Affordable Housing Project Sparks Debate in Mackinaw City
Supporters Say New Option Would Be a Plus for Business, Schools, Young and Elderly People
By Paul Gingras

Mackinaw City may become home to a new 30-unit affordable housing project designed for people with incomes below the area average. The prospective project is part of an effort to make the village affordable for young and elderly people, encourage more yeararound businesses, provide schools with new students, and increase the non-transient labor force.

Following heated debate at its regular meeting, Thursday, April 6, the Mackinaw City Village Council voted to send Community Development Director Steve Schnell and Village Manager Jeff Lawson to Lansing to meet with members of the Michigan State Housing Development Authority (MSHDA) to research the project and determine whether the city has a sufficient medium-to-lowincome market to accommodate the apartment complex.

The building plan involves five two-story structures with six apartments each.

According to a housing study done by Community Research Services of Okemos, 26 of the village's 859 residents need of more affordable housing. Further, a study done by the Maryland-based Chesapeake Group suggested that inexpensive housing is needed to develop more year-around businesses, Mr. Schnell said.

"Affordable Housing" is a term for government-backed projects in which private developers receive low interest loans by MSHDA to develop high quality dwellings, Mr. Schnell explained. The rent in affordable housing units varies by income and family size. The concept, he said, is that families paying more than 30 percent of their income for rent are overly burdened by housing costs. Affordable housing projects counter this problem by enabling a resident to pay 90 percent of his rent, if he can afford it, or as little as 20 percent, if that is what he can afford.

The estimated rent in the housing units proposed in Mackinaw City ranges from $260 to $690 per month, and to make sure the units stay in good shape, developer Jerry Haan would pay into a building maintenance fund. This fund would prevent the units from becoming run-down, unsightly buildings because MSHDA would have access to the account and make upgrades when necessary.

"This keeps people proud of where they are living," Mr. Schnell said.

Village President Robert Heilman said the project is necessary to combat what he called "artificially high real estate prices in Mackinaw City."

"Even locals like myself are being shut out," he said. "It's difficult to buy a home in Mackinaw City for under $100,000 anymore. Young people can't afford that." He added that he did not want the village to become "a high-end community." To have a "living community," he said, the village needs a mix that includes all age groups and income levels.

President Pro Tempore Sandra Planisek strongly objected to the size of the project, which she said would double the number of lower-income residents in the community and raise the overall population approximately 10 percent. She also questioned whether the school system could accommodate the number of students it could bring to Mackinaw City. Further, she added that 20 residential lots would be sold by the village for the project, but the village would make much less in taxes from an affordable housing complex (which receives a tax abatement) than if the village sold the land to traditional developers. In fact, she said, the village would make more money by selling only two lots.

Mr. Heilman countered that the village is not presently receiving any tax income on the lots, and Mr. Schnell added that the village could not sell 20 lots at once to traditional developers, anyway.

"If we did that, we'd glut the market," he said. "There isn't demand for that many lots right now. We'd also be competing with other landowners selling lots in the area."

Rather than taxes, Mr. Haan would provide the village with an annual "Payment in Lieu of Taxes" of about $8,000, Mr. Schnell said, but the village will not know how much revenue the project will actually produce until it is built and operating.

Trustee James Alford said he understood Mrs. Planisek's concerns, but added that the project is necessary.

"During my eight years on this board," he said, "we have talked and talked about helping establish year-around businesses and decent paying jobs, but nothing has taken place." He cited the costly Chesapeake Group study, which mentioned the need for affordable housing in Mackinaw City, and said, "Someone must take a step forward."

The housing project could attract businesses dissuaded from locating in an area because their employees could not find affordable housing, Mr. Schnell said.

"With job development comes housing development, and vice versa," he added.

Mr. Schnell said there are a number of parents who would like to place their children in the Mackinaw City schools but cannot do so because housing costs prevent them from living in town. Further, they are dissuaded by high fuel costs from transporting their kids into Mackinaw City.

Following the meeting, village representatives contacted Jeff Curth, superintendent of Mackinaw City schools, who said the school can comfortably handle 45 additional students, unless they are all concentrated in one or two grades. If more than 45 students were to arrive, he added, the school system would simply gain an opportunity to build new classrooms and hire more teachers.

A major problem affordable housing projects have in getting local approval, Mr. Schnell said, is a common misconception that they are geared to low-income residents and could increase the impoverished population in areas where they are built. This project, however, he said, is geared toward people with medium-level incomes. The concept is to make housing "affordable." There are already housing projects in the area designed for low-income residents, he said.

Another problem posed by Mrs. Planisek concerned the potential for the new apartments to draw residents from existing lowincome projects in the area, leaving them vacant. It could also draw more transient labor, she added.

This issue can only be solved by research, Mr. Schnell said.

"We have to get consultants to come back and confirm the market demand," but in terms of transient laborers, Mr. Schnell said they would be unlikely to pass the screening process required to get an apartment. This would include completion of a long application, a one-year lease, and proof of yeararound employment. There is already housing for the village's hundreds of seasonal employees, he added.

The majority of communities in Michigan with affordable housing projects have reported positive feedback from their residents, Mr. Schnell said, citing comments by Pellston Village President Jim Gillett in particular.

The housing project left local landlord Dick Moehl uneasy. Although Mr. Moehl supports the village council's move to research affordable housing, he feels the project may have the potential to ruin the existing housing market in Mackinaw City by drawing customers out of rentals such as his. He contends he lost money last year. In a letter to Mr. Heilman and the village council, he questioned whether the affordable housing project would ultimately ruin his investment, and speculated that he may seek a lower tax bill.

"If the [Economic Development Corporation] could offer the local renters a similar incentive opportunity as what the MSHDA gets, then perhaps our affordable housing needs would be resolved," he said.

Mr. Schnell said his first guess is that this would not happen.

"We wouldn't do this if current housing demands were met," he said. MSHDA, he added, requires that there be an existing market for the proposed project.