Amidst a housing rental shortage straining Traverse City employers’ efforts to attract and retain staff, two local restaurateurs are taking matters into their own hands and building a downtown housing development.

Jeff and Trish Wiltse – owners of Firefly, Bubba’s, The Kitchen and Maddy’s Tavern – recently broke ground on a 14-unit apartment complex called Boardman Flats at 619 East Eighth Street between Railroad Avenue and Franklin Street. Scheduled to be ready for occupancy in spring 2017, the 8,200 square-foot building will house 12 single-bedroom studio apartments and two larger two-bedroom apartments.

Two homes were demolished on the site to make way for the development. “We owned one house since 1998,” says Trish, “and when the other went on the market last year, we had this idea to (combine the properties) and build small flats so people could work and live downtown.”

The Wiltses echo the frustrations of other local restaurateurs and retailers who’ve found it increasingly difficult to hire and keep staff in the wake of Traverse City’s housing shortage. “We’ve had employees move because they could find lower-cost housing downstate,” says Trish. “We’ve tried to be competitive with our wages. But unless you live outside the city and drive in (to the restaurants), or else pile people up in a small apartment in town, it’s difficult to make it work. That’s how this (project) started: our employees talking about housing.”

President Chris Richter of RCI/Richter Construction – which is overseeing construction of Boardman Flats – says the development will feature “trendy touches” like arched walkways, bike racks and attractive finishes that will make it a “highly desired” addition to the corridor. “It’s cool to be a part of this revitalization of Eighth Street,” Richter says. “We’re taking out these old buildings, helping clean up that section of Eighth Street and putting in a place people are going to want to live.”

While construction has only been underway a few weeks, Richter says the job site has generated “a ton” of interest from passersby. “People constantly stop and ask us what’s going in, how tall the building will be, when it will be ready,” he says. But the million-dollar question – as is often the case with new Traverse City rental developments – has been: How much will the rent be?

“It’s not low-income housing,” says Richter. “It’s a valiant attempt at providing affordable housing in Traverse City, but it’s not low-income.”

As business owners and now first-time developers, the Wiltses are experiencing both sides of the affordable housing crisis coin: the economic impact of not having housing available to workers, and the difficulty in making the numbers work to construct affordable housing – even for builders personally motivated to bring it to the marketplace.

“We really want to meet this need, but (the process) is frustrating,” says Trish. Renting out apartments significantly below market-rate – for example, to low-income tenants – typically requires public-private partnerships with entities like the Michigan State Housing Development Authority to make the development sustainable. It can take multiple application cycles to be approved for MSHDA funding, if funding is approved at all – a process Trish says can be “very difficult to work through.”

The Wiltses instead are trying to make the apartments available as quickly as possible and still keep rent within reach for middle-income workers. The couple originally set a target goal of $800/month for the studio units, which can accommodate 1-2 individuals. But the couple was informed by the city assessor’s office that property taxes alone could equal $200/month per unit.

After factoring in building, development and maintenance costs, those expenses could ultimately drive rental prices closer to $980, according to Trish. “We have to at least get a return on our investment,” she says. “We’re not trying to make a lot of money. We’re hoping to work with the city on some type of concessions.”

City Assessor Polly Cairns says tax abatement requests for housing developments typically come to city commissioners before construction begins, not after, so she's uncertain how such a request would be handled. “We do appreciate the benefit of them trying to provide housing at a reasonable cost, because Traverse City doesn’t have enough of that housing,” Cairns says. “If an abatement is what they want, we would do our best to work with them and assist them with that request."

Richter believes no matter the final rental rates, Boardman Flats will help meet a crucial need for downtown rental housing and offer a "studio concept that does not exist in the area." He says his firm also has a “bigger vision” of developing multiple such properties in the city – smaller-scale developments integrated into the surrounding neighborhoods, rather than large-scale complexes. “We’re already looking at another piece of property right now,” he says. “There is a crying need for housing for our downtown workers.”