10,000 new Michigan homes? Plan calls for $800M, changes to zoning code to bolster stock

Detroit's Housing Market Forecast

Real estate advice from Michael Perna www.thepernateam.com

(FOX 2) - As the state works to reduce its housing shortage, the group that represents local governments in Michigan is pitching a plan to build 10,000 homes.

The MI Home Program would strive to build or rehabilitate thousands of homes, while promoting changes to the local zoning code, while making use of the market, so businesses can help their employees with their housing needs.

But doing so won't be cheap, argues the Michigan Municipal League, which wants five years of reliable funding to the tune of hundreds of millions of dollars to make the program a reality.

Big picture view:

The program calls for investing $160 million a year for five years to tackle various hurdles that people who want to own a home come across.

More than half would go toward a grant that would pay for the cost of building or rehabbing a residential property, while another chunk would go to a revolving loan fund that helps fill in gaps in financing for expecting homeowners.

The MML's plan also calls for reforming zoning codes in local cities. That could include shrinking the size of dwelling units, building mixed-used housing where commercial properties are allowed, promoting more duplexes, and even shrinking parking spots at dwellings.

The plan also calls for the creation of an Employer-Assisted Housing Fund in which the state would match contributions from businesses to help employees with their housing.

Path to 10,000 homes in Michigan

Over five years, the program would use $800 million to tackle its goals. Here's a breakdown of how $160 million would be spent annually:

Dig deeper:

MI Home Readiness ($5 million annually)Continue to provide funding for Housing Readiness Incentive Grants to local governments for the purpose of updating zoning regulations in support of housing needs. Capped at $50,000 per applicant.Create a statewide matchmaking platform to identify housing opportunities and make connections between the state, municipalities, and developers.
Continue to provide funding for Housing Readiness Incentive Grants to local governments for the purpose of updating zoning regulations in support of housing needs. Capped at $50,000 per applicant.
Create a statewide matchmaking platform to identify housing opportunities and make connections between the state, municipalities, and developers.
MI Home Grant ($95 million in years one and two, $145 million in years three through five)Establish a grant fund to pay for the cost of building or rehabbing qualified residential property. Capped at $100,000 for new construction and $30,000 for rehab per dwelling unit but cannot exceed 1/3 of the cost of construction or rehab. The caps will increase annually by an amount equal to the Headlee Inflation Rate Multiplier.
Establish a grant fund to pay for the cost of building or rehabbing qualified residential property. Capped at $100,000 for new construction and $30,000 for rehab per dwelling unit but cannot exceed 1/3 of the cost of construction or rehab. The caps will increase annually by an amount equal to the Headlee Inflation Rate Multiplier.
MI Home Fund ($50 million in years one and two)Create a revolving loan fund that addresses finance gaps for building or rehabbing qualified residential property. Modeled after current fundssuch as Build U.P. (InvestUP), Rapid Response Housing Fund (Housing North), and Grand Rapids Affordable Housing Fund (City of Grand Rapids). The MI Home Fund can be used in conjunction with the MI Home Grant.
Create a revolving loan fund that addresses finance gaps for building or rehabbing qualified residential property. Modeled after current fundssuch as Build U.P. (InvestUP), Rapid Response Housing Fund (Housing North), and Grand Rapids Affordable Housing Fund (City of Grand Rapids). The MI Home Fund can be used in conjunction with the MI Home Grant.
4. MI Home Employer ($10 million annually)Continue providing funding for the Employer Assisted Housing Fund to promote public private partnerships, with the state matching employer contributions to their employees’ housing.
Continue providing funding for the Employer Assisted Housing Fund to promote public private partnerships, with the state matching employer contributions to their employees’ housing.

Proposed Zoning Changes

Building more housing would also require reform at the local level that would allow for more construction. The proposed changes include:

Reduce residential parking requirements to 1.5 space per dwelling or less
Allow accessory dwelling units (ADU) for long-term housing (not short term rentals) as permitted use
Allow duplex as permitted use in residential
Adopt pre-approved plans
Allow higher density near transit and employment centers
Allow single room occupancy for non-related individuals for long-term housing (not short term rentals)
Reduce allowable dwelling unit size
Allow multi use dwellings and mixed use where commercial is allowed
Reduce governing body approvals by expanding and expediting administrative review approvals
Reduce minimum lot size requirements
Provide height density bonuses
Reduce tap fees
Allow modular as a permitted use in residential
Complete the Redevelopment Ready Communities program

The backstory:

Michigan's housing agency celebrated 22,000 new homes being added to the state's housing stock in May. However, an analysis by the department found a shortage of 119,000 homes.

The lack of housing has driven up the cost of owning or renting in Michigan, which makes it more difficult to reside in the state.

Experts argue zoning laws have stymied growth, which already faces pressure from the cost of constructing a new home or rehabilitating an old one.

What they're saying:

"Michigan’s housing shortage affects every corner of our state — from large cities to rural communities," said Mayor Don Gerrie, the president of the league board mayor of Sault Ste. Marie. "The MI Home Program is a targeted, practical approach to building more attainable housing units, while supporting local decision-making and creating thriving, more vibrant communities."

The program has the backing of representatives from eight Michigan districts and two Michigan state senators.