NEWAYGO, Mich. — It’s no secret that West Michigan is undergoing a drastic housing shortage, with inventory between less than one month and up to two months, depending on the area, according to City2Shore real estate broker/owner Steve Frody.
To help with that shortage, one local builder and the City of Newaygo found a compromise that is adding housing in the city, one that the builder hopes other communities will learn from.
River Hills Estates in Newaygo had sat unfinished for nearly 15 years, after the original developer pulled out with only four homes completed.
In 2017, Sable Homes took over and quickly built on and sold homes on the remaining 27 lots.
“Newaygo was thrilled," explains Sable Homes president John Bitely. "They welcomed us with open arms."
Sable completed the homes in Phase 1 in 2019 and, as Bitely describes, “Now it’s a neighborhood. It’s true workforce housing.”
However, for Phase 2 of that same neighborhood, Bitely said, he couldn’t make the numbers work due to the upfront costs like tree removal, ground leveling, installation of the water main, the fire hydrants, and other items, totaling more than $300,000.
“The infrastructure for the new roads and the requirements that were involved cost more than what we were selling the already developed lots for,” Bitely explained. Hence the market doesn’t work at that point. It’s backwards."
But neither the City of Newaygo nor Sable was ready to give up on the hope of building more homes at an affordable price point that Bitely says is vital for small rural communities like Newaygo. With the help of several entities, they were able to make it work.
“There’s several partners involved," Newaygo City Manager Jon Schneider explains. "You have obviously the City of Newaygo, which is myself, also the county of Newaygo, especially their Brownfield Redevelopment Authority, which is a county-wide entity. You also have the Michigan Land Bank, then obviously Sable Homes, also The Right Place helped us with some of this, and also a consultant was Fishbeck, that was hired by Sable Homes. So all those brought together, brought for a unique situation.”
Sable will fully front the infrastructure costs, and through a tax increment financing plan over the course of about ten years, will get paid back from the property taxes that the 16 new homes in Phase 2 will create, “if and when I put somebody in that house and they start paying taxes," Bitely explained. "So, it’s really a hand up.”
“Those future tax dollars don’t affect the rest of the city or any other locations," City Manager Schneider said. "That capture would come strictly from that neighborhood where the new homes are going in. And once those costs are paid back, we get the normal tax flow like we would on any other property. And we also get new people in town, more population, which we look forward to."
Bitely credits other barriers that were knocked down as making this new build a reality. “It’s required to have sidewalks in pretty much all neighborhoods, and that’s something that Newaygo looked at and said, 'You know what, this existing phase doesn’t have them; we can forego those in this next phase.'”
Between the sidewalks and the infrastructure tax increment financing plan, the final price on these homes will be lowered somewhere between $20,000 and $30,000 dollars in a neighborhood where the homes should cost between $190,000 and $250,000.
This overall teamwork and flexibility is something that Bitely says too few other communities are willing to do, despite the obvious housing need.
“We need to build ourselves out of this problem. And in order to do that, we need to be allowed to build and were not being allowed to build, whether its approvals for developments, whether it’s infrastructure requirements."
Schneider summed up what it means to the city of Newaygo: “We’re showing that it is possible to provide affordable housing in some of these northern and rural areas. Hopefully, it will inspire others to maybe take a look at things and be able to do similar positive projects.”
The executive director of the River Country Chamber of Commerce of Newaygo County, Colleen Lynema, told FOX 17 that they could handle more housing to help with the number of people who drive into town for work and would welcome more housing all the way around, and that’s in addition to another development going in, bringing some 60 homes to the county.
For information about Sable’s development in Newaygo, check out their website.