In a landmark move, the Michigan State Housing Development Authority (MSHDA) has earmarked $100 million in the 2025 Fiscal Year Budget to address the state’s pressing housing needs. This significant allocation aims to boost the housing stock and enhance affordability across Michigan. The funds will be directed toward constructing new single-family and multi-unit homes, renovating existing units, and improving energy efficiency.
Addressing Michigan’s housing shortage
Communities throughout Michigan are grappling with a supply-constrained housing market. When coupled with interest rates not seen since before the global financial crisis and with the cost of housing on the rise, many individuals are finding it increasingly difficult to secure an affordable, safe, and quality place to live. Michigan experienced the second-highest year-over-year increase in rent prices across the United States. In a recent report by the University of Michigan, 51% of renters and 18% of homeowners were housing cost burdened in 2022, spending over 30% of their income on housing, a common benchmark for affordability in the market.
The $100 million MSHDA allocation is a beacon of hope, poised to address the housing shortfall. It can help communities and developers to secure the necessary gap funding to bring their housing projects to reality. These projects, in turn, promise to increase the affordability and availability of housing in Michigan. This initiative is not just about building homes; it’s about building futures and strengthening communities in Michigan.
The complexities of housing development
Housing development is a multifaceted process involving numerous challenges and barriers, from financial constraints to regulatory hurdles. These obstacles can significantly impact the pace and success of housing projects. The newly allocated funds can help alleviate some of these burdens, making it easier to overcome development challenges.
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Available funding sources
Several funding sources from MSHDA can be leveraged to support housing development projects:
- Housing Readiness Incentive Grant Program
- MI Neighborhood Program
- Tribal Nations Housing Development Assistance Program
Housing Readiness Incentive Grant Program
The Housing Readiness Incentive Grant Program provides grants of up to $50,000 per project to encourage additional housing development and affordability. The state initially allocated $5 million and now only $800,000 remains in the 2024 budget. These funds are only available to cities, villages, and townships, to help local governments meet their housing demands. The Housing Readiness Incentive Grant Program is a significant step toward addressing the housing crisis, promoting sustainable urban development, and committing to providing affordable housing options.
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MI Neighborhood Program
The MI Neighborhood Program aims to enhance housing development by providing streamlined access to funds for three main housing activity components: rehabilitation, new unit construction, and public amenities. Its goal is to address housing challenges in Michigan by promoting community revitalization. Grants ranging from $200,000 to $2 million are available for use by nonprofits, for-profit businesses, and local governments. The development must be organized to aid persons and families of low or middle income. The program seeks to create vibrant, inclusive neighborhoods by fostering partnerships between various stakeholders, exemplifying Michigan’s proactive approach to tackling housing disparities.
Tribal Nations Housing Development Assistance Program
The Tribal Nations Housing Development Assistance Program provides $3 million in funding to help remove barriers to program participation, cover critical predevelopment expenses, respond to additional capacity-building needs and opportunities, and bridge project financing gaps. It underscores the commitment to empowering tribal communities and enhancing their living conditions, recognizing tribal sovereignty and the importance of collaborative efforts in addressing housing issues.
Conclusion
In the face of escalating housing challenges, Michigan has taken a bold and necessary step toward increasing housing stock and affordability. These funding sources will be crucial in increasing housing supply and affordability throughout Michigan.
Michigan communities and organizations should act promptly, recognizing that available funds are likely to deplete rapidly. Whether contacting a third-party consultant, or collaborating with local stakeholders, communities and organizations should actively engage in strategic planning, prioritize housing initiatives, and swiftly allocate available resources to address housing affordability.
How can Plante Moran Realpoint help?
When it comes to complex real estate development projects, Plante Moran Realpoint strives to simplify the process. Our experienced team will help you navigate the countless steps and requirements needed to maintain momentum, overcome hurdles, and mitigate risks from concept through project completion. Contact our team for help with development strategy, feasibility analysis, due diligence, project underwriting, financing strategy, and incentives.
In a landscape marked by financial hurdles and regulatory complexities, Plante Moran Realpoint can be a source of knowledge and reliability. We understand the challenges you face and the funding sources available to you. We’re not just consultants; we’re your partners in transforming housing development and making affordable housing a reality. Contact us today.
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