City officials fear Detroit could lose as many as 10,000 affordable housing units in buildings with expiring low-income housing tax credits in the next five years, threatening massive displacement of renters.
A bulk of properties are coming up on the end of a 15-year compliance or renewal period now through 2023, according to the city. Most at risk are areas ripe for redevelopment, including downtown, Corktown and Midtown.
Margaret Dewar, a professor with the University of Michigan who has researched the issue of low-income housing tax credits, believes the figure could be as many as 7,000 housing units through 2022 and a major threat to the city’s low-income housing stock.
“That’s a huge number,” she said. “It’s really close to half the total low-income housing units the city has.”
Without adequate funding to make financial sense for developers to maintain low rents, they could be tempted to sell to developers who would increase rents with market-rate units, Dewar said.
There’s a temptation for building owners to sell, particularly in areas with an influx of residents. It’s even more so for struggling properties, Dewar said.
“What we see is that a lot of them are having a great deal of trouble breaking even,” she said. “Especially ones that have hard debt from banks or are smaller projects like maybe 20 units instead of 80 or something like that. Ones that do not have housing-assistance vouchers.”
City officials also say Detroit has a large number of affordable rental units throughout the city that have low rents but aren’t regulated through federal subsidies. Both regulated and unregulated units are aging and need investment, according to the city.
To avoid a housing crisis, the city has begun planning for its Affordable Housing Leverage Fund, which will address those existing units and seek to create 2,000 more affordable housing units.
The City Council recently approved nonprofit Detroit Local Initiatives Support Corporation as fund managers to help plan a $250 million fund that will be a mix of grants, low-interest financing as well as city and federal funds. Contributors will include financial institutions, community development financial institutions and philanthropic organizations.
The city Housing and Revitalization Department estimates the $250 million figure is enough to cover the preservation of 10,000 existing units while creating 2,000 new affordable ones.
Without taking these steps, the consequences would be dire, officials warn.