How Ryan Kilpatrick and Housing Next are changing the paradigm about affordable housing

Housing Next has evolved, growing from an Ottawa County-based organization to one that includes Grand Rapids and the rest of Kent County. The board that represents the multicounty regional organization also includes a representative from IFF, a Chicago-based nonprofit that provides funding to address housing needs.

The new structure has been key to not only expanding the geographic footprint but expanding the staff. Brooke Oosterman is the executive director and Jennifer Radaz is the community relations manager. The organization’s first employee and the face of the organization, Ryan Kilpatrick, now is working behind the scenes as a consultant.

As executive director, Oosterman represents the organization in the community, while Kilpatrick is in the background figuring out financing strategies and legislative tools.

Kilpatrick’s new role reflects the growing demand for strategies first championed by Housing Next, which began in 2018 as a pilot project funded by Ottawa County’s two biggest foundations to address the affordable housing crisis. Across Ottawa and Kent Counties, two out of five renters need housing that is priced below the median.

Housing Next, which is made up of local public, private and nonprofit representatives, now is trying to send the message that there is a different way to promote affordable housing.  

“We basically just did the math and said there's not enough subsidy out there,” says Kilpatrick. “To finance all the affordable housing we need a paradigm shift. It's fundamentally a system change. We've got to be thinking about how we build and regulate housing in a way that makes it affordable.”

Subsidies not enough

Kilpatrick blames the affordable housing crisis on 75 years of housing policies and infrastructure subsidies that favored large single-family homes on large lots.

“It’s sort of an ideology that everybody should be homeowners and we should all have our own sense of open space, which were great ideals,” he says. "But infrastructure has gotten more expensive. The cost of construction has gotten more expensive. And our local codes continue to require these really expensive buildings on expensive lots served by expensive infrastructure. And then we wonder why isn't housing affordable anymore?

Joshua Spencer, strategic impact director for Kent County, and Ryan Kilpatrick, executive director of Housing Next.

“Frankly, it's because we don't let it be affordable. We don't allow folks in the market to build something small on a small piece of property or build something attached on a small piece of property.” 

The community doesn’t have the resources to just subsidize its way out of the problem, Kilpatrick says. 

“It wasn't possible to say hey, we're just going to solve our housing problem by providing a subsidy and keep building the way we've always been building,” he says. “We realized that we're not going to get bailed out by the federal government. The state isn't suddenly going to create this huge tax-incentive program that solves for all of our housing needs. We have to solve this from the ground up.” 

Taking message to other communities

Kilpatrick continues his work for Ottawa and Kent Counties through his firm, Flywheel Companies. His shift to full-time consultant was driven by demand from other communities that wanted assistance in using new ways to address their affordable housing shortage.

Initially, he consulted with the other communities under an agreement with Housing Next with revenue going to the nonprofit. But over time, Kilpatrick had enough clients that it became clear that there was an entire business model that he could work on. He now is working with communities across the state to replicate the model he developed in Ottawa County, tailoring it to each area.

Kilpatrick began his career as a consultant to municipalities before being hired by the city of Douglas, where he worked for five years, until 2014, as director of community and economic development.

“That was such a good experience for me because I got to understand municipal finance. I got to understand local politics and I got a clearer sense of seasonal tourism’s impact on both the local economy and housing,” says Kilpatrick. 

He watched Douglas change from Saugatuck’s sleepy sister town to its own resort destination, driving up home prices dramatically. 

“When I first started working there, you could still find homes for less than $100,000. By the time I moved on in 2014, there was really nothing under a quarter million, and those were really old. Now, you can't get into that market under $400,000,” says Kilpatrick. 

The experience helped him understand the issues driving scarcity in housing and the challenges facing elected leaders caught between a community’s long-term objectives versus constituents who don’t like the impact a project might have on them personally.

“Having that education in municipal government gave me a perspective that it doesn't matter if we've got all of the data. We have to be able to talk about this in a way that makes sense to the average neighbor, who doesn't have time to read the whole agenda packet and listen to the two-hour presentation from the engineers. We've got to be able to distill this in a way that it makes sense and show there are viable, sustainable solutions for the long term.”

Fresh approaches

He found that many municipalities were open to new ideas, especially if they could learn from a project in another community and not have to reinvent the wheel.

“If somebody's already done it, can you bring us some resources?” he says of the feedback he received from the communities. “Help us understand how this works. Talk to our city commission or town council, make sure that they understand how it works and they're supportive. Give us the space and the time and the energy to really digest all of this and then select the tools and the programs that actually will work for us in our community.”

One of the challenges with denser projects is that some people believe these areas can develop into pockets of high crime, requiring more resources. This is mostly a myth, but when higher density neighborhoods are exclusively reserved for low-income households and when these neighborhoods are designed in isolation from the rest of the community, those myths can become reality, Kilpatrick explains. 

“When we create concentrated pockets of poverty, and then isolate those pockets of poverty from the kind of traditional daily amenities of the community, there are going to be pain points and conflicts,” Kilpatrick says. 

“We need those folks in our community because they're essential workers. They're working in retail stores and restaurants. They're cleaning buildings and taking care of elderly. We've got to make sure that they have opportunities to live in the same neighborhoods that the rest of us do, but understand that the homes that are affordable to that income segment aren't going to look exactly like the homes that are affordable to somebody who's working in a C suite.”

The challenge, he says, is helping community officials understand that because new construction is expensive, new housing can be affordable only with some level of support and innovation, whether through tax incentives, grants, or other ways to offset that cost. 

Older residences often become naturally occurring affordable housing, as long as the community has enough housing overall. 

“Our message to communities is you need to be able to do both,” he says. “You need to be able to have enough housing in your community that you actually get some naturally occurring affordable housing from the older stock, and you've got to be able to prioritize subsidies or tax incentives for some new construction because there's probably not going to be enough naturally occurring affordable housing over the next decade to serve all of the folks who need it."

By following that paired approach over the next 10 to 15 years, Kilpatrick says, communities can increase housing supply and diversity enough to create a market equilibrium. 

In the past five years, Housing Next has had a direct hand in creating about 6,500 units. In addition, it has:
  • Created a large public investment in a revolving loan fund with partner IFF providing matching dollars. Now, $80 million of dedicated investment will be recycled in Kent and Ottawa counties year over year for the next 20 to 30 years. 
  • Laid the groundwork for housing innovation by getting communities ready for different types of development. 
  • Worked with the Housing Michigan Coalition to pass legislation that expanded brownfield tax increment financing for housing, made neighborhood enterprise zones eligible in all communities, not just urban cores, and created new residential facilities tax exemptions. 
“You don't have to use every one (of these tools),” says Kilpatrick. “You can think creatively about how you want to use these in your local community. But now we have resources available to help solve problems that we didn't have a year ago.”

Photos by Tommy Allen.

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