Kalamazoo, Michigan: Affordable and Workforce Housing Incorporates Mixed-Use, Place-based Solutions

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Kalamazoo, Michigan: Affordable and Workforce Housing Incorporates Mixed-Use, Place-based Solutions

 

The Creamery is a mixed-use affordable housing development that opened in 2021 in the Edison neighborhood of Kalamazoo, Michigan. The site, located at the entrance of the city’s historic downtown business district, originally housed the Klover Gold Creamery but became a brownfield after creamery operations ceased in 1997. The Kalamazoo County Land Bank Authority acquired the site, received a grant to demolish the unsafe building and remediate the site, and then selected the Hollander Development Corporation to redevelop the property. In addition to creating low-income units, the new development addressed the area’s growing need for housing for the "missing middle," an income group earning between 80 and 120 percent of the area median income (AMI) whose members still struggle to find unsubsidized affordable housing in amenity-rich neighborhoods. The developer partnered with the Michigan State Housing Development Authority (MSHDA), which exclusively supports affordable housing, and the Michigan Economic Development Corporation (MEDC), which historically has supported the creation of market-rate housing. The partners funded the development of The Creamery as a pilot project for missing middle housing.

Along with 48 units of affordable and workforce housing, the mixed-use building also houses commercial tenants that serve neighborhood residents and support the revitalization of the historic Portage Street business corridor. Guided by the principles of place-based development, the developers created policies, investments, sustainable design features, and projects fitting the needs and character of the neighborhood. The Creamery received the U.S. Green Building Council’s 2023 LEED Homes Award for Outstanding Affordable Projects.

The Creamery

The three-story building includes one-, two-, and three-bedroom apartments, with most of the units affordable to low-income renters. There are 15 units for extremely low-income households earning no more than 30 percent of the area median income (AMI) and 24 units for households earning no more than 80 percent of AMI. The nine remaining units are workforce housing for families earning up to 120 percent of AMI.

Amenities include a lounge with a porch, a fitness center, and bicycle storage. Onsite parking is available, and a bus stop at the edge of the property offers residents access to public transit. The building earned Leadership in Energy and Environmental Design Platinum certification by employing all-electric heating, ventilation, and air conditioning systems; a green roof with solar panels; and rainwater harvesting and reuse systems. The building’s energy efficiency reduces residents’ utility costs.

Place-Based Commercial Space

More than 300 feet of the building’s frontage along Porter Street consists of ground-floor retail. The developer incorporated place-based strategies in selecting the commercial tenants, which include an early childhood learning center, a dance studio, and a Hollander Development Corporation office. The childcare facility, The Dreamery, resulted from a partnership between the YWCA and the developer and has a capacity of 40 children. As the county’s first 24-hour childcare center, The Dreamery accepts emergency drop-offs, accommodating families working first, second, and third shifts. In addition, 16 beds are available for families seeking overnight child care. The YWCA worked with architect Bryce & Associates to incorporate best practices for stress reduction for vulnerable children and families experiencing trauma. The developer’s responsiveness to the community’s needs resulted in an expansion of the childcare space from an initial 3,000 square feet to 7,800 square feet. The two-story space also includes a communal kitchen and a nature-based outdoor playground.

The dance and movement studio, called Move with Joy, has a mission to support the development of healthy, active lifestyles for everyone regardless of background or income. The studio provides yoga, pilates, and dance instruction for low-income families. A scholarship fund allows community members to make donations in support of residents who cannot afford the classes. The developer provided a financial incentive for the small business incubator by covering one-half of their rent for the first 6 months. According to Matt Hollander, president of Hollander Development Corporation, this financial support acknowledges that the studio’s grant-funded work "dovetails with the [needs of] affordable and workforce housing residents."

Hollander emphasized that a series of community engagement charettes conducted before the developer acquired the property streamlined the development process. By demonstrating a commitment to addressing community-expressed desires and needs, the team found it easier to obtain municipal approvals and attract funders.

Financing

The Creamery is the first project for which the state paired social impact investors with the MSHDA tax-exempt bond program. Two of the investors, Kalamazoo Community Foundation and the Stryker Johnston Foundation, purchased $1.5 million in municipal tax-exempt housing bonds (table 1). According to Hollander, this unique financing strategy was critical to project funding. MSHDA sold the bonds at 1 percent interest, allowing them to set the interest rate on the permanent mortgage to below the market rate. Other funding included $350,000 in HOME Investment Partnerships program funds from the city of Kalamazoo, low-income housing tax credit (LIHTC) equity, MEDC, InSite Capital, and the Local Initiatives Support Corporation. The total cost of the project was $14.7 million.

Expanding Place-Based Development

Next steps include plans for a public art project led by the Edison Neighborhood Association. The art is intended to integrate with other artworks throughout the neighborhood, including a large mural across the street from The Creamery and several more being commissioned throughout the neighborhood. Hollander adds that his company has access to LIHTC funding for a "Creamery 2.0" project in Battle Creek, Michigan, which, like The Creamery, will offer equitable childcare.