Affordable housing: What is it, where to find it, and why it’s Detroit’s next best bet

There is record demand for homes across the nation, but also limited supply. And in Detroit, a majority renter city, there is no surplus of affordable housing in the city, and there are waitlists. 

Soaring home prices put the idea of homeownership out of the reach of many, and the COVID-19 pandemic exacerbated the issue of housing insecurity at a time when sheltering in place was necessary to curb the spread of the coronavirus.

And while rent prices dropped early in the COVID-19 pandemic, those prices too are seeing an incremental increase. According to the National Low Income Housing Coalition, there is a deficit of more than 100,000 affordable and available units at or below the extremely low-income threshold in the Detroit-Warren-Dearborn area. 

It may all seem like a numbers game for people who are fortunate enough to be positioned to buy a home or poised to move into a new apartment, but for many the economy is rebounding slower than the housing market and job growth slowed in April

Now is the time when a city like Detroit, where the median household income is just over $30,000, needs safe, clean, and affordable housing for its residents and to attract new transplants. 

But as more cities find innovative solutions to address the affordable housing crisis, is there a focus on affordable housing in Detroit? 

The difference between affordable and low-income housing

There is a difference between affordable housing and low-income housing. 

Keegan C. Mahoney, the program director, Policy & Implementation Div., Housing & Revitalization Department at the City of Detroit, explains that low-income housing is subject to oversight from the Housing and Urban Development department of the federal government. “These could include public housing or private homes that accept vouchers from Section 8.” Whereas, “affordable” housing is defined by area median income (AMI). 

HUD defines area median income for Detroit using income from the city and several suburbs, so Detroit’s AMI for a two-person household is $62,800

Therefore: a low-income household is defined as an income of 80% AMI ($50,240) or less, a very low-income household is defined as an income of 50% AMI ($31,400) or less, an extremely low-income household is defined as income of 30% AMI ($18,840) or less. 

Affordable housing is often listed on and found in the same buildings as market-rate units. These units can be priced at 30, 50, or 80% of the median income of the area where the rental unit is located. 

This would make rent in affordable housing units range from approximately $400 to $1,000. 

“Developers receive significant tax credits to build and create affordable housing,” Mahoney says. “They also recognize the benefit of helping the community. So more and more we are seeing developers set aside a number of units in almost every new development in the city as affordable housing.” 

One of those developers is Amin Irving, CEO of Ginosko Development Company. He says “back in the day, the federal government would come to developers like myself and would say, ‘will you build an apartment building for low-income families?’”

Amin Irving.“And developers like me would say, ‘Federal government, we would love to build apartment buildings for low-income families. The problem is this if it cost me $10 million to build this apartment building, well, in order for me to pay back all the loans, and all the debt associated with this, I've got to put rent at $1,000 a unit, just to be able to pay back all the money that I borrowed.’ And so, back in the day, the federal government said no problem, we will pay $1,000 on behalf of the low-income families, which is Section 8.” 

In the '80s, he explains, under President Ronald Reagan a lot of those programs were defunded and replaced with federal tax credit programs. 

“So now, the federal government says, ‘I'm going to give you $10 million worth of tax credits, but on the condition that you rent it out to low-income families,’” he says. 

Developers like Irving then take that promise of a hypothetical $10 million worth of tax credits and sell them to major corporations for, let’s say, $8 million in cash. “Now, I only need $2 million in debt to pay for this $10 million project,” he says. “And so, instead of charging $1,000 in rent, I can now go all the way down and charge $200 worth of rent. Because I only need to pay back that $2 million loan instead of a $10 million dollar loan,” Irving explains.

What it comes down to is that developers benefit and can generate wealth by investing in affordable housing properties by creating a lot of them. While they are able to prosper financially, they are also able to help families and communities that need stable, healthy homes. 

'The foundational mission'

Developers Monique Becker and Sharnita Johnson say creating affordable housing development in the city were about more than making money for them — it is an investment in the communities that they serve.

Becker, a former elementary school teacher with Teach for America, told Model D earlier this year, “As I began to learn, first by working for others, I recognized very quickly that the work of development affects the quality of life in the built environment. I felt like it was oftentimes too much about the building and the numbers and not about the people and the impact on human beings. And that’s why we are so mission-focused.” 

“I think in the affordable housing industry, every developer, whether it be a for-profit developer or a nonprofit developer, has a mission to house low-income families. They care about that,” Irving says. “They really do. I've yet to meet any developer that doesn't care about the low-income families that they serve. So, that is the foundational mission.” 

One of Irving’s developments, Renaissance Village on the northwest side, is an affordable housing community that features two- and three-bedroom apartments that he completely remodeled in 2018. 

Additionally, Irving contracted with several nonprofit organizations that serve the physical and mental health needs of the community. While he is a for-profit developer, he feels that he is motivated by a divine purpose. 

In 1995, when his mother passed away from cancer, he was fresh out of high school and forced to sell his childhood home. The sale of the home, at $20,000 more than the broker expected it to sell for, sparked his interest in real estate. 

Irving eventually met his future business partner, and co-founder of Ginosko Development Company, John Hayes and they founded the company in 2002. Irving was able to make it his full-time business in 2006. 

Ginosko Development Company has over $443 million in capitalized value and owns and operates over 2,800 units, including Renaissance Village. 

In a video celebrating the opening of the community, one resident, Thaddeus Walker, proudly proclaimed, “You can’t find anywhere else in the city like this.” He explains that Irving didn’t install the bare minimum into the affordable apartments, opting for plusher carpets and thicker drywall, which mean lower utility bills. 

Irving credits a lot of the success at Renaissance Village to establishing trust. “There needs to be healthy dialogue and transparency between the real estate development team and the community,” he says. “The real estate development team has to be very transparent with their vision and the economics of a deal. And the community has to be very transparent with their vision and what they're looking for in a deal.” 

How to find affordable housing in Detroit

Today, there are nearly 24,000 units of regulated affordable housing in Detroit, including 4,957 that have been preserved or developed since 2018 according to a press release from the City. 

Keegan Mahoney with the City of Detroit explains that there is no surplus of affordable housing in the city, and there are waitlists. But, the city wants to be a resource in connecting developers with communities and residents. 

The City has been awarded 13 Google Fellows who are working on an online tool to address housing instability in the city by creating a portal that will help Detroiters find affordable housing, making it easier to rent and stay in the city.

The portal will be tested with residents, community-based organizations, city administrators, housing counselors, and property managers/landlords to ensure it is user-friendly and includes the information Detroiters want in such a search tool.

“By bringing together the best of Google’s technical expertise and resources with the city’s first-hand knowledge of the community’s needs, we hope to have a lasting positive impact for the residents of Detroit by helping make affordable housing even more accessible to people all across the city,” says Rob Biederman, Head of Midwest Government Affairs for Google. 

When it is ready later this year, Detroiters using the portal will be able to:
  • Use search filters to help them find the affordable housing options they want.
  • Gain an understanding of how affordable housing works and their eligibility for different types of affordable housing.
  • Learn about the process and requirements for applying for and accessing affordable housing.

Additional functions may include an online application for affordable housing and enrollment in text message updates about new housing opportunities.

“We are proud of the work we are doing to preserve and create thousands of affordable housing units across the city, but it doesn’t help if the people who need them don’t know how to find them,” Mayor Mike Duggan said in a statement. “I am deeply appreciative to our partners at Fellows to develop a tool that will help more Detroiters find the right housing options so they can have the opportunity to live affordably in the neighborhood of their choice.”

This is part of the Block by Block series supported by FHLBank Indianapolis that follows minority-driven development in Detroit.

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