City of Muskegon’s innovative solutions to housing affordability getting national recognition

MUSKEGON, MI – A lakeshore community is being nationally recognized for its creative solutions to housing needs.

The city of Muskegon is one of 10 finalists for the Ivory Prize, representing efforts from across the country to deliver impactful and practical solutions to housing affordability.

The award is given by Ivory Innovations, a nonprofit that operates as an applied academic institution at the University of Utah’s David Eccles School of Business.

In its seventh year, the award recognizes the most ambitious, feasible, and scalable solutions to the critical issue of housing affordability.

The award is designed to celebrate and reward innovators for their efforts and provide material support to advance their work. Muskegon is listed in the policy & regulatory reform category. The other categories are instruction & design and finance.

The city is being recognized specifically for their use of tax increment financing (TIF). The city “leverages tax increment financing to transform vacant lots into affordable single-family homes, recovering costs through future property tax gains,” the foundation shared.

The city of Muskegon owns 495 vacant buildable lots in a Brownfield Plan Amendment.

The city is building some houses itself and is then able to sell them for less than construction costs because the city is not a “profit-driven builder,” said Jake Eckholm, director of development services for the city.

Under the Muskegon Scattered Site Infill Housing Brownfield Plan, 212 homes have completed construction.

Another 123 are under development agreements or sold for construction and 160 are still for sale.

“The houses we build are priced so that folks in the low to moderate income buying range can afford them, and the market rate houses that are built are still paying TIF funds into the plan, effectively subsidizing the more affordable units and reimbursing the city for our losses against construction costs,” Eckholm said.

From 2018 to 2023, this program accounted for 60% of the new houses constructed in the city.

The other 40% were primarily lakefront homes or condominium developments, Eckholm said.

“Those are important needs in the housing market as well, the data shows we need housing at all price points,” Eckholm said.

“However, we are not under any illusion that the majority of the community can afford those homes, so this project has allowed new construction infill for working families, young buyers and other crucial members of the buying market that may not have found a home in the city otherwise.”

Muskegon joins Los Angeles County and the state of Florida among the municipal recognitions. Other finance and construction/design organizations are on the top ten list.

The winners of the Ivory Prize will be announced on May 20 at 10 a.m. MT on ivoryinnovations.org. Each will receive a share of the $300,000 grand prize.

Eckholm said he’s proud of the work done by the city staff, the Brownfield Redevelopment Authority Board, city commission, local builders and realtors.

“And the community for embracing our neighborhoods and supporting this new housing,” Eckholm added. “This is a team effort, and none of our success would be possible without all of those stakeholders.”

“To even be a finalist is a testament to the hard work and innovative efforts of our team at city hall,” said Mayor Ken Johnson. “I’m proud of the great progress we’re making, but know we have much more work to do still.”

The infill housing program began in 2018 but ramped up with the funds from the American Rescue Plan Act.

Muskegon allocated approximately $5 million of $22.8 million ARPA funds towards housing.

That resulted in 42 homes being specifically constructed by the city, with all of them selling under $225,000 and some as low as $129,000.

The city is now partnering with small scale, local builders to build homes on remaining city lots.

Buyers must build a residential home in 18 months.

There are also “incremental developers,” rather than large-scale developers, Eckholm said, that build one to four homes at a time.

In 2023, a housing study revealed that the city would need 3,000 units to fulfill resident needs in the next five years.

Other issues raised by the study were increasing rent prices that are driving out lower-income residents – or gentrification – an increasing number of seasonal and short-term rentals and a shortage of affordable homes that are for sale.

“If you look purely at units, we are about halfway towards meeting our 3,000-unit shortfall,” Eckholm said. “However, we are falling short on the housing called out in the study for very low-income people, both in the rental and owner-occupied sense.”

Eckholm said the study called for 385 new units of rental housing between 2023 and 2027 that is under $570 a month.

“That cannot be built and marketed without a subsidy, and those subsidies don’t exist at the scale to meet that need,” he said.

The city has supported the developments of affordable apartments, like Amity Commons and Allen Crossing under construction near Apple Avenue.

RELATED: Muskegon approves tax credit application for 92-unit senior housing development

“We have a long way to go at the local, state, and federal level to address the gap between housing costs and what people can actually pay,” Eckholm said.

The need for housing is felt county-wide in Muskegon.

A 2023 study by the Muskegon Community Foundation revealed that the county will be short by 9,000 housing units in the next decade, due to the increasing population growth of the county.

The need includes owned homes, rental properties, apartments and condos.

A county-wide housing coordinator position was created to help address the problem.

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