Proposal Made To Empower Cities With Housing Policy

The cost of living has become one of those evergreen stories that politicians grandstand about, magazines like this one spill gallons of digital ink on, and more and more Michiganders get more and more squeezed by. But that hardly means that nobody is trying to solve the problem.

“I myself, and other renters, have been surprised by the large jumps in rent increases,” Representative Carrie Rheingans said.

Rheingans is a Democrat representing the northwestern one-quarter of Ann Arbor along with the northwestern part of the rest of Washtenaw County, and part of Jackson County. She got to work on housing affordability as soon as she got into the Michigan State Legislature in 2023, her efforts eventually culminating with the introduction of HB4947.

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This paragraph-long bill is a simple repeal of a Regan era state law that prohibits local municipalities from instituting any sort of rent control, rent stabilization, workforce housing, rent increase percentage cap or any requirement for multi-family developments to have a certain number of affordable units. Rheingans’ bill wouldn’t create anything like those programs, but rather just empower each municipality to set up their own program if they want to.

Ann Arbor has been an expensive place to live for decades now. The average Ann Arbor rent was $1,472 from 2018-2022 and the average mortgage payment was $2,319, according to the Census.

But the middle class ring of housing that used to ring a wide loop around the expensive areas across town is eroding fast. Small towns that started off as farming communities like Saline, Dexter and Chelsea keep getting more expensive, and the old common wisdom that Ypsilanti is always a cheaper alternative to Ann Abror is becoming less and less true. In Ypsilanti, the average rent was $977, and the average mortgage $1,620 per month from 2018-2022.

“It’s nonexistent,” Washtenaw County Commissioner Caroline Sanders said of the stock of affordable housing last winter. Sanders said in a previous Current article that while she is a supporter of private property development, she is also in favor of some sort of rent control or equivalent program for the sake of housing because “This really is a workforce issue where you can’t hire people, or people turn down offers, because the cost of living is cost prohibitive.”

Homes are still being built all across Washtenaw County of course, but like in a lot of wealthy communities, it has mostly been at a luxury or upper-middle class price point. And because Ann Arbor and Ypsilanti are both college towns, a lot of the land is owned by the University of Michigan, Eastern Michigan University, Washtenaw Community College and Concordia University – to say nothing of the hospitals. The constant churn of students complicates matters further.

Leah Robinson, the Director of Legislative Affairs at the Michigan Chamber of Commerce, said that her pro-business organization opposes the legislation specifically because they support workforce housing.

“But at the same time, how we get there matters. The Michigan Chamber has serious concerns about rent control mandates because there’s a possibility that it does the very opposite. I definitely think that solutions from our members perspective would be focused on supply, and maybe innovative solutions to incentivizing supply, cutting unnecessary red tape,” she said.

Interestingly for a progressive approach to housing equity, part of the argument Rheingans makes for her bill is actually surprisingly conservative in spirit. It is old school Republican doctrine not only that there should be limited government power, but when it is necessary for the government to have control over anything, that power should be concentrated down the totem pole from federal, to state, to county, to local governments if at all practical. The general argument is that doing this is more democratic, increases public trust and transparency and accountability if something goes wrong.

“Since housing is a market good, obviously with markets people get left out, so I guess they must be ok with some people left out of a basic need of living,” Rheingans said of a free market approach to solving the housing crisis. “The market is obviously not working so far. I do think that we need a minimum level of housing for people, especially in a city like Ann Arbor where we have many low paying jobs.”

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Representative John Roth, a Republican representing the Grand Traverse area, who sits on the Economic Development and Small Business Committee that Rheingans first introduced her bill to, said that his fear is that if the bill passes, all that it will do is reduce incentives to build any housing, and what will still be built will be outrageously expensive condos rather than rental apartments anywhere within the realm of middle class affordability. However, Roth did say that he was sympathetic to the cause of increasing local control.

“If we can get control back to the local level it is a better piece of legislation, because they know their communities better than anywhere else. I want to look at this more, I just want to make sure it doesn’t hurt growth,” Roth said.

Roth said that his constituents are hurting also, facing rents for basic housing units around $1,000 more than they can reasonably afford. “I’m willing to look at the bill and consider more. …I just want to make sure we don’t stifle growth either.”

The Ann Arbor/Ypsilanti Chamber of Commerce declined to comment on HB4947, but they have supported a number of affordability initiatives in the past. At least seven of its members are in the real estate or construction industries.

While declining an interview, Executive Vice President and Director of Government Relations Andy LaBarre (who also serves on the Washtenaw County Commissioners) wrote the following emailed statement: “The housing affordability challenge is in parallel with the childcare challenge, transportation challenge, and other cost of living challenges. All of these factors have a direct impact on workforce availability, which in turn impacts businesses and their growth. Finding ways to equitably and efficiently shape the market to increase affordability is a difficult but necessary effort. The A2Y Chamber has supported state legislation and local efforts and will continue to do so.”  

Lukas Bonner, the owner of an Ann Arbor-based real estate development advisory firm specializing in mixed use projects, who lectures at the U of M, said that regionality itself was the solution to long term affordability. While saying he believes that Michigan “needs all housing types” he also decried a fixation on small municipal lines and insisted that a smarter approach was to go regional in its long term planning process, rather than having everything planned on the municipal or even county level.

“I think that there are, often times, things where we have to look at the region and not everybody does. The Ann Arbor region is bigger than just the city of Ann Arbor. It’s a major job center. And when you have that much employment in one place, and that much demand for housing, it’s not always feasible that people can live where they work. So, if you look at the region overall – Pittsfield Township, Saline, Dexter – I think for those communities look at themselves and think ‘we’re a great option to live in’ and they’re also building housing into the market,” said Bonner. “I also think that one of the benefits of the Ann Arbor region compared to the rest of Southeast Michigan is a good transit system. I think that helps from an upward mobility standpoint … which is all part of a regional economy.”

Compromise is possible. One thing that Roth wants to see is a reduction in the expenses caused by building code red tape.

Rheingans separately said, “It would be nice if we had a smoother process for zoning changes and we had better financing options for developers, because I do believe that if cities had enough housing that people could afford – not affordable housing as a federal definition – being built, then the market could stabilize the rent. That is going to take a while, so that’s why I think rent stabilization in the meantime can help people stay in housing.”

Rheingans introduced the bill last September. It is currently still sitting in the Economic and Development and Small Business Committee, yet to make it to the full House.

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Drew Saunders is a freelance business and environmental journalist who grew up just outside of Ann Arbor. He covers local business developments, embraces his foodie side with reviews restaurants, obsesses over Michigan's environmental state, loves movies, and feels spoiled by the music he gets to review for Ann Arbor!