police officers or health care workers in the area.

“The problem you run into in this market is you can’t produce the rent or sales that you’d see in the Grand Rapids area,” Schneider said. “By collaborating with the land bank, we’re able to reimburse the developer and keep the project and construction cost down to a level where the homes and rent are at a price this market can support.”

There are about 2,000 people living within the city limits of Newaygo, Schneider said, but the city serves a wider area of townships that don’t have any commerce or industry and look to the city of Newaygo proper as their community, so the actual population the city serves is closer to 10,000 residents.

“Residents want a good quality of life and amenities that businesses provide, but businesses need residents in order to be sustainable,” Schneider said. “Having more housing stock and increasing our population makes businesses more viable, so that’s a good reason why we’re excited to move forward.”

North River Hills will be reimbursed from the development’s increased property taxes for infrastructure and site preparation costs under a brownfield plan amendment written by Fishbeck and approved by the city of Newaygo, the Newaygo County Brownfield Redevelopment Authority and Newaygo County. 

The city, county and state still will be paid taxes at the pre-development rate until North River Hills is reimbursed, and the county will collect $15,000 from the increased property taxes for its Brownfield Revolving Fund.

“Because of Sable Homes’ and North River Hills’ financial strength, the cost is still upfront, and the TIF pays it back in the end,” Bitely said. “The difference is these homes should sell for $35,000 more, but it will allow Sable Homes to sell these homes for less. It’ll allow these new homes to be built at the price this market is able to afford.”

In order to pass the litmus test for brownfield support, a project has to be for the public good, Wenzlick said. Typically, brownfield incentives are used to redevelop a contaminated site, but in this case, the property in question was in good condition. It just couldn’t support home construction at a cost affordable for working-class residents.

“This was not a distressed piece of property, so where is the public good in this?” Wenzlick said. “The public good is we’re able to provide housing to that missing middle part of the population … and that helps keep people, who want to stay local, local.”

Collaboration between state and local government officials, economic development organization The Right Place, and the development team set the stage for the project’s success.

“Traditionally, we focus a lot on business retention, expansion and attraction work, but in rural communities, the capacity is so much smaller,” said Right Place Newaygo County business development coordinator Julie Burrell. “We’ve paved the way and shown that it can be done, so I think communities across the state will be jumping at the chance to utilize this tool.”

Burrell said The Right Place was thoughtful about the approach and making sure the community is aware of what the project involves.

“People sometimes get afraid of tax abatements and things like that, but you can have all of nothing or some of something, so I think it’s good to take that risk and say we can keep all of our taxes and have it continue to be undeveloped, or maybe we can give up a little bit for a short period of time and have something really great come of it.”

“I am so impressed with how the city of Newaygo, Newaygo County, the brownfield authority, all the local government units were all working together, and everybody was on board with it. It was really cool to see,” Wenzlick said.

Sable Homes took over the first phase of River Hills Estates in 2017 after it remained unfinished for 15 years. At that time, four homes had been built in the phase designed for 31 homes. Sable was able to revitalize River Hills Estates and finished construction of new homes on the remaining 27 lots earlier this year.

Sable and North River Hills expect a complete land and home package to range from $190,000 to $250,000 in this new phase of construction.

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