Charlevoix pumps brakes on $500K housing project
Dec. 19—CHARLEVOIX — Charlevoix County officials cited concerns about a short-term rental bill and hesitancy around financial commitments as reasons to potentially hold off on an affordable housing project.
The pilot project would have built two- to three below market-rate housing units per year in Boyne City, according to Steve Schnell, program director for Housing North in Charlevoix County.
Housing North initially proposed the project to the county several years ago, to establish a $500,000 revolving fund to build the homes that would regenerate when the houses were sold. The majority of that fund would have come from the county.
"We're disappointed, but we're looking at other opportunities to augment that fund," said Schnell. "So if the county decides not to be a part of it, we're working on other sources to do that kind of funding to keep those projects affordable."
The project had not yet been formally submitted or rejected by the board, but Charlevoix County Administrator Kevin Shepard said the county has decided to reconsider its support.
"We're talking a substantial amount of money," said Shepard. "And quite frankly, we're the only major investor ... a lot of it is just about being cautious."
One reason for caution is with the proposal's funding structure. The project would have generated $50,000 in revenue from an incremental tax known as a TIF (Tax Increment Financing).
TIF is a funding tool by which investors — either public or private — recoup funds by freezing the base-value of a property. Over time, as the property's taxable value increases, the difference between the original tax and the assessed tax pays back the investor. The more housing prices go up, the more funding a TIF can generate.
The proposed Charlevoix homes may take eight to nine years for TIF to fully refund the county, said Schnell.
That's a point of con- cern for the board members, who don't want to be seen as playing favorites among townships and were hoping to immediately reinvest the $500,000 elsewhere, said Shepard.
"The whole goal of this is to recoup our investment as quickly as possible," Shepard said.
Shepard said the second, "huge" issue was that of short-term rentals.
In October, the Michigan House of Representatives passed a bill to remove some regulatory roadblocks for short-term rental owners. The bill, HB 4722, would classify rental properties as residential. Previously, they had been classified as commercial uses, which allowed townships to ban, cap and license rental properties.
AirBnB alone acc- ounts for 813 listings in Charlevoix County. In December, AirBnB numbers showed entire-home listings accounted for under 4.5 percent of the county's housing stock, but that ratio is still the highest out of any Lower Peninsula county bordering Lake Michigan.
Shepard said the County is concerned that more short-term rentals could follow. The proposed bill would allow up to 30 percent of a township's housing stock to become short-term rentals.
"Say we build 3 units, but in that same year, 30 units become short-term rentals, then what are we doing?" Shepard said. "The house bill is huge. We're waiting to see what the outcome of that is."
The fate of the bill — which awaits its day in the Michigan's Senate — is still unclear. One of the bill's original sponsors is John Roth, whose district lies within Grand Traverse County.
A legislative aide for Roth, Adam Hagedorn, commented that the bill might not be passed for some time.
"The Senate has been pretty quiet about the timeline so I am assuming they do not have the votes to get it passed," said Hagedorn.
The bill's sponsor in the Senate, Aric Nesbitt, did not respond to requests for comment.
