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A surprise decision by the Michigan State Housing Development Authority (MSHDA) to "non renew" a $300,000 grant for the HomeStretch Nonprofit Housing Corporation could put a halt on the organization's development within downtown TC's Depot Neighborhood.
HomeStretch and Habitat for Humanity partnered to buy the 2.5-acre vacant lot on the corner of Eighth Street and Woodmere Avenue from the city at the end of 2012 with the goal of constructing 21 energy-efficient, affordable housing units. HomeStretch is constructing five three-story duplexes and a three-story townhouse for a total of 11 units, while Habit for Humanity is building 10 single-family homes.
Infrastructure construction began on the development last year and is set to be completed within the next few weeks, according to HomeStretch Executive Director William Merry. But the organization learned just days ago from MSHDA officials that the state housing authority plans to reject HomeStretch's application for a renewal of a $300,000 Housing Resource Fund grant – previously approved for the project – that was set to cover construction of the organization's first four units this year.
“We already had the grant and had to reapply for it because we were reaching the end of the grant period,” Merry explains. “The first time around, we didn't have all the financing secured and the grant was still approved. This time, all the financing was in place, the infrastructure was underway...and they turned it down. We have no idea what the problem is.”
Merry, who says the state did not provide an explanation for its rejection, is now busy reaching out to MSHDA leadership as well as local and state representatives to ascertain the cause of the application's denial and explore whether the decision can be reversed. Merry spoke to MSHDA Executive Director Scott Woosley about the issue Monday (“he said he was going to look into it, because he supported the project,” Merry says) and anticipates he could hear back from the state by the end of this week.
While MSHDA often discusses grant status with applicants ahead of official announcements, Communications Director Katie Bach noted in a written statement to The Ticker that “Housing Resource Fund grant applications are still under review” and that “while members of the MSHDA staff may have reached out to an applicant to offer feedback, there has been no formal announcement regarding the awards. We expect to release that information in the next few weeks.”
Merry says that without MSHDA grant funding, HomeStretch's housing construction this year will be put on hiatus until alternate funding sources can be secured (Habitat for Humanity, which has separate financing streams for its portion of the Depot development, will still proceed with construction of its first three units in 2014). HomeStretch could also reapply for the Housing Resource Fund grant in July, when additional funding becomes available, though Merry is concerned about the precedence that could be set by an initial rejection and about delaying a project that already has buyers secured for two units and others waiting in the wings.
“If we had to go to other financing, it'd likely be a lender, which would add debt to the project we weren't expecting,” says Merry, who adds this is the first time in HomeStretch's 19-year history the organization has been turned down for the grant. “That could create a problem with homebuyers and the pricing of houses, because we'd have to repay those costs out of the sales price. We could lose the buyers we have now, or the (sales model) could change...there are a lot of concerns.”
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