Grounded Solutions’ technical assistance to the City of Detroit led to policy and funding solutions to preserve the affordability of 10,000 units of multifamily housing, and produce 2,000 new affordable multifamily housing units, by 2023.
Average rents in Detroit are lower than in many other communities throughout the country. Average rent in 2014 for a one-bedroom apartment was $702 per month, which is affordable to a household making just above 60% of the Area Median Income (AMI) for the Detroit metropolitan area.
However, median income in the city of Detroit is roughly half of the regional area median income. This disparity means that rents in Detroit are less affordable for city residents than for other surrounding metropolitan area residents. In 2014, 59% of Detroit renters were housing cost burdened, paying more than 30% of their household income on housing costs. This housing cost burden falls disproportionately on households of color: 79% of Detroiters are Black or African American, compared with 22% of the metro area population.
After decades of disinvestment, Detroit experienced a building boom which heightened concerns about housing affordability—average rents rose to $820 per month by 2016. City officials selected Grounded Solutions Network to help guide their efforts to address these concerns through a competitive RFP process.
Working with a team of other consultants, Grounded Solutions Network conducted an intensive scan of the existing housing policy landscape and provided the city with a set of best practice policy options suited to the unique needs and challenges the city faces. The city then hired Grounded Solutions Network again to help it move from planning to action on its affordable housing preservation goals. That work included facilitating a Preservation Task Force of stakeholders, research into best practices from across the country, and interviews with housing experts locally and in other communities.
Based on Grounded Solutions’ recommendations, the City:
Adopted an Inclusionary Housing Ordinance requiring that development projects include 20% of homes affordable to households making 80% of median income if those projects receive discounted public land or at least $500,000 in public subsidy. The ordinance is expected to produce 1,600 new affordable rental homes by 2023; the homes must remain affordable for at least 30 years.
Adopted a preservation action plan to preserve the affordability of 10,000 units of multifamily housing by 2023. Key anticipated outcomes include: Rental subsidy contracts that are reaching their expiration date are either renewed or transferred to an alternative building; multi-family LIHTC properties whose affordability restrictions are reaching their expiration date are refinanced and rehabilitated, retaining affordability; and unregulated properties that receive city tax incentives or other financial assistance for improvements retain affordability.
Created an Affordable Housing Leverage Fund (AHLF). The AHLF is expected to deploy $250 million into the preservation of 10,000 units of existing affordable housing and the development of 2,000 units of new affordable housing. Since its 2018 launch, the AHLF has released two Notices of Funding Availability for a total of $14 million; the first awards to projects are expected to be announced in late 2019.
In their most recent phase of work with us, Grounded Solutions developed a Preservation Action Plan to take preservation-related goals in our Multifamily Affordable Housing Strategy and translate them into detailed, implementable strategies. They balanced incorporating best practices from around the country with addressing the specific local dynamics and needs of our city. I was impressed with the team’s dedication to thoroughness; for example, they interviewed dozens of stakeholders in order to fully understand the local context and what strategies and solutions would be the best fit for Detroit.
I came to think of Grounded Solutions as a partner in this work. They care about the work and that shows in their work product and process. Grounded Solutions can be counted on to communicate clearly, provide deliverables on schedule, plan and manage meetings with multiple stakeholders, and deftly incorporating feedback on documents. We would hire Grounded Solutions Network again in a heartbeat.
-Julie Schneider, Associate Director for Policy Development and Implementation, City of Detroit Housing and Revitalization Department
Grounded Solutions’ engagement with the City of Pittsburgh led to the creation of a dedicated $10 million per year Housing Opportunity Fund which will provide affordable homes for 6,300 households over 12 years, with 50% of those being permanently affordable and with a priority for serving extremely low-income households. Our work also resulted in the adoption of the City’s first inclusionary housing policy which ensures that new residential development in the booming Lawrenceville neighborhood designates 10% of new units as affordable.
In 2016, Pittsburgh faced a large and growing affordability crisis, particularly for its poorest residents. The city estimated that it needed more almost 15,000 units of housing to meet the needs of extremely low-income (ELI) households—those earning 30% or less of area median income (AMI). These are disproportionately households of color: 54% of households living in poverty are households led by people of color, while people of color only represent 34% of the population.
Happily, the city was in the midst of a building boom. Unhappily, that building boom was only exacerbating the city’s affordability gap. It also gave rise to concerns about gentrification and displacement, particularly in historically poor, African-American neighborhoods like East Liberty, Lawrenceville, and the Strip District.
The city organized an Affordable Housing Task Force and charged it with crafting the city’s response to these housing challenges. Grounded Solutions Network provided technical assistance to the Task Force. The Task Force submitted its report to city council in 2016, and council has been working to implement it since then.
Notably, in December 2017, the council established a Housing Opportunity Fund with $10 million a year of funding from real estate transfer taxes. The fund will create creates and preserve homes for about 525 households per year, or a total of 6,300 households over 12 years. It prioritizes serving extremely low-income households. And 50% of housing supported by the fund must be permanently affordable.
Building on the Task Force’s work, Grounded Solutions was hired again, this time to provide facilitation and technical assistance to an Exploratory Committee tasked with researching and offering recommendations on incentive zoning and inclusionary housing policies. Grounded Solutions Network convened eight meetings of the Exploratory Committee, resulting in policy recommendations for inclusionary housing requirements paired with cost-offsetting incentives including density bonuses and tax abatements. Following the Exploratory Committee meetings, Grounded Solutions developed a report for review by the mayor and city council with recommendations for an inclusionary program tailored to Pittsburgh's housing goals and market conditions.
In July 2019, the city adopted a policy that in the Lawrenceville neighborhood, which is one of the hottest for new development, 10% of units must be affordable to 50% AMI for rental developments or 10% must be affordable to 80% AMI for new homeownership opportunities.
“Grounded Solutions played a key role in providing Pittsburgh’s Affordable Housing Task Force, as well as the Inclusionary Housing and Incentive Zoning Exploratory Committee, with a clear path to recommendations incorporating national best practices and Pittsburgh’s specific challenges to arrive at policy and programs to improve housing opportunity. The team’s technical knowledge of the field and experience working with governments across the country, as well as their insights in modeling affordability, were matched by their skills in coordinating deliberation among diverse stakeholders, yielding forward-looking meetings, reports, and recommendations.”
-Ray Gastil, Director of City Planning, City of Pittsburgh
Twin Cities and Minneapolis
Grounded Solutions helped Minneapolis work toward its goal of eliminating racial disparities by developing an inclusionary housing policy and a perpetually affordable homeownership program that together will create affordable homes for roughly 300 low-income households each year.
Affordable housing challenges in Minneapolis do not affect all people equally. Over 50% of Black and America Indian households, and over 45% of Hispanic households are housing cost-burdened—meaning more than 30% of their household income goes toward housing—compared to one in three white households.
In 2018, the City of Minneapolis recommitted to eliminating their city’s racial disparities through “Minneapolis 2040”, the city’s Comprehensive Plan. They engaged Grounded Solutions as a consultant to develop an inclusionary housing policy and expand their shared equity homeownership programs using a racial equity lens.
Grounded Solutions conducted economic analysis and created a set of policy recommendations which formed the basis for the inclusionary zoning policy adopted by the City Council in December 2019. Under the policy, developers building rental projects must set aside 10% of units at rents affordable to households making 60% of Area Median Income (AMI) or, if they access City financing, set aside 20% of units at rents affordable to households making 50% of AMI. The program is expected to produce roughly 230 affordable units each year.
The City also hired Grounded Solutions to help redesign their long-term affordable homeownership program for increased impact. We worked with city staff to engage residents, community organizations and institutions, specifically those representing communities of color, to share our analysis, and get feedback on models. Grounded Solutions members in the region were valued collaborators, sharing expertise in public feedback sessions, resale model workshops, and calls. The program that resulted from our recommendations is expected to produce roughly 70 affordable homeownership units each year for households at 40%, 60%, and 80% AMI.
“We have worked with Grounded Solutions Network twice now on housing policy projects. I really value their ability to not only undertake complex housing policy and economic analysis but also explain it clearly and succinctly to diverse stakeholders. Their products, like the Inclusionary Housing Policy Recommendations and Economic Feasibility Analysis they prepared for us, are of the highest quality. And their staff and consultants truly understand the many different factors and nuances that city leaders must balance. Grounded Solutions’ assistance was absolutely essential in our work to craft an effective and impactful inclusionary housing policy.”
-Andrea Brennan, Director, Housing Policy and Development, City of Minneapolis