TRAVERSE CITY — A parking lot in downtown Traverse City is the spot where Homestretch Nonprofit Housing wants to build apartments with rents as low as $429 per month.
First, the developer will need Low Income Housing Tax Credits from the Michigan State Housing Development Authority. The developer cleared a crucial step toward receiving those tax credits Monday when city commissioners approved a payment-in-lieu-of-taxes agreement for the project.
Under the agreement, Homestretch Nonprofit Housing will pay 4 percent of rent income minus the cost of certain utilities. While the motion commissioners approved gave a 30-year term, company Executive Director Jon Stimson said he plans on a 45-year term to better the project’s chances at receiving the competitively awarded tax credits.
“If Homestretch had a way of doing it for 200 years, we would, but 45 is about palatable,” he said.
City Attorney Lauren Trible-Laucht said the actual agreement with the city states 30 years or the term of the mortgage, whichever is longer.
In response to Commissioner Jackie Anderson, Assistant City Manager Deb Allen said the tax deal would result in the city giving up $2,381,061 over 30 years. The property is currently tax-exempt, being a city parking lot, city Manager Liz Vogel added.
Mayor Amy Shamroe said that amounts to about $74,000 a year, and Commissioner Tim Werner said there is a cost to the city for people living in the apartments once they’re built. What that number is remains unknown despite past discussions among previous city commissions. But he expected payments through the PILOT agreement to come closer than not to covering that.
“I’m not too concern that the cost to the city is very much greater than what will be paid by the folks that are living there,” he said.
Plans for the building call for a concrete first floor with four upper floors built with mass timber on what is currently city parking Lot O at Cass and State streets, Stimson said. The 41 apartments will be a mix of studio, one- and two-bedroom units, some of which will rent for market rates.
For people earning up to 30 percent of area median income, rents would range from $429 for a studio to $533 for a two-bedroom, Stimson said. People earning up to 60 percent of area median income would pay $958 for a studio, up to $1,214 for a two-bedroom.
The first floor would be commercial space intended as a market, Stimson said. Floor plans also show a rental office and community room for apartment tenants.
Commissioner Heather Shaw asked Stimson if the company is able to do the project, given complexities like needing to build an access tunnel so vehicles can reach the backs of neighboring businesses. That in turn would cut into the amount of revenue the commercial space could generate and create future maintenance costs.
“I’ll support this if you’re truly invested, but maybe you’d like to squeeze out of this project,” she said.
Shaw also wanted to know what assurances the city has that the apartments won’t turn into another Trailside 45.
There, Westwind Construction and Midwest Property Development partnered with Traverse Connect to build below-market-rate apartments. Westwind Construction sold them in 2021 after keeping rents artificially low for three years, and new owner Cochran Booth & Company turned the apartments into condominiums.
Stimson responded that Homestretch Nonprofit Housing will partner with Cove Investments to give the developer the liquidity and personal guarantee it needs for the project. And unlike in past partnerships where the developer had a minority stake, Homestretch Nonprofit Housing will have an 80-percent stake in the Lot O apartments.
Not only will the developer retain control of the project, but the city will have the first right of refusal on any future sale, Stimson said — Trible-Laucht confirmed this.
Every affordable housing project is complicated, Stimson said. He reiterated the developer’s commitment to the project, and reminded commissioners its aim is to realize their push to build housing on city parking and unused city property.
“It’s your project, that’s what’s different,” he said. “It’s Homestretch acting on your behalf to put this project together.”
Next, Homestretch Nonprofit Housing will apply for tax credits in October, Stimson said after the meeting. If awarded, contractors could start construction in spring 2026 and largely wrap by fall 2027.
The developer will also ask the Grand Traverse County Brownfield Redevelopment Authority for reimbursement of some public infrastructure costs. Those could include demolition, sidewalk work and, possibly, the cost of the tunnel since it’s for public use.
Being mostly tax-abated — save the commercial space — a tax increment finance agreement isn’t possible, so the brownfield project wouldn’t need to go to a citywide vote under recently adopted city charter amendments.
