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MSHDA Board approves $14.3 million in loans for workforce housing initiative
November 14, 2018
Media Contact: Katie Bach
517-335-4786 | email@example.com
November 14, 2018
Lansing, MICH. – The site of the former Klover Gold Creamery in Kalamazoo may soon be renamed and redeveloped into affordable and workforce housing for low and middle-income workers, following MSHDA Board approval today of loans for a $14.3 million development deal that includes financial support from the Michigan Strategic Fund.
The Creamery is a proposed new three-story, mixed-use building on about 1.3 acres at the corners of Portage Street, Lake Street and Dewey Avenue in the Edison neighborhood. The Klover Gold Creamery, in operation from 1919 until 1997, was demolished in 2011.
“We are pleased that together with our partners, we are creating an opportunity for this brownfield site to be returned to productive use,” MSHDA Executive Director Earl Poleski said. “It’s exciting and necessary territory for MSHDA to finance developments to meet middle-income, workforce housing needs.”
Hollander Development Corporation plans to redevelop the site into a LEED Platinum certified, mixed-use building offering affordable and workforce housing as well as commercial space. A total of 48 residential units is planned with 33 units set aside for workforce and market-rate tenants, targeting households between 70 percent and 120 percent of Area Median Income (AMI). The other 15 units will be affordable to tenants earning less than 30 percent AMI.
The first floor of The Creamery will house nearly 7,500 square feet of commercial space. One great benefit to future residents: The developer is expected to enter a long-term lease agreement with the YWCA, which plans to locate a childcare center within a portion of the space. The remaining area will be used for its corporate offices and another commercial endeavor.
MSHDA intends to continue to make financial resources available that could be used to assist with gap financing for housing projects aimed at serving workforce needs in other parts of the state under this initiative.
The arrangement allows MSHDA to maximize its current resources and existing programs while welcoming a new financing partner. The Michigan Strategic Fund (MSF), in cooperation with the Michigan Economic Development Corporation (MEDC), currently provides grants and loans to market-rate mixed-use developments.
The proposed bond purchases at lower rates by both the MSF and two local social-impact investors enable MSHDA to reduce the tax-exempt construction loan interest rate it charges the development. This innovative structure makes these types of projects feasible.
“With this financing structure, the quantity of housing developed could increase while providing cost savings to the MEDC, the MSF, foundations and MSHDA,” Poleski said. “This could be a win for all involved, and ultimately result in the best outcome for Michiganders who need this type of housing.”
“We like to think of ourselves as the ‘feasibility’ partner -- that by investing in bonds issued by MSHDA, MSF is making a number of these proposed developments possible,” said Jeff Mason, CEO of MEDC, the state’s chief marketing and business attraction arm that administers programs and performs due diligence on behalf of the MSF. “Without this type of creative financial partnership, some of these projects simply might not be achievable.”
Grant and tax incentives from the City of Kalamazoo also were instrumental in the board’s decision to approve the loans.
Work on the project could begin as early as spring 2019.