Housing

Introduction

When people think of rural living, they think affordability. But the cost of building materials and trades needed to construct a home are largely the same in rural as it is in urban. So the primary challenge faced by Cassopolis and most other rural communities is the cost to build does not equal what a seller expects to receive for the finished product when compared to similar product in an urban area.

For example, a builder prices a new home at $185,000 in order to cover their costs and earn an acceptable profit. However, the rural housing market may only warrant a sale price of $165,000 as a result of a smaller buyer pool and lower wages compared to suburban and urban housing markets. Similar challenges are faced when an existing homeowner wants to renovate their home which can result in a loss should they seek to sell their property in the next few years. These challenges create a disincentive for a developer to build in a rural community or homeowner wanting to invest in a major renovation.

To determine development solutions to support new and renovated housing development, Alchemy reviewed existing reports and engaged in interviews with builders, contractors, and local leaders to determine the major challenges facing housing development in Cassopolis. An interactive development analysis was completed to highlight potential sites for redevelopment and new development areas in and around the community. The housing action plan also includes recommendations for how best to use existing development tools and create new strategies and incentives to achieve Cassopolis’s goal of growing its housing stock.

PAST REPORT OVERVIEW

The recently completed Master Plan (2019) and Imagine Cass (2019) projects provide great insight into the current conditions and publicly supported initiatives to support new housing development in Cassopolis.

Here are some key takeaways from these reports regarding housing:

Existing Positives

  • Homes that are affordable and accessible
  • Neighborhoods are primarily walkable with few exceptions
  • Historic homes are prevalent
  • Neighborhoods have access to natural assets in town, like Stone Lake
  • The Village is family-oriented and multi-generational
  • Residents are student-focused with an engaged school system

Proposed Projects

  • Sidewalks: A sidewalk inventory within neighborhoods should be completed.
  • Mixed-Use Districts
  • Facade Improvements and Home Improvements
  • Increase housing diversity – Increase the number of homes priced in the $150,000-$200,000 range.
  • Improve crossings – Inventory all intersections and ensure that each intersection consists of accessible crossings.

Housing Challenges

Buyers’ financing challenges

Stakeholder feedback and statistical analysis have identified challenges Cassopolis buyers face when purchasing housing. Whether it is insufficient resources to afford a down payment, difficulty qualifying for traditional housing loans, or becoming cost-burdened by mortgage payments requiring more than 30% of their monthly income, these issues create barriers to transition residents from rental units to owner-occupied housing.

Barriers to Developers/Investors

Development is based on a risk/reward system. If a project is a higher risk, then the investor would expect a higher reward or return on investment. In many cases, rural areas have a lack of comparable home sales to demonstrate that a property will sell and for the price necessary to provide a good return. As a result, this risk needs to be mitigated to attract developers to build in rural areas.

Blighted and abandoned homes

Blight can be defined as properties that are vacant, abandoned, boarded up, dilapidated, or poorly maintained. Besides being an eyesore for neighbors, blighted properties directly impact a community’s sense of pride, lower a visitor’s impression of the community, potentially contribute to increased crime rates, and decrease surrounding property values. Even though they contribute little to no property taxes, blighted properties still require equivalent village maintenance costs as other structures, including waste cleanup, pest control, police, and fire.

The report, “Understanding the True Costs of Abandoned Properties: How Maintenance Can Make a Difference” (Community Blight Solutions) estimates that each property costs roughly $155,000 in its first year.

Availability of Affordable Land

An additional challenge facing Cassopolis is the availability of affordable housing lots. The Stone Lake Shores subdivision has 33 available lots ranging in price from $18,500 to $53,000. Of the vacant lots in the more central part of the village have their own challenges as these lots may be too narrow for today’s conventional home designs.

Key Strategies

1

EXISTING TOOLS & RESOURCES

Create better awareness around available tools and resources and how they can be deployed.

2

EMPLOYER ASSISTED HOUSING

Create a public-private partnership to establish an Employer Assisted Housing program that will provide resources for development of new housing and incentives to homebuyers through local employers.

3

BUILD OUT EXISTING LOTS

Partner with the village and local builders to develop housing to fit on the narrow infill lots available within the village as well as available lots at Stone Lake Shores.

4

CREATE NEW SUBDIVISION

Redevelop the Village’s existing industrial park and neighboring school property into a new residential subdivision with a mix of housing types and price points.

Existing Tools and Resources

State & Federal Programs

There are existing state and federal resources that are available to help finance new or renovate existing homes. One of the best resources is the Michigan State Housing Development Authority who provides resources that meet the needs of low-to-moderate income households as well as those at or right above the median household incomes.

For instance, the Preferred Conventional Loan program allows households of two or fewer people an income up to $88,000 and households of three or more up to $103,600. If we take these gross annual incomes times 2.5 – a general rule of thumb to estimate how much home you can afford – households of two or fewer people could afford up to $220,000 and households of three or more up to $259,000, albeit the program is limited to sale prices at or below $224,500. These figures are well in line with many of the housing options being constructed in and around Cassopolis.

For a more expanded list of these programs, click here to download the Funding Resource Guide in Appendix C.

EMPLOYER ASSISTED HOUSING

Employer-assisted housing (EAH) programs help close the homeownership and rental affordability gap and allow workers to live in the communities where they are employed. This has the impact of reducing employee absentees and long-term turnover of staff. EAH programs can be described as any employer-sponsored housing benefit, which could include, but not limited to, down payment assistance or rental assistance, homebuyer education and counseling, or low-interest mortgages. It’s also common for the local government and non-profit agencies to contribute to EAH programs.

In many cases, EAH programs access state and federal funding to help support their efforts. However, these state and federal programs are typically limited to households with low to moderate incomes (LMI). This can be a challenge if employers are providing a wage greater than the area median income.

The first step to creating an employer-assisted housing program is to identify which employers and local partners are willing to support the initiative and what assets can they bring to the table. The EAH program then needs to determine how it wants to deploy these resources: help their employees obtain existing housing or help increase the supply of affordable housing in the community. See the list below for examples of each option.

Increasing the Community’s Supply of Affordable Housing
  • Cash Contributions to Housing Projects
  • Donation of Land
  • Housing Developed and Owned by the Employer
  • Construction Financing
  • Low Income Housing Tax Credit Investment
Helping Employees Obtain Affordable Housing
  • Down payment/Closing Cost Assistance
  • Secondary (Gap) Financing
  • Rent Subsidies
  • Homebuyer Education and Counseling
  • Help with Applications, Credit, Moving Costs, Deposits, and/or Possible Rent Guarantee or Sublease

For more details on Employer-Assisted Housing programs, see the EAH Resource Guide in Appendix D.

Build out existing Lots

Lot Analysis

In order to better understand the potential for development in and around Cassopolis, a housing development assessment was completed. This process included reviewing parcel data for vacant lots and undervalued properties as designated by the Cass County Assessor. The findings of this analysis can be used to help direct development throughout the community from individual infill lots to new subdivisions with multiple housing units.

Using the interactive development analysis map below, it is apparent there are a number of infill and undeveloped lots available in and around Cassopolis. An EAH program could purchase lots and provide those lots to employees who can then build on the site with a preferred builder. Removing the cost of a residential lot can reduce the cost of building a house by 10-20% which helps to make the financing more affordable.

Infill Lots

Infill or development on existing, vacant lots present the best opportunity to build affordable homes although they do come with their own challenges. For starters, municipalities can save money by promoting development in areas that already have infrastructure connected to public services, as opposed to financing new infrastructure in undeveloped greenfield sites. This new construction can also raise the taxable value of an undeveloped property and increase market values in the surrounding neighborhood. Building on infill lots have the added benefit of stabilizing a neighborhood by attracting a greater diversity of household income levels, bringing new resources to the area, and reducing concentrated poverty. Lastly, it can bring residences and destinations closer together, making it easier for people to walk, bike, or drive shorter distances, which reduces pollution from vehicles.

See the “Vacant Parcels” tab on the Lot Analysis Interactive map to identify opportunities to build new homes in and around Cassopolis.

Stone Lake Shores

One area of development opportunity is the Stone Lake Shores subdivision located on the southern banks of Stone Lake (see interactive map above for more details). The site has 44 shovel ready lots that vary in size from 1 acre with a handful of lots eight to 10 acres in size. Utilities are available to the lots with future plans to improve the existing road network in the subdivision. Lot prices range from $18,000 up to $60,000 based on size of lot and proximity to the water.

Acreage homes are typically sites for custom build homes where someone can purchase a lot and hire a home builder to construct their home. It is unclear why these lots have sat vacant for as long as they have, but these lots would be ideal to site new homes that would attract the professional workforce needed to make the Smart Park a success.

One strategy to get construction going is to partner with a local builder who can help design a handful of homes specific to a few lots. Then promote the lots with these designs so potential buyers can visualize themselves in the space. This would also speed up the home design process as many of the major decisions would be made and the homebuyer could pick the finishing details such as the kitchen cabinets, countertops, and paint colors. Going one step further, a builder could actually begin construction and then actively market the home during early construction further reducing the wait time for a homebuyer to get into the home.

An added benefit of building in this subdivision is the flexibility of the property owner. Stone Lake Properties LLC has stated they would allow a builder to begin construction and forfeit payment for the lot until the home was completed and sold to a buyer. This incentive allows the future homebuyer to invest their financial resources in the construction of the home and have less upfront cash to purchase a lot prior to closing on their completed home. These conditions are also ideal for a spec home as a builder would reduce overall carrying costs and reducing their budget needed to finance the construction process.

See the “Stone Lake Shores” tab on the Lot Analysis Interactive map to identify opportunities to build new homes in this subdivision.

Create new subdivision

One strategy to get construction going is to partner with a local builder who can help design a handful of homes specific to a few lots. Then promote the lots with these designs so potential buyers can visualize themselves in the space. This would also speed up the home design process as many of the major decisions would be made and the homebuyer could pick the finishing details such as the kitchen cabinets, countertops, and paint colors. Going one step further, a builder could actually begin construction and then actively market the home during early construction further reducing the wait time for a homebuyer to get into the home.

Building out infill lots and completing unfinished subdivisions are two ways to address a shortage of housing in the near term. However, long term plans should be made to consider where future housing should be sited once these available lots are fully built out. One area we considered was the Village of Cassopolis’s existing industrial park and the adjacent school property with the Squires Education Center. The creation of MEC’s 245-acre Smart Park has presented the village with an opportunity to rethink how this underutilized property could expand housing and better serve the growth of Cassopolis.

Rendering of proposed subdivision

The proposal would include a land swap between the village and school district. The village is in the process of building out its new administrative building which would leave their current space vacant. The school district could move any programming from the Squires Education Center to the former village office space freeing up that land for new residential development.

Between the current industrial park and the school property, there are nearly 90 acres of developable land. The proposed layout provides a total of 280 single-family lots. It is laid out to allow the village to develop the ground they currently own before they would need to perform the land swap or other agreement to receive the property from the school district. The development pro forma below outlines the preliminary estimate for construction and total project costs. Engineering fees include a fee for surveying and engineering for the entire 90 acres of development although a development of this size would be broken into multiple phases to minimize financial risk.

Property Summary
Total Developable Acres 90.0 Acres
Total Single-Family Lots 280 (80 ft width)
Total Commercial Ground 9.44 Acres
ESTIMATED PROJECT DEVELOPMENT COSTS
Engineering $605,952.00
Village/State Permit & Review Fees $5,000.00
Site Work $7,288,256.00
Construction Staking
Grading
Storm Sewer
Sanitary Sewer
Water Main
Paving
Landscaping/Signage/Misc.
School Site Basic Demolition* $469,097.65
Wetland Mitigation ($50k per Acre) $50,000.00
Estimated Project Development Costs $8,418,306.00
Land Cost $185,000.00
TOTAL PROJECT COST $8,603,306.00
Cost per lot $30,726.09
*Estimate does not include asbestos remediation or lead paint removal

NOTE: This proposed development is an exercise to consider what a residential neighborhood could look like on this vacant parcel of land. Further study would be needed to better understand the cost to install infrastructure and marketability for this volume of new home lots.

Action Steps

1

CREATE BETTER AWARENESS AROUND AVAILABLE TOOLS AND RESOURCES

WHO: Village of Cassopolis, Cass County, Midwest Energy & Communications, Banks and other financial institutions, Southwest Michigan Planning Commission (SWMPC)

HOW: Connect with local home builders and housing service providers to help connect potential homebuyers with their available services including individual home counseling and funding resources. Banks and other financial institutions will also play a role in educating themselves on the available programs outlined in the Funding Resource Guide in Appendix C and how they can be offered locally.

2

ESTABLISH EMPLOYER ASSISTED HOUSING TASK FORCE

WHO: Village of Cassopolis, Cass County, Midwest Energy & Communications, Banks and other financial institutions, Southwest Michigan Planning Commission (SWMPC)

HOW: Convene meeting to setup structure of the task force and outline responsibilities. Some of the first items to address include (1) identify fiscal agent, (2) determine what assets members can provide, and (3) how they will be deployed. For more details on Employer-Assisted Housing programs, see the EAH Resource Guide in Appendix D.

3

SET APPLICATION CRITERIA TO UTILIZE EAH FUNDS

WHO: Village of Cassopolis, Cass County, Midwest Energy & Communications, Banks and other financial institutions, Southwest Michigan Planning Commission (SWMPC)

HOW: Outline parameters for use of EAH funds including, but not limited to, grant, low-interest loan or combination, income restrictions (i.e. low- to moderate-income or anyone), application of funds (i.e. roof repair, new HVAC, etc.), down payment assistance, and other criteria. Use the interactive map to help identify sites for potential redevelopment investment. Setting these criteria will also help better understand the level of funding to request from partners and grant applications.

Note, some state and federal resources likely require income limits and other restrictions on use of funds. Please make note of this upon award of these funds.

4

CREATE THE EMPLOYER ASSISTED HOUSING FUND

WHO: Village of Cassopolis, Cass County, Midwest Energy & Communications, Banks and other financial institutions, Southwest Michigan Planning Commission (SWMPC)

HOW: Once assets are accounted for – i.e. pledged funds, parcels available for development, etc. – the task force should request a meeting with representatives from the Michigan State Housing Development Authority, USDA Rural Development and other major housing service providers to determine how best to maximize the funds from the EAH fund with state and federal resources.

5

MARKET EAH PROGRAM

WHO: Village of Cassopolis, Cass County, Midwest Energy & Communications, Banks and other financial institutions, Southwest Michigan Planning Commission (SWMPC)

HOW: Work with MEC and other major businesses to encourage those employed at local businesses to apply for the EAH program. The task force can conduct monthly public meetings about the program and its benefits. The program can also be marketed through the Village’s website and other local partners for greater impact.

6

DESIGN HOME CONCEPTS FOR STONE SHORES

WHO: Village of Cassopolis, Cass County, Midwest Energy & Communications, Banks and other financial institutions, Southwest Michigan Planning Commission (SWMPC)

HOW: Work with local builders to establish a set of proposed designs for a select few lots in the Stone Lake Shores subdivision. EAH funds could also be used as a loan to begin construction on the first home with an agreement to use proceeds of sale to reimburse the fund. The EAH program would then market the home to the general public with an emphasis on targeting interested employees at local businesses who can work with the builder to finalize the design of the home.

Once a handful of homes are built, other builders may be more willing to adopt this approach and help complete the buildout of the other available lots in Stone Lake Shores and infill lots throughout the community.

7

DESIGN NEW SUBDIVISION

WHO: Village of Cassopolis, Cass County, Cassopolis Public Schools, Midwest Energy & Communications, Banks and other financial institutions, Southwest Michigan Planning Commission (SWMPC)

HOW: While the EAH program works to buildout existing vacant lots, there needs to be further study to site a future residential subdivision in Cassopolis. Should there be interest to repurpose the Village’s current industrial park property and adjacent school facility, further study should be conducted to identify more detailed cost estimates for infrastructure buildout. Proper phasing will also be established at this stage to maximize the use of existing utility services and roads and prevent too much investment upfront.

Note, a buildout like the one suggested at the existing industrial site will be a 10+ year buildout and is largely dependent on the success of MEC’s Smart Park to attract large employers.

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