Detroit's affordable housing fund gets $10M boost

Amelia Benavides-Colón
The Detroit News

Detroit — An effort to add and preserve affordable housing in Detroit got a $10 million boost Wednesday, one of its largest commitments since the fund launched last year, officials said. 

Detroit Mayor Mike Duggan joined with city housing officials and representatives from KeyBank to announce the latest donation to the Detroit Housing for the Future Fund. The KeyBank contribution is the second-largest committed so far to the fund that aims to preserve 10,000 units of existing affordable housing in Detroit and to develop another 2,000 units. 

Julie Schneider, director of the city's housing and revitalization department, noted Wednesday that 1,300 affordable units have been completed or under construction since 2018. Additionally, 5,700 existing units have had their affordable rents extended for another 15 to 30 years or are in the pipeline for extensions, officials said. 

"Those numbers represent great accomplishment but of course, there is still more work to do," she said. 

Duggan said a year ago his administration learned the need for affordable housing was “outstripping the government programs,” which sparked the initiative to raise $75 million from the private sector. 

With KeyBank's contribution, he said, the city has achieved commitments of $65 million of the $75 million goal. The private investment fund is managed by Detroit-based Local Initiatives Support Foundation, or LISC, a community development organization. 

The Detroit Housing for the Future Fund, created to aid affordable housing developers secure capital for projects, is the private portion of the city's larger Affordable Housing Leverage Fund, an initiative of the City of Detroit’s Housing & Revitalization Department.

The Affordable Housing Leverage Fund was unveiled in 2018 as part of the city's affordable multifamily housing strategy. The $250 million effort involves federal, state, corporate and philanthropic investments.

Affordable housing, the mayor said during a Wednesday news conference at Detroit Public Safety Headquarters downtown, “takes an extraordinary amount of planning.” 

“Whether you are building affordable housing or housing for the wealthy, the construction costs are the same. You can’t have a permanent low rental rate so that those of lower-income can afford it unless somebody is subsidizing that difference,” Duggan said. “That can be the federal government, that could be the state government, that could be the city government, that can be the private sector.”

KeyBank's Derek Reed, vice president of community development lending and investment, said the company is honored to be involved with the city's efforts.

“Helping communities thrive is not just our business but it’s our mission,” Reed said. “This is a fund that we had to be a part of. It truly represents the transformational and generational opportunity for the city and LISC and all of us at KeyBank are very proud to be a part of this.”

The housing fund is working on five projects and with the KeyBank donation, additional projects are being added, said Camille Walker Banks, executive director of LISC.

The city on Wednesday noted the Weber Apartments, a vacant apartment building at 655 Hazelwood in the Piety Hill neighborhood, will be completely renovated with aid from the fund. 

The 1927 building will feature 44 units and be 100% affordable housing, with six apartments at or below 50% of the area median income, $31,400 for a two-person household in Detroit, and the remainder at or below 80% of the area median income, which is $50,240 for a two-person household, with rent running from $750 to  $1,200 per month for one-bedroom units.

The developer, Hazelwood Partners LLC, received a $2.9 million loan through the fund for the $4.4 million project, officials said. The renovations are expected to be completed late this summer.

“There are five (other) transformative construction projects in progress across Detroit with seven more in the queue for 2022 completion,” Banks said. 

Tahirih Ziegler, vice president of LISC's midwest program, noted the Detroit organization is targeting residents with household incomes below $50,000. 

Residents "that need deeper affordability," she said, "are our primary customers."