What it is, where to find it and why it’s Detroit’s next best bet


There is record demand for homes across the country, but also a limited supply. And in Detroit, a predominantly tenant city, there is no surplus of affordable housing in the city and there are waiting lists.

Soaring house prices have put the idea of ​​homeownership beyond the reach of many, and COVID-19 pandemic has exacerbated the problem of housing insecurity at a time when shelter in place was necessary to curb the spread of the coronavirus.

And while rent prices fell at the start of the COVID-19 pandemic, these prices are also seeing a gradual increase. According to National Coalition for Low Income Housing, there is a deficit of more than 100,000 affordable units available at or below the extremely low income cut-off in the Detroit-Warren-Dearborn area.

It may seem like a numbers game for people who are lucky enough to be positioned to buy a home or are ready to move into a new apartment, but for many, the economy is rebounding more slowly than the housing market and employment growth slowed in April.

Now is the time when a city like Detroit, where the median household income is just over $ 30,000, needs safe, clean and affordable housing for its residents and to attract new transplants.

But as more cities find innovative solutions to tackle the affordable housing crisis, is the emphasis on affordable housing in Detroit?

The difference between affordable and low-income housing

There is a difference between affordable housing and low rental housing.

Keegan C. Mahoney, program director, Policy and Implementation Division, City of Detroit Department of Housing and Revitalization, explains that low-rental housing is subject to oversight by the Department of Housing and Housing. federal urban development. “These may include public housing or private homes that accept Section 8 vouchers.” While “affordable” housing is defined by the area’s median income (IAM).

HUD defines the median area income for Detroit using the income for the city and several suburbs, so Detroit’s MAI for a two-person household is $ 62,800.

Therefore: a low income household is defined as an income of 80% MAI ($ 50,240) or less, a very low income household is defined as an income of 50% MAI ($ 31,400) or less, a very low income household is defined as an income of 30% MAI ($ 18,840) or less.

Affordable housing is often listed and is located in the same buildings as market-priced housing. These units can be valued at 30, 50 or 80% of the median income of the region where the rental unit is located.

This would cause the rent for affordable housing to vary from about $ 400 to $ 1,000.

“Developers receive significant tax credits to build and create affordable housing,” says Mahoney. “They also recognize the benefit of helping the community. So we are seeing more and more developers reserving a number of units in almost every new development in the city as affordable housing.

One of these developers is Amin Irving, CEO of Ginosko Development Company. He says, “Back then the federal government would go to developers like me and say, ‘Are you building an apartment building for low-income families?

Amin Irving.“And developers like me would say, ‘Federal government, we’d love to build apartment buildings for low-income families. The problem is, if it cost me $ 10 million to build this building, well, so that I can pay off all the loans, and all the debt that goes with it, I have to put the rent down to $ 1,000 on it. unit, just so I can pay back all the money I borrowed. And so at the time the federal government said there was no problem, we will pay $ 1,000 on behalf of low income families, which is section 8. ”

In the 1980s, he explains, under President Ronald Reagan, many of these programs were postponed and replaced with federal tax credit programs.

“So now the federal government is saying, ‘I’m going to give you $ 10 million in tax credits, but on the condition that you rent them out to low-income families,’ he says.

Developers like Irving then take that promise of a hypothetical $ 10 million in tax credits and sell them to big companies for, say, $ 8 million in cash. “Now I only need $ 2 million in debt to pay off this $ 10 million project,” he says. “And so, instead of charging $ 1,000 in rent, I can now go all the way and charge $ 200 in rent. Because I just need to pay off that $ 2 million loan instead of a $ 10 million loan, ”says Irving.

Ultimately, developers benefit and can generate wealth by investing in affordable housing properties by creating large numbers of them. While they are able to prosper financially, they are also able to help families and communities who need stable and healthy housing.

‘The fundamental mission’

Developers Monique Becker and Sharnita Johnson say creating affordable housing development in the city wasn’t all about making money for them – it’s an investment in the communities they serve.

Becker, a former elementary school teacher with Teach for America, said Model D earlier this year, “As I started to learn, first by working for others, I quickly recognized that development work affects the quality of life in the built environment. I felt like it was often too much about the building and the numbers and not about the people and the impact on human beings. And that’s why we are so focused on the mission. ”

“I think in the affordable housing industry every developer, whether it’s a for-profit developer or a not-for-profit developer, is on a mission to house low-income families. They care about it, ”Irving says. “They really do. I have yet to meet a promoter who does not care about the low income families they serve. This is therefore the fundamental mission. ”

One of Irving’s developments, Renaissance village on the northwest side is an affordable housing community that includes two and three bedroom apartments that he completely renovated in 2018.

In addition, Irving has contracts with several nonprofit organizations that serve the physical and mental health needs of the community. Although he is a for-profit developer, he feels motivated by a divine purpose.

In 1995, when his mother died of cancer, he was just out of high school and forced to sell his childhood home. Selling the house, at $ 20,000 more than the broker expected to sell, sparked his interest in real estate.

Irving eventually met his future business partner, and co-founder of Ginosko Development Company, John Hayes and they founded the company in 2002. Irving was able to make it his full-time business in 2006.

Ginosko Development Company has a capitalized value of over $ 443 million and owns and operates over 2,800 units, including Renaissance Village.

In a video celebrating the community’s openness, one resident, Thaddeus Walker, proudly proclaimed, “You can’t find anywhere else in the city like this.” He explains that Irving hasn’t installed the bare minimum in affordable apartments, opting for plush rugs and thicker drywall, which means lower utility bills.

Irving attributes much of Renaissance Village’s success to building trust. “There needs to be healthy dialogue and transparency between the real estate development team and the community,” he says. “The real estate development team must be very transparent with its vision and the economics of a transaction. And the community needs to be very transparent with their vision and what they are looking for in an agreement.

How to find affordable housing in Detroit

Today, there are nearly 24,000 regulated affordable housing units in Detroit, including 4,957 that have been preserved or expanded since 2018 according to a City press release.

Keegan Mahoney of the city of Detroit explains that there is no surplus of affordable housing in the city and that there are waiting lists. But, the city wants to be a resource to connect developers with communities and residents.

The city received 13 Google scholarships that are working on an online tool to tackle housing instability in the city by creating a portal that will help Detroit residents find affordable housing, making it easier to rent and stay in the city.

The portal will be tested with residents, community organizations, city administrators, housing counselors and property managers / landlords to ensure that it is user-friendly and includes the information Detroiters want in such a search tool.

“By combining the best of Google’s technical expertise and resources with the city’s first-hand knowledge of community needs, we hope to have a lasting positive impact for Detroit residents by helping make housing affordable again.” more accessible to people from all over the world. city, ”says Rob Biederman, Midwestern government affairs manager for Google.

When ready later this year, Detroiters using the portal will be able to:

  • Use search filters to help them find the affordable housing options they want.
  • Gain an understanding of how affordable housing works and its eligibility for different types of affordable housing.
  • Learn about the process and requirements to apply for and access affordable housing.

Additional functions may include an online affordable housing application and signing up for SMS updates on new housing options.

“We are proud of the work we are doing to preserve and create thousands of affordable housing units across the city, but it doesn’t help if the people who need it don’t know how to find them,” said Mayor Mike Duggan. in a statement. “I warmly thank our Google.org Fellows partners for developing a tool that will help more Detroiters find the right housing options so that they can have the opportunity to live affordably in the neighborhood of their choice. . “

This is part of the Block by Block series supported by FHLBank Indianapolis that follows minority-led development in Detroit.

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