Fund the fund: Why Michigan’s Housing and Community Development Fund Needs Support

Michigan’s Housing and Community Development Fund, if given resources, would spur economic growth and help individuals and families live in safe, affordable housing.

By Jessica AcMoody, senior policy specialist

In the Out of Reach: The High Cost of Housing 2018 report from the National Low Income Housing Coalition (NLIHC), it was found that renters in Michigan must make $16.85 per hour to afford a two-bedroom rental home at Fair Market Rent without having to pay more than 30% of their income on housing. In Michigan, the average renter wage is $14.27, so the average renter across the state is spending more than 30% of their income on housing. Renters earning minimum wage ($9.25 in Michigan) would have to work 73 hours per week to afford a two-bedroom rental home or 57 hours per week to afford a one-bedroom rental home.

The statistics show that housing costs are too high for low-wage workers and other vulnerable households. The struggle to afford housing in Michigan affects both urban and rural populations, and it is clear we need to invest in more housing for low-income individuals and families.

Michigan’s Housing and Community Development Fund (MHCDF), established in 2008, was created to do just that. The fund supports the development and coordination of public and private resources to meet the affordable housing needs of low-income households and revitalize downtown areas and neighborhoods in Michigan. Some of the key areas targeted by the MHCDF include:

  • Financing affordable and market-rate housing for people with low and moderate incomes
  • Financing supportive housing for the homeless and people with disabilities
  • Financing downtown and neighborhood improvements to make them attractive places to live and do business

The MHCDF is housed within the Michigan State Housing Development Authority (MSHDA). The MHCDF was funded for one year in 2008 as a general appropriation, but was subsequently cut by the legislature the following year. In 2012, $3.7 million from the Homeowner Protection Fund was allocated to the Michigan Housing and Community Development Fund for another round of one-time funding. Unfortunately, only nine projects out of the 65 submitted received funding due to the limited resources of the MHCDF. A larger and more stable funding source is needed in the state of Michigan in order to continue funding projects that serve to strengthen our neighborhoods and communities in a number of ways.

While this initiative supported individuals who needed safe, affordable housing, it also had a positive impact on a larger economic scale. In 2008 projects awarded leveraged $1 of MHFCD to $11 of public/private sources ($2,163,400 appropriated; $24,041,009 investment leveraged). Thousands of jobs were created, generating millions of dollars in state and local taxes. Also, these community development efforts help to make Michigan cities look more attractive to the young and newly educated people who can help to continue economic progress for their communities and the state.

Forty-seven states and the District of Columbia have created fifty-eight housing trust funds. The most popular funding source is the real estate transfer tax, which is a tax that may be imposed by states, counties or municipalities on the transfer of the title of real property within the jurisdiction.

With individuals and families in Michigan struggling to make ends meet, addressing our housing crisis must be a priority. Funding Michigan’s Housing and Community Development Fund would be a step in the right direction to support hard working families across the state.