Detroit announces two affordable housing projects in Midtown

**Airforceguy** · February-17-23, 04:05 AM

The two projects from Bingham Farms-based MHT Housing are projected to cost about $25.5 million and will bring a combined 86 apartment units to the area, 63 of which will be designated "deeply affordable" for those making between 30 and 60 percent of the area median income [[AMI) or below, with the remainder for those making 60 to 80 percent AMI.

Income-restricted housing in Detroit uses the broader metropolitan statistical area's AMI of just over $67,000, meaning that units in the developments will be available to those making between roughly $20,000 and $53,000 annually.
https://www.crainsdetroit.com/real-e...fordable-units

**K-slice** · February-17-23, 11:17 AM

Crazy that it costs nearly $300,000 to build one apartment in what's for sure to be a wood frame building. So much for economies of scale.

Good to see the infill though.

**Richard** · February-17-23, 05:52 PM

It reads “deeply affordable” it’s hud backed so it is not costing the developers that amount per unit,you bloat the costs in order to increase the HUD funds.

Affordable housing HUD grants come with a time frame,you have to keep it “affordable” for 3 years then you can drop the “affordable” part and charge regular rates.

Thats HUDs program so they do not have to build or run projects anymore,they pay the developers to do it.

I have a friend that builds large scale,200 plus units apartment complex’s,HUD puts up a majority of his cost to build,he sits on them for 3 years then sells them at full rate.

It used to be 2 years but I believe they raised it to 3-5 depending on what time frame you give them,the longer the more money you can draw.

You will get laughed at if you go to them and say you can do something at 1/2 the cost and save the taxpayers millions in the process,that’s not their objective.

In the article posted it does not specify the time frame for the “affordable” units.

When you are working with gov money,if something normally cost $1 you charge $50,it does not have to be realistic,it’s free money anyways.

Seattle built a high rise for the homeless @ $350,000 per unit ,big difference in Detroit verses Seattle.

Not for nothing but there are a lot of buildings in Detroit that people would look at and say,I wish I could buy that and rehabilitate it if I only had the money.

You do not need to have the money to do it personally,there are so many programs and incentives out there and private investors,it can be done with a good plan.

Dont look at them base on what you cannot do,look at them based on what you can do,you might be surprised.

**Danny** · February-18-23, 07:27 AM

When folks talk about affordable housing, they are not talking about subsidized housing.

**Richard** · February-18-23, 08:36 AM

They are still in essence subsidized,just in one lump sum to the developer at the start ,verses spread out over monthly payments.

It’s good though because it allows teachers,nurses and service workers to live close in where they would have been priced out.

The only issue I see with it is single mothers with children,if the developer is under the 2 year program,they have to move every 2 years,if it requires changing school district or the kids had friends and then moved to far away,it’s like starting over for them every 2 years,Kinda like a stabilization issue.

Affordable or subsidized it does not matter,HUD pays the developer to build,no lose situation.

The income based ones by us stay pretty nice but have restrictions,no felonies etc. but they are being sued because the police would not allow people to hang out on the corner and sell their wares.

Strange world we live in when you can sue because they will not let you sell drugs on the corner.

**JBMcB** · February-18-23, 10:06 AM

The cost of construction has skyrocketed recently. There are two stalled houses, roughly 75% completed, in my neighborhood, mainly due to the fact that material costs increased to the point that the completed home would be too expensive to sell at a profit for the area. Existing homes sell within weeks, so the market is still good, just not for the price the completed home would ask for.

Construction costs of $300,000 per apartment isn't completely unreasonable in this market.

**Richard** · February-18-23, 03:06 PM

The cost to construct a new home in the city of Detroit is 7% above the national average but yet the medium sales price is $84,000.

Medium home value for the state is $236,000

Ann Arbor is $416.498

In the city of Detroit an average 2 bedroom apartment is $1500 per month the state average is $750.

With 20% down or $17,000 a $85,000 home mortgage is $305.

Way cheaper in the city of Detroit to own verses rent but more rent then own.

$300,000 per unit in Detroit is insanity.

In Tampa if I spent $300,000 to build a house it would sell between $500 to $750k easily.

They are saying houses increased in 2022/2023 x 20% but so did everything that surrounds them.

They have been on a mad rush to build new apartments for affordable housing,spending hundreds of millions of dollars,that will never come back.

You would think that with the amount of houses in the city,the cost to purchase and re-hab,the value of those properties where it is cheaper to purchase then it is to rent,one kinda figures it would be more prudent use of tax dollars to be creating homeowners instead of renters,so people can build wealth instead of directing it at a few.

It’s kinda backwards,usually a city ramps up apartment building when there is a shortage of affordable houses or apartment rent is cheaper then a mortgage.

Detroit as a city has an abundance of affordable houses and 1/2 empty neighborhoods,there is no housing shortage why create a bunch of renters when everything points to the perfect opportunity to create homeowners.

What makes the city of Detroit one of the most expensive cities in the country to build in?

It’s not like the land value is driving the costs.

My guess would be,because they are throwing so much money at it,it’s being milked for every last drop.

**Danny** · February-19-23, 07:49 AM

This is couple of new apartments which developers called it affordable housing in Brush Park. It's for the poor and low-income folks who are welfare checks, Social Security Welfare and food stamps? Or is it for hard working $10 to $15 wage hr. Americans? Or its for high salary based nouveau riche career making people. Surely this is not a Brewster Project revival, but a project to bring hard working Americans, young professionals and millennials into Gilbert Town Detroit. It's subsidized housing all-right not just for seniors, disabled or low-income folks. It's subsidized housing for hard working American people with an excellent rating between 630 and up. Developers don't want thugs and yahoos running about next to a high market City Modern "Projects". They want to see Brush Park, Cass Corridor and the of Woodward Business Corridor thriving with people with money and high end business. Just like Chicago, LA and New York City.

**Richard** · February-19-23, 10:21 AM

It’s how it is defined

Subsidized Housing: A generic term covering all federal, state or local government programs that reduce the cost of housing for low- and moderate-income residents. Housing can be subsidized in numerous ways—giving tenants a rent voucher, helping homebuyers with downpayment assistance, reducing the interest on a mortgage, providing deferred loans to help developers acquire and develop property, giving tax credits to encourage investment in low- and moderate-income housing, authorizing tax-exempt bond authority to finance the housing, providing ongoing assistance to reduce the operating costs of housing and others. Public housing, project-based Section 8, Section 8 vouchers, tax credits, the State Housing Trust Fund, and Seattle Housing Levy programs are all examples of subsidized housing. Subsidized housing can range from apartments for families to senior housing high-rises. Subsidized simply means that rents are reduced because of a particular government program. It has nothing to do with the quality, location or type of housing. In fact, a number of Seattle's subsidized housing developments have received

Affordable Housing: Affordable housing is generally defined as housing on which the occupant is paying no more than 30 percent of gross income for housing costs, including utilities.

Reference: www.hud.gov

Hud decided after demolishing Cabrini Green and ramped up after hurricane Katrina destroyed a majority of the projects in New Orleans to get out of the projects and Section 8 business instead of rebuilding/repairing buildings that were mostly built in the 60s.

Its not section 8 anymore as we knew it,they call it a subsidized housing voucher.

It was based on,or they thought that if you phase low income residents alongside of middle and higher income residents,it would “rub off” on them and inspire them to achieve a higher level in life.

So they increased the monthly subsidies to match average rents accordingly.

They give developers low or no interest loans or flat out grants in order to construct “affordable* housing options.

They did that because it was not economically feasible to build new and then rent at below market rates.

I agree the concept was anybody should be able to live anywhere they want regardless of income.

For the rest it is based on the 30% rule,30% of your income is what you can afford as housing options.

Places like LA - New York City etc had high housing costs because they had no more land to build new,they were maxed out which forced costs to rise.

It creates a lot of discourse tho and the intention of mixing people does not work when you have somebody paying $5000 per month living next door to somebody paying $500 per month.

The intention for the “affordable housing “ aspect kicked in where cities had high rents and was forcing service workers,teachers etc out of the city,but it was based on,no more land to build and skyrocketing housing costs .

Not an issue in Detroit.

Plenty of land and affordable housing options available.

It’s the thought process,if I am making $15 per hour I have just as much right to live in EEV as anybody else,I cannot afford it but I deserve it.

St Petersburg Fl is going through that,a 1950s 3 bedroom house in a working class neighborhood is $600k,a $1000 will get you a rented bedroom in somebody’s house.

It used to be you bought or rented where you could afford to and if you could not afford to live in a region you moved to where you could.

But the way the system is being set up now where you can live where ever you want and if you cannot afford it,the subsidies will make up the difference.

People making $15 per hour are not priced out of housing options in Detroit,they are priced out of options where people making $25 per hour are living.

Kinda kills the incentive to do better and increase your income so you can have nicer things,it mimics the war on poverty,we never actually have ever lowered the poverty rate,they raised the level of those in poverty to match or exceed those not in poverty.

There may be something to that though if you really think about it.

Why bust your ass getting educated or learning skills so you can enjoy the finer things in life,when you can have the same things with little effort?

When you build “affordable” housing you cannot discriminate,so there is no difference in somebody making $15 per hour verses somebody collecting a housing voucher because they all fall under making less then the medium income level to qualify.

**Henry Whalley** · February-19-23, 01:31 PM

Originally Posted by Richard

It’s how it is defined...

tldr

**GPCharles** · February-20-23, 09:22 AM

I presume this is a LIHTC deal.

**Richard** · February-20-23, 03:02 PM

Odds are most likely,over 90% of the projects are being funded this way,it’s the tax credits,cash in the pocket and you are putting up little personal investment,low risk high payoff.

It was already in place but this administration opened up the floodgates with a massive pile of cash infusion,go big or go home as they say,the only thing is,in Detroit it’s killing the secondary re-hab market because all of the funds are being diverted to apartments,good in markets that housing has skyrocketed.

When the funds are there to build apartments,they build apartments,at the cost of neighborhood stabilization programs.

It’s a trend that unfortunately cannot be custom tailored to local and is applied as a broad brush.

It is interesting how when the feds put up the funds they actually control what happens and where,but it does not leave any middle ground to leave a balance,it’s cut and dry you get the housing they dictate that you will get.

Ideally it would be a mix 50% housing rehab to increase homeownership and 50% rental which by nature is transitional.

By me you cannot go 1 mile without seeing multiple 200 plus units under construction,because they are dealing with free money the cost of the land was jacked up,so now when they build subdivisions they are way out in the farmland which gives sprawl a whole new meaning.

It’s like they say,for every action,there is a reaction.

But that is dealing with the feds,if you figure it will cost you $100 per sqft to build,you cannot tell them that,it’s $250 because they like big numbers,it gets them excited,tell them you can do the same thing at half the cost while meeting the same goals and saving the taxpayers millions in the process and they will have you tossed out the back door.

If it cost you $150 per sqft to build you tell them $300 so when they do the 50% split you are in essence building it not out of pocket.

They know that’s how it is done,but they do not really care as long as the end goal is met.

Thats how they did the space program,you can always meet your stated objectives if you throw enough money at it,weather it is cost effective is totally irrelevant.

Thats when it sucks to be a taxpayer,you bust your ass to get ahead and make more money while paying your taxes.

Those taxes go into one big pile that gets dropped off at some agency whose only task is to figure out how to get rid of the pile.

**Henry Whalley** · February-20-23, 08:21 PM

Originally Posted by Richard

Odds are most likely...

tldr

**oladub** · February-23-23, 08:02 AM

Originally Posted by Danny

When folks talk about affordable housing, they are not talking about subsidized housing.

I disagree. The first time I ever came across the term 'affordable housing' had to do with expensive homes in Marin County, CA. the county north of the San Francisco Bay Bridge. Marin County was very rich. Working people could no longer afford to live there. The result was a shortage of teachers, construction workers, nurses and other lower middle class workers. 'Affordable housing' was built with State and/or federal funding so rich people could have a stable of workers. The alternative would have been to raise wages considerably. It made more sense for rich people to secure State and/or money rather than pay their workers out of their own pockets.

The meaning of the term 'affordable housing' has since expanded to mean subsidizing corporate builders big enough to hire the attorneys, grant writers and other professionals able to wrangle public subsidies as welfare for the already rich.

Smaller, less financed house building enterprises are being squeezed out of the market as they cannot compete with subsidized housing corporations. In the long run, little more housing is constructed but at a higher price paid by taxpayers instead of purchasers. The higher property taxes home buyers who didn't buy 'affordable housing' pay makes their housing less affordable.