The Michigan Economic Development Corp. announced more affordable housing will be built across Michigan with the help of a $55 million Community Development Financial Institution (CDFI) New Markets Tax Credit (NMTC) award. Michigan Community Capital (MCC), one of three Michigan entities to receive an NMTC award in last year’s round, will use the $55 million award to invest in attainable housing projects in communities statewide.
The Community Development Financial Institution is part of the U.S. Department of Treasury, and the Michigan Community Capital is a nonprofit organization that lends and invests in communities in an effort to counter gentrification and create upward mobility.
“The $55 million awarded to Michigan Community Capital will help fuel Michigan’s economic momentum and create upward mobility for residents and business opportunities for underserved communities in Michigan,” says Jeff Mason, CEO of the MEDC. “We’re pleased to work alongside MCC to bring more of these beneficial, place-based projects to the state. The decision by the CDFI Fund to recognize and support the work of MCC emphasizes the strength of Michigan’s community development programs.”
MCC has invested in many mixed-use and mixed-income multi-family housing projects. In July 2017, the company invested in a project led by TC 637 Michigan LLC. The $7.8 million project in Grand Rapids included replacing low density, functionally obsolete, and vacant single-family homes with a medium density, mixed-use, multi-family apartment building that consisted of 44 residential units. The residential units are being leased on a rent-capped basis. Another project located in downtown Boyne City and led by Lofts on Lake Street LCC offers the opportunity to create market-rate housing mixed with workforce housing.
“MCC will use this very scarce federal resource to invest in some of the most impactful but financially challenging projects across the state over the next 18 months,” says Eric Hanna, president and CEO of MCC. “These projects will include place-based investments to rehabilitate vacant, blighted, and contaminated property, investments in businesses that make jobs accessible to households of modest means, and to improve access and affordability to fresh food alternatives.”
The NMTC Program helps economically distressed communities attract private investment capital. The federal tax credit helps fill project financing gaps by allowing investors to make larger investments than would otherwise be possible. The CDFI Fund is operated by the U.S. Department of Treasury to ensure all people and communities have access to investment capital and financial services.
MCC, a supporting entity of the Michigan Strategic Fund (MSF), facilitates investment in attainable housing projects. Attainable housing is defined as housing targeted at individuals and families with incomes between 60 and 120 percent of area median income. MEDC and its partners have identified an unmet need for attainable housing in communities across the state as rental rates have continued to rise in central business districts and other commercial cores.
MCC has previously invested $145 million from earlier NMTC rounds in many projects throughout the state in addition to its current focus on attainable housing projects. The company has also been provided with a $22.5 million low cost loan from MSF that it will utilize to make risk capital investments in transformational mixed-use and attainable housing projects across the state. MCC has closed four attainable housing projects using MSF funds and has another seven projects in the pipeline.
Michigan was selected from a pool of 214 applicants that requested a total of $14.8 billion in tax credit allocation authority from the U.S. Department of Treasury’s Community Development Financial Institutions Fund. The 73 award recipients are headquartered in 35 different states, Puerto Rico, and the District of Columbia.
The MEDC is the state’s chief marketing and business attraction arm that administers programs and performs diligence on behalf of the MSF.