City approves affordable housing fund

Partnership with GR Community Foundation will bolster efforts to eradicate racial and ethnic disparities.
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West Garfield Apartments, a 26-unit complex on the city’s southwest side, is one recent example of new affordable housing cropping up in the city. Courtesy Orion Construction

The city of Grand Rapids is working to preserve and increase its affordable housing supply, establishing one of many necessary steps to address racial and ethnic housing disparities in West Michigan.

A joint agreement with the Grand Rapids Community Foundation (GRCF) was approved by the Grand Rapids City Commission to establish the Grand Rapids Affordable Housing Fund as one of the foundation’s non-endowed designated funds.

“Establishment of the housing fund is a major accomplishment that has been a priority for this commission,” Mayor Rosalynn Bliss said. “This effort is essential as we work to ensure that Grand Rapids remains a desirable and equitable place to live for all. I am grateful for all of our partners, residents, commissioners and city employees who worked hard over the years to make this fund a reality.”

The initial concept of the Affordable Housing Fund was first established in 2015 through the work of the city’s Great Housing Strategies initiative and was aided by the suggestions of Housing Now!. The city later suspended its plans to move forward with creation of the fund due to a perfect storm of events, including closure of the Kent County Land Bank Authority and the need for a housing strategy aligned with the city’s strategic plan, which still was in the process of being formed.

Housing Next — a pilot program of the Greater Ottawa County United Way — was first hired by the city in 2019 to support work city staff and the Grand Rapids Housing Commission were doing under the strategic plan to address housing disparities in West Michigan. Priorities of the plan’s economic prosperity and affordability include an objective that “supports housing development and services that help keep people in their homes.”

Housing Next’s objective was to provide support in helping to craft the Affordable Housing Fund and policy surrounding it through adopting best practices from other versions of affordable housing or trust funds from across the country with the intention of creating a standout local model. The organization also played a primary role in identifying GRCF as the fiduciary management steward.

“What we want to be able to do with the Affordable Housing Fund is to create a long-term source of funding that is capable of supporting the necessary housing supply and affordability,” said Ryan Kilpatrick, executive director of Housing Next. “In the short-term, what we need to do is support preservation of existing affordable housing and new construction, but we also need to simultaneously try to grow the size of the fund as much as we can so that ultimately, that fund can be self-perpetuating.” 

The fund also seeks to address racial and ethnic barriers in housing by focusing on a few primary objectives, one of them being homeownership rates among households of color.

“We’ve got a lot of evidence that demonstrates Black households and Latinx and Hispanic households have a much lower rate of homeownership in the city, and we want to bring parity there. So, there’s opportunities to invest in down-payment assistance, and rehab and repair loans to both improve existing housing stock and improve energy efficiency and climate resilience,” said Kilpatrick. “But what we also want to do is ensure that we have enough investment to support emerging developers of color who want to participate in the growth and wealth creation across the city and help us to build more housing supply, and that could be investing as an equity partner or as a gap financing partner to make sure those emerging developers have access to capital.”

An initial investment of $875,000 was included in the city’s FY21 budget and will remain available to aid the fund in achieving its goals.

Commission policy for the operation of the fund was outlined in detail by Kilpatrick at a recent Committee of the Whole meeting in which he presented the board’s makeup, purpose, appointment process, duties and decision-making process. He also outlined uses of funds for investment in housing and the process for initial and future deposits to the fund.

Commissioners determined GRCF would manage the fund investments while the Housing Fund Board would be responsible for making all capital spending and distribution decisions.

According to Kilpatrick, the board also will be asked to review applications at least twice per year and provide recommendations relating to investments and disbursements for gap financing, acquisition and pre-development loans to nonprofits, funding to support emerging developers of color, or homeowner assistance grants. 

“(The board) will also be asked to prepare an annual plan for the City Commission that sets out the goals and objectives of the fund, how they’re looking to spend those dollars each year and how they want to communicate those priorities to potential applicants,” Kilpatrick said.

A projected $5 million in American Rescue Plan Act funds also are envisioned in the 2022 fiscal plan, which may be permitted under federal rules aiming to encourage the development or preservation of affordable housing. The board also could consider this potential direct investment, as well as other gap financing offered to development projects that receive money from state or federal funding, or equity investment.

The 11-member board will consist of a diverse representation of the racial/ethnic makeup of community members who have previous experience relative to housing, finance, residential development, health and well-being, lived experience, social work, philanthropy and impact investing.

The board makeup will include:

  • Three members nominated by commissioners — one from each ward
  • One member nominated by the mayor
  • The city manager or their designee
  • The executive director of the Grand Rapids Housing Commission
  • Five members nominated from community through the Committee on Appointments 

The Affordable Housing Fund will not solve the problem by itself, however.

“(It’s) one step among many that needs to be taken both in the city and across West Michigan to increase housing supply and affordability,” Kilpatrick said. “(It) definitely isn’t a silver bullet, but it’s a really important tool that helps us get further, faster.”

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