Aligning the stars’ toward affordable housing

Aligning the stars’ toward affordable housing

By Corey Smith, The Daily News on April 11, 2022

Developer chronicles struggles, successes of working in rural communities to construct high-density housing

BELDING — As a contractor who has built numerous homes and developments for more than 25 years, John Bitely has long been familiar with the housing industry as trends come and go. What he’s experienced recently, however, is something that stands alone. Housing, especially affordable housing, has been more in-demand in recent years than the developer has ever witnessed. While such demand would normally be met with a market of available housing, there’s currently seldom a house to be found. Speaking at the United Way Community Leadership Conference on March 18 at Belding High School, Bitely shared his thoughts on an issue he said will take higher levels of involvement from local communities to solve. He said this is especially true in looking to create an affordable market of homes for those who are designated as ALICE — Asset Limited, Income Constrained and Employed. ALICE residents have been identified as living in households with combined incomes above the federal poverty line, but who still do not earn enough to afford the essentials of housing, child care, food, transportation, health care and other needs. “We all can probably agree that we need housing, but the challenge is, how do we keep it affordable, how do we make it work out, especially toward this ALICE group, especially the lower groups beyond that?” Bitely asked. “One of the things that is going on right now, there isn’t any housing available. If you are a young person trying to get started and you’re ready to buy your first home, there’s nothing available.” As housing prices have skyrocketed in the last two years, with the majority of homes being sold well above the asking price, Bitely said it’s rare to find anything at $200,000 or below while being deemed a desirable place to permanently live. “Your average rental unit is very likely nicer,” he said. Part of the issue, according to Bitely, is that newly built homes that could potentially be sold at a more affordable price range simply can’t be built. “What’s happening to myself and my company, we’re not allowed to build these houses anymore,” he said. ‘STARS HAVE TO ALIGN’ As the owner of Sable Homes in Rockford, Bitely has overseen the construction of more than 1,000 homes over his tenure with the company. Of 31 Sable Home properties currently listed available for sale throughout West Michigan on the Sable website, the prices range from $250,000 in Newaygo to $445,000 in Caledonia. However, Bitely said it is his personal desire to pursue building homes that are on the more affordable end of that spectrum. “Number one, it’s my passion,” he said. “If you’ve come to know me, you know I grew up top-level ALICE. Most of my family are ALICE, as far as my generation of family members, so yes, while I have experience in upper-level homes, this is who I am.” Looking to expand upon that desire, Bitely eventually saw an opportunity in rural West Michigan. “I went to a community and asked to do workforce housing — we call it attainable housing,” he said. “Attainable housing is different to everyone, but as our wage groups get lower, so does the attainability.” That community was the city of Newaygo — a community of about 2,100 residents — in Newaygo County, where Bitely’s concept of attainable housing appeared to be in demand. In 2017, Sable Homes took over a dormant development, River Hills Estates, which had sat unfinished for nearly 15 years after the original developer pulled out with only four homes completed. Sable Homes then built and sold homes on the remaining 27 empty lots. “I bought a discounted, already-developed property and that allowed an extra $20,000 discount (per house),” Bitely said. “Because of that discount, we were selling those houses left and right.” However, to pursue a “Phase 2” of the development, Bitely couldn’t build affordable homes — along with $300,000 in infrastructure costs needed for them — and still turn a profit. “Newaygo is very similar to Ionia and Belding,” he said. “Your economic numbers, in order for us to be a profitable company, we cannot hit the right price levels of housing for your average incomes. If you don’t have high enough incomes to support new houses on a new lot, I can’t do that project.” A comprise was reached between Sable Homes and the city of Newaygo. What resulted was the development of a Tax Increment Financing (TIF) plan, one that would see future tax revenues for the city of Newaygo and Newaygo County, collected from the new homes after they are purchased, being paid instead to Sable Homes over 10 years to help offset the cost of roads, ground-leveling and water mains, among other infrastructure needs. With an additional compromise reached to remove the installation of public sidewalks, along with the TIF plan in place, an additional 16 homes will be available for purchase, constructed with prices Bitely estimates will range between $190,000 and $250,000. “In Newaygo, they have more jobs available than they have people,” he said. “They made a commitment. I had to put up all the capital, build all the roads in advance, on the promise that I would be paid back on the increase in taxes. They had to give up future taxes — taxes they wouldn’t have had otherwise.” Bitely said the successful River Hills Phase 2 project is one he wishes could occur more frequently in smaller communities such as Newaygo across West Michigan. “Those projects do exist, but the stars have to align,” he said. “With Newaygo, we had a community that had everybody on board.” ‘NOT IN MY BACKYARD’ Despite his success in Newaygo, Bitely hasn’t been welcomed with open arms everywhere. In 2016, the developer pursued a goal to construct a housing development in Sparta Township in northern Kent County, where he said he aimed to earn approval to construct nearly more than 80 homes on about 80 acres of vacant property — 44 acres for homes, 26 acres as designated open and common space. However, Bitely immediately ran into opposition in the rural township of 9,400 residents. “The community had a fit when I initially proposed 85 homes — ‘not in my backyard’ is what I heard,” he said. According to meeting minutes from the Sparta Township Planning Commission and Township Board, in which public hearings on Bitely’s proposal were held, township residents voiced concerns ranging from safety issues regarding road sizes, increased traffic, septic tanks, too small of lot sizes, the development not consisting of a “rural setting” and also being located in what one resident described as “my backyard.” Several of the residents said while they weren’t opposed to additional housing, they would instead rather see larger homes built on larger lots. But to construct affordable houses in areas that need additional housing, Bitely said there’s little option than to build higher-density projects on vacant properties in rural areas. “If we’re going to fix this problem, it has to be in somebody’s backyard,” he said. “Places like Belding, Ionia — you’re in between two large communities (Lansing, Grand Rapids). If you don’t embrace some of these people (moving to your community), what’s going to happen?” “If you don’t change, you’re going to die,” he continued. “There are communities, one right near mine, where they are now struggling. They lost their local food store, the local car dealership, nearly lost the pharmacy and they are down to one local restaurant — that’s all they can support.” With nearly all of the smaller, rural communities he visits with a proposal, when Bitely asks that community to embrace his proposal, he says he hears the same thing — “This property is in a rural, farming community.” What resulted from Bitely’s efforts in Sparta Township was an initial personal victory, only to eventually be overturned. “Needless to say, the local Planning Commission succumbed to the pressure and after nearly three years of planning, I did get it approved,” Bitely said. In October 2020, the Sparta Township Board approved his project, revised at 70 proposed single-family homes. Additionally, it approved his rezoning request of the property from R-1 (low-density, single-family) and A-2 (agriculture) to a Planned Unit Development (PUD) featuring high-density housing, in a split 4-2 vote of the Board. In defending its initial recommendation for approval by the Sparta Township Board, the Planning Commission said the development was compatible with the township’s Master Plan, which indicated the future land use classification of the property as “low-density residential and open space neighborhood,” intended primarily for “single-family houses in a subdivision or cluster-housing setting.” But one month later, township residents submitted a successful petition to have a referendum vote on the decision. A year later in the Aug. 3, 2021, election, the residents of Sparta Township overwhelmingly halted Bitely’s development by a measure of 985 to 262 votes — 79% to 21%. “We lost the election and the project was out the door,” Bitely said. Additionally, the Township Board approved a recommendation from the Planning Commission to issue a moratorium on PUD projects, preventing Bitely from re-applying with another proposal. “The only alternative is to build less homes on larger parcels at a higher price range, but there’s no ALICE people that are going to live there,” Bitely said. “In Sparta, the whole community is ALICE or just barely above. When I started the project, the average home sale in that community was less than $200,000, but I was told by one of the board members, ‘if we aren’t building $500,000 homes, we aren’t interested,’” ‘HAPPENING LOCALLY?’ In listening to Bitely’s remarks regarding his failed proposal in Sparta Township, United Way Montcalm-Ionia Counties Executive Director Terri Legg said people don’t have to look far to see similar examples of stalled efforts locally. “We’ve seen that happen locally, haven’t we?” she asked. Legg was referring to a recent unanimous vote of the Eureka Township Planning Commission, which declined a request from developer Al Lehman of Al Lehman Construction to construct 14 homes on 20 acres of vacant land. Lehman had requested the property, currently zoned agricultural, be rezoned to suburban residential so he could build homes on lots less than one acre in size. But his proposal to turn a property in a rural neighborhood, one that had been farmed for decades, and instead erect more than a dozen homes on it, was met with initial uncertainty as commissioners weighed the need to construct more housing against uprooting a traditional agricultural portion of the township. “That is part of our Master Plan, to maintain agricultural use there, but with the need for more housing … Grand Rapids is running out of room,” Vice Chairman Marty Posekany said at a January meeting. However, following a public hearing in February that generated only complaints from neighboring property owners, Lehman’s request was denied by the Commission. “Rural residential, in my mind, would be more in keeping with (the area), rather than going to suburban residential,” Posekany said of the property at a February meeting. “We have that forecasted out as suburban residential secondary, but I would anticipate with the next update of the Master Plan, which occurs every five years, that that would be put into rural residential.” Under such a proposal, which would require lot sizes greater than at least two acres per home, developers such as Bitely argue no “affordable” homes could be constructed to meet the growing housing demand. “On every level, density is being reduced,” he said. “In how many of our communities have we heard ‘we like it the way it is, we don’t want it to change?’ If we talk about building three houses per acre, we’ll have this auditorium packed with people telling us ‘that’s too close, don’t live there.’” Bitely said there is a growing demand, especially from younger generations, to move out of larger cities and find an affordable single-family home in a more suburban setting. “Our millennials are very happy to live in a community like that,” he said. “They grew up happy living in downtown, inner cities, in a townhouse, spending the first 10 years of their lives getting their lives established in communities like that. Now, they are more than glad to live that way (suburban developments), but yet our community leaders are saying, ‘No. If it’s not two acres or more, we don’t want a house on it.” When searching for any sort of compromise, Bitely and Legg said it’s going to take community involvement and collaboration to find a resolution in addressing a lack of affordable housing locally in both Montcalm and Ionia counties. “It’s going to take a lot of partnership to make this work,” Legg said. “In many of our communities, one side of the street is the city, the other side is the township. We have to work together.” “If you don’t encourage some growth, you’re going to die — communities need to hear that,” Bitely added. “So I’m going to encourage people to become these community leaders. Some (public officials) are not going to change their minds and the only way you are going to change things is by voting. One of my goals was to make some of you uncomfortable, to wake you up. At the end of the day, it’s what we do that makes a difference. We can fix these problems. “Most of our communities do not need a 300-home development,” he continued. “They need about 50 to 80 homes at a time. That is the growth amount we can sustain, that is the amount I can build because of today’s restrictions on labor. That’s about what our infrastructures can support.”

See the PDF version of the article here. Part 1, Part 2.