Traverse City Business News | The Missing Middle: Recently-passed legislation provides new tools to address workforce housing needs

As we kick off the new year, it’s interesting to look back on the growth of Traverse City and the broader region over the first two decades of the 21st century. The early 2000s saw several changes that would lead to considerable regional economic and cultural development and significant impact on our population growth.

Between 2001 and 2003, our region added more new and expanded industrial development than any other small town in the country. Projects including Britten’s major expansion, TranTek’s new production plant, and D&W’s mechanical contracting facility led Site Selection Magazine to rank Traverse City the number one small town in America back-to-back in 2002 and 2003. These were some of the first, of many, accolades that brought national recognition and new people to our region.

Meanwhile, our world-class cultural assets grew as well. The former state hospital was purchased by the Minervini group in mid-2002 and work began to transform it into the Village at Grand Traverse Commons. The State Theater Group and Interlochen first announced a partnership to renovate the State Theater in 2003 – the year that also saw the major renovation of the City Opera House to its current form.

Our economic and population growth over the past 20 years is the envy of other parts of Michigan and the Midwest that have seen dwindling economies and declining populations. This growth, however, has also resulted in significant economic and community challenges related to workforce housing.

A 2019 study by Housing North estimated a shortfall of 15,000 housing units in the region through 2025. Three years later, this shortage has been exacerbated by the pandemic and associated issues, including supply chain constraints, labor supply, short-term rentals, interest rate increases, and further increased housing demand.

To address these challenges, leaders from across the state banded together over the past few years to form the Housing Michigan Coalition. This group focused on advancing forward legislation in Lansing that provides new tools and policy improvements for local communities across the state to address workforce housing independently.  

Coalition members Housing North, Traverse Connect, and the Northern Michigan Chamber Alliance worked with partners across the state to advocate for these needed policy changes. The priorities were to improve local control in housing decision-making, provide more flexibility for local municipalities to apply these new tools as local conditions warrant, and address the “missing middle” gap of workforce housing to benefit residents who have difficulty obtaining market-rate housing but have more income than would qualify for subsidy programs.

Thankfully, our collective voices were heard as Michigan policymakers came together in a successful bipartisan effort to pass the package of housing legislation in December. The package provides new tools to address our local housing needs in several important ways, including two bills from local lawmakers. A payment in lieu of taxes (PILOT) bill, sponsored by Sen. Wayne Schmidt, allows local governments to provide low-income housing tax credits for workforce housing projects. Rep. John Roth sponsored a bill that allows municipalities to offer temporary tax abatements for multi-family or single-family housing.

The legislation also offers new ways for local governments to address the missing middle subset of workforce housing. Municipalities can now create “attainable housing districts” where property owners can apply for partial tax exemptions if they meet affordability requirements set by the local government and Neighborhood Enterprise Zones to support the construction of new homes or condominiums in mixed-use buildings in newly designated zones.

While this legislation is a big step forward, successful growth in attainable housing stock for local communities depends on deploying and utilizing the new tools in our neighborhoods. Effective partnerships between private sector developers, nonprofits, and local governments will be key to success.  

As state agencies begin implementing the legislative changes, business leaders can engage with local officials to discuss the importance of these programs to address workforce housing. Local elected officials and municipal leaders will have an opportunity to attend information webinars hosted by Housing North to learn more about implementing the new tools available to them.

County, city, villages, and townships will be key to implementing these tools and changing the narrative about our region’s housing opportunities for working families. We may not fully address the workforce housing gap by 2025, but by working together with effective public-private partnerships we can significantly impact our region’s future growth and success. Local business and community leaders of the mid-21st century will thank us for taking action today.

Warren Call is the president/CEO of Traverse Connect. Contact him at warren.call@traverseconnect.org.