State subsidizes project in Traverse City to reduce housing costs for a professional group
The state of Michigan is providing $5 million in funding for a project in Northern Michigan to provide rental housing for teachers whose rents are too high in the Traverse City area. This is the largest subsidized housing program for teachers in the state.
A coalition of private and public schools requested $5 million for the housing project in the recently passed budget to help K-12 schools attract and retain staff as the housing market for low- to moderate-income earners has become increasingly expensive – a goal that a financial watchdog group equated with picking winners and losers among professional groups. The first phase of the project will likely cost up to $23.5 million and include at least 72 housing units for teachers and support staff, coalition officials said.
The groups making up the coalition include Traverse City Area Public Schools, Interlochen Center for the Arts, Grand Traverse Area Catholic Schools and the local middle school district Northwest Education Services.
The $5 million allocation was one of about 200 pet projects totaling $764 million that the Democratic-led legislature slapped into the budget at the last minute. Last year, the Republican-dominated legislature passed $1 billion in appropriations for specific communities, businesses or special interest groups – often referred to as election giveaways.
While some smaller school districts in Michigan, such as the Mackinac Island School District, provide housing for teachers, the project in Blair Township near Traverse City would be the first of its size in the state. Similar projects have been undertaken in Colorado and California to combat excessive housing costs in affluent tourist regions.
“You have to drive pretty far outside the Traverse City area to find something that a young professional or a young family can afford,” said state Rep. Betsy Coffia, a Traverse City Democrat who co-sponsored the funding with Sen. John Damoose (R-Harbor Springs) and Rep. John Roth (R-Interlochen).
According to a study by Housing North, a nonprofit organization based in Traverse City, about 38% of homes in Traverse City are occupied by renters and nearly 62% are occupied by owners. As of February 2023, nearly 71% of homes for sale in Traverse City were listed for more than $400,000, with another 21% listed for between $300,000 and $399,999. The city’s vacancy rate at the time was 0.7%.
Additionally, the average rent in the city is $1,900 per month, according to rental website Zumper.
“Fortunately, we live in a region of the state that is experiencing growth,” said Ryan Jarvi, a spokesman for Northwest Education Services, the agency named in state budget documents as the recipient of the $5 million grant.
“However, the region faces unique challenges and affordable housing is one of the most pressing issues,” Jarvi added. “Each of our organizations has had the experience of a new employee who had accepted a position being hired, only to have the agreement terminated because the employee could not find housing.”
The fiscally conservative Mackinac Center for Public Policy criticized the $5 million grant as an “intrusive, ineffective and spurious” solution that ignores long-term changes that could help solve the housing crisis – such as expedited permitting processes, the elimination of unnecessary licensing laws and zoning changes that would make it easier to build multifamily housing.
In addition, the funding favors one profession over others in terms of need by channeling tax dollars from professions such as nurses or firefighters into housing specifically reserved for teachers and school personnel, said Jarrett Skorup, vice president of marketing and communications at the Mackinac Center in Midland.
“Even if everything goes according to plan,” said Skorup, “a significant amount of money is being spent here to help a tiny number of people, and it is only a tiny drop in the ocean for what is really needed to solve the housing crisis.”
The State of Michigan has provided over $18 million in direct taxpayer funding to various housing projects in Traverse City over the past three years.
Common problem, new solution
The four school groups came together several years ago to talk about the difficulties each of them has in recruiting and retaining teachers, said John VanWagoner, superintendent of Traverse City Public Schools. VanWagoner said in recent years several new hires have accepted a job offer, only to come back about a week later and say they can’t take it because they can’t find affordable housing.
The schools concluded that cooperation on housing was necessary and could serve as a model for other areas of the state struggling with the same problem. The coalition hired affordable housing developer Cinnaire Solutions and a development team in Cunningham-Limp to begin planning the project.
“We’re the first in the state to try to take the baton and see if we can do it,” VanWagoner said.
The housing project is currently planned to include up to 200 housing units for affordable and mixed-income people, with the first phase consisting of 72 one- and two-bedroom apartments for teachers and school staff.
According to VanWagoner, officials are planning to locate the project on 30 to 40 acres of woodland east of Blair Elementary School. The coalition is working with attorneys to create some kind of property restriction on the eventual development to ensure that a certain number of housing units are always reserved for teachers and school staff. However, there will also be housing without these restrictions.
In addition to the $5 million state grant, the project received a $50,000 rural readiness grant from the Michigan Department of Agriculture and Rural Development. The coalition plans to apply for low-income housing tax credits through the Michigan State Housing Development Authority this fall.
“We continue to explore other options to fully fund this project, including tax credits for low-income households and charitable donations, as well as taking out conventional loans,” Jarvi said. “The project itself will carry all debt taken on, with revenue from the units being used to repay the loans.”
It is unclear who will own the project once it is completed – whether the four school groups will share ownership under a joint venture agreement with the developers or whether ownership will be taken over by a nonprofit organization.
The project is a small intervention in the midst of a pressing need. The Traverse City Area Public Schools alone have nearly 1,200 employees.
The Interlochen Center for the Arts employs about 475 people year-round and an additional 1,100 people in the summer. The Interlochen Arts Academy had about 574 students last school year, and this summer’s Interlochen Arts Camp hosted 3,344 students from every state in the U.S.
The organization has about 64 year-round dorms for staff and provides summer student housing for staff, but the coalition said it needs a “conservative estimate” of 20 more housing units. Like other schools in the area, the boarding school 15 miles southwest of Traverse City has had staff opt out of their employment contracts when they couldn’t find housing in the area.
“We know we have been unable to bring on board highly qualified candidates because they have not been able to find housing in our region. And others are currently working from home while they continue their search,” said Trey Devey, president of the Interlochen Center for the Arts.
What other countries are doing
It was the unique coming together of schools and stakeholders that prompted Sen. John Damoose (Republican of Harbor Springs) to help lobby for money for the project. Traverse City’s housing situation has long been a challenge, but groups have recently begun to find more innovative approaches, Damoose said.
A northern Michigan cherry farmer plans to build workforce housing on his property, Habitat for Humanity is building an energy-efficient housing neighborhood in Traverse City and the Chippewa Indian tribe of Sault Ste. Marie recently bought a hotel to convert into long-term housing for the homeless, Damoose said. The Sault project received about $1 million in this year’s state budget.
There is no “panacea” for the housing problem, so unique solutions are needed, said the Republican congressman.
“The situation is bad all over the state, but it’s worse up here because we have so many homes that are used as second homes or vacation homes,” Damoose said. “It’s become a real crisis up here.”
Other U.S. cities struggling with rising housing costs have tried similar housing solutions.
The Eagle County School District in Colorado recently built 37 housing units for its teachers, called the Miller Flats project. The school district – which includes the ski resort of Vail, Colorado – distributed the units through a lottery system from October 2023 to April 2024, tying the prices to employee salaries, assuming 40% of an employee’s salary would go toward rent, said Matthew Miano, a district spokesman.
“Not only do we have too little supply, the units that are becoming available can hardly be described as ‘affordable,'” said Miano about the housing situation in the district.
According to KGO-TV in San Francisco, the San Francisco Unified School District opened applications for affordable housing with priority for the district’s teachers at the 135-unit Shirley Chisholm Village site back in April while the site was still under construction.
According to a report in the San Francisco Chronicle, the housing project received over 900 applications for 135 units, resulting in a lottery for the units.
