After revising design plans to accommodate a recent court ruling that determined that all parts of new buildings must be less than 60 feet in Traverse City to avoid triggering a public vote, the developer of affordable housing in Nonprofit HomeStretch is ready to move forward with a project to build a mixed-use subdivision on Lot O at the northwest corner of Cass and State streets in downtown Traverse City.
Traverse City commissioners will consider HomeStretch’s proposal during their Monday study session at 7 p.m. Last year, commissioners approved the release of a request for proposals (RFP) to find developers interested in building housing on Lot O – as part of a larger city goal to consolidate parking terraces and converting surface land to more productive uses, particularly housing. The city received four Lot 0 redevelopment proposals, with a committee of employees and commissioners selecting HomeStretch as the top candidate. At the time, HomeStretch was proposing to build a 64-unit mixed-use development on the property.
But shortly after the proposal was selected and HomeStretch and the city entered negotiations for a transfer of ownership of Lot O, Judge Thomas Power ruled in a lawsuit that no part of any new building in Traverse City could not exceed 60 feet without triggering a public vote. Historically, the city’s height measurement system excluded parapets, steeples, clock towers, and other mechanical or architectural features. According to City Manager Marty Colburn, the HomeStretch-planned building had an elevator shaft and other rooftop features that exceeded 60 feet — previously permitted by the city, but no longer after Power’s decision. “Since then, HomeStretch has worked hard to revise its design to stay under the more restrictive 60-foot limit while maintaining the number of floors proposed in their original bid,” according to Colburn.
HomeStretch’s proposed new building now contains 60 units – four fewer than planned – but remains a five-story mixed-use development with over 5,000 square feet of commercial/retail space on the ground floor and four floors superiors of rental units. According to project documents, the apartments will include 46 studios ranging from 245 to 480 square feet and a rent range of $800 to $950. Ten other units will be 600 square foot one-bedroom apartments with a rent range of $1,150 to $1,300. The remaining four units will be 750-square-foot, two-bedroom apartments with a rent range of $1,400 to $1,500 (the most expensive units in each category are on the fifth floor, offering the best views).
According to HomeStretch, 40 units on the third and fourth floors will be “co-op style” rentals with access to a large communal kitchen (including a vegetarian kitchen area), a dining/lounge area and an outdoor terrace. “The unit concept on these floors is a collaborative style where residents would rent an efficient type of accommodation with space for a bed and study/lounging as well as in-room grooming, a ‘kitchenette’, a microwave oven and a sink”, according to project document. “A common laundry room, as well as a quiet zone, are also provided on each floor as well as a waste and recycling zone.” Tenant selection for co-op-style units will be based on a level of 0-40% of the area median income level (AMI), with a maximum rent of $800 per month for tenants without a bond (rents could be lower for those who use housing choice vouchers and project vouchers, which will be accepted in the development).
According to HomeStretch, tenant preference will be given to “skilled employees and city labor,” including tenants with “verified current and future employment with a downtown-based business.” HomeStretch says the target income levels for most tenants in the Lot O building will be the “missing middle” salary range of $30,000 to $74,000 per year. The organization surveyed 72 downtown businesses and found that 38% of those businesses are reducing operating hours due to understaffing, 71% are looking for employees, and 67% have one or more employees who drive more. 30 miles to get to work. Providing more rental housing will help increase the downtown employee base, according to HomeStretch, which also cited increased business and revenue, ground floor retail space, the increased surrounding property values and improved stormwater retention as benefits to the city in the project.
Project documents describe the development as a “highly sustainable” building to be constructed from mass timber with a green roof system, recycled building materials, energy-efficient plumbing and HVAC systems, and the potential for photovoltaic roof panels.” to provide renewable energy and minimize dependence on the grid. The building’s design — led by Grand Rapids-based company Integrated Architecture — maintains vehicle access from State Street to parking spots behind businesses such as My Secret Stash and The Omelette Shoppe. The retail space will front onto Cass and State streets and allow rear access for service and deliveries.
Jonathan Stimson, executive director of HomeStretch, said the organization was “pursuing several viable (funding) avenues to achieve Lot O development”. The nonprofit organization submitted an application this month to the Michigan Economic Development Corporation (MEDC) for Revitalization and Placemaking program funds. Depending on the outcome of this application, HomeStretch may apply for additional grants through the Michigan State Housing Development Authority (MSHDA) or apply to the state’s Low Income Housing Tax Credit (LIHTC) program. . The financing will be backed by a construction loan from the Independent Bank, which “does not require a standing loan commitment in place at the time of construction loan closing”, according to Stimson. “The development team plans to go to market for permanent funding once construction is complete.” The permanent loan is estimated at $6.5 million. “Additional financial feasibility will be pursued through reduced operating costs, review of land acquisition, capital grants and approved payment in lieu of taxes, or PILOT,” adds Stimson.
Several local leaders and organizations have written letters of support for the project to the MEDC, including Colburn, Traverse City Downtown Development Authority (DDA) CEO Jean Derenzy, Grand Traverse County Deputy Administrator Chris Forsyth, Director from [email protected] Sandra Lupien, Community Action of Northwestern Michigan Kerry Baughman, Executive Director of the agency, Ashley Halladay-Schmandt, Director of the Northwestern Michigan Coalition to End Homelessness, Carolyn Ulstad, Transportation Program Director of the Groundwork Center for Resilient Communities, Yarrow Brown, Executive Director of Housing North, and Dan Buron, Executive Director of Goodwill Northern Michigan.
“We strongly believe in the benefits of downtown housing, a mix of different housing types and the use of quality building materials and systems with attention to the housing experience of residents and the health of the environment in which they live,” Buron wrote. “We have a long-term relationship with HomeStretch and have partnered on housing solutions for years. We have tremendous respect and confidence in their ability to lead concept to effective implementation. Buron said Goodwill is interested in collaborating on the Lot O project, including “supporting the inclusion and management of AMI housing units from 0 to 30%. Having minimal on-site parking “isn’t an issue,” said Buron. he added, “because many of our residents do not have access to a vehicle, which makes walking a downtown solution ideal.”
According to a proposed schedule submitted to the city, HomeStretch aims to work on fundraising, rights, architecture, engineering and tenders through July 2023. Construction would begin in August 2023, the the goal being that occupancy permits will be issued by December 2024. municipal commission is a study session, the commissioners will not take any action on the proposal but will instead receive a presentation from Stimson and discuss the project. Colburn says staff will then work with the city attorney “to prepare a purchase agreement (for lot O) for future approval by the commission.”
Pictured: Rendering of the Lot O construction project, seen looking west from State Street