Affordable. Low-income. Workforce. Market-rate.

All of these terms are used to describe housing in the Traverse City market – often interchangeably, and rarely with precise definitions attached. While community leaders and developers agree there’s a clear need for more “affordable” housing in the region, how that term is defined is less apparent. Affordable to whom? Is there an objective set of criteria that accompanies each of these categories, or is “affordable” simply in the eye of the beholder?

“It’s difficult – unfortunately there’s not really a consistent set of definitions of those terms,” says Sarah Lucas, regional planning department manager at Networks Northwest. “The price point for affordable housing is all over the board. It’s really a nebulous, generic term.”

Lucas says “low-income” may be the easiest of the four categories to define, because state and federal agencies have specific criteria for that term. “That is typically people who are earning 80 percent or less of the area median income (AMI),” says Lucas. “There are generally subsidies that go into those projects. The units developed are only available to people earning low incomes.” Examples of low-income projects in Traverse City include Riverview Terrace, Orchard Townhomes, Tradewinds Terrace, Aspen Hills and Churchside Village.

“The complaint we often hear about low-income housing is that it doesn’t serve big chunks of the workforce,” continues Lucas. “A lot of people don’t qualify as low-income, but they’re not earning enough money to pay market price for homes for sale or rent. So there’s this big gap between what’s on the market and what’s affordable. That’s where people start talking about workforce housing.”

Developer Thom Darga specifically cited his intention to build “workforce housing” when seeking city zoning approval for Warehouse Flats, a planned four-story, mixed-used development in the Warehouse District. According to Darga’s conditional zoning agreement approved by the city, the developer plans to build apartments ranging from one-bedroom, 500 square-foot units to 3-bedroom, 1,200-square foot units. “Most of the 500 square-foot apartments at Warehouse Flats will be available for rental as workforce housing apartments,” the agreement reads. “Workforce housing is defined in this offer to be those starting at 30 percent of the (AMI) of Traverse City.”

According to Traverse City Housing Commission Executive Director Tony Lentych, Traverse City’s AMI for a family of four is $68,750. The U.S. Department of Housing and Urban Development (HUD) provides “fair market rent” estimates for communities like Traverse City based on census data and renter surveys. In Traverse City, for those earning 30 percent of the region’s AMI – the same threshold proposed by Darga – a fair market rent apartment would cost $709 per month, including utilities.

Darga’s proposal would hit the lower income range of workforce housing, according to both Lucas and Lentych, who themselves see that market as being between 80 and 120 percent of the region’s AMI.  “(Workforce housing) is a made-up term, it’s not defined anywhere in statute,” says Lentych. “(When using it), I’m referring to housing opportunities – and there aren’t many of them – for young families, younger workers, people in that 80 to 120 percent of AMI range.”

Agrees Lucas: “It seems like the portion of the workforce affected by this keeps getting bigger and bigger, going from 100 to 120 to 150 percent of AMI,” she says. “If you’re trying to serve that population, it’s hard, because there aren’t programs in the state that provide subsidies for those larger-scale developments. Developers recognize there’s a huge market for workforce housing right now, but it’s really difficult to build because of construction and land and infrastructure costs.”

TraverseCONNECT CEO Doug Luciani affirms Lucas’ assessment. TraverseCONNECT is a partner with Midwest Property Development and Westwind Construction in Trailside45, a 74-unit apartment complex under construction on Garfield Road. Marketing materials for the project tout a “budget-conscious” development offering a “welcoming environment for young professionals and others in the community in need of affordable housing.” While the partners initially identified a rent range of $750-$1,200 per month, a representative for the project told The Ticker the lower end of that range will likely rise, though she could not disclose final rental rates. Luciani says he’s also uncertain as to the rates, but notes costs on the project are high – a challenge facing many developers trying to build workforce or affordable housing.

“(The rents) will be below market rate for at least four years while we’re in as an equity partner in the deal,” Luciani says. “We don’t know what the rate will be, but it’ll be the cost to pay for the debt service on the building, maintenance, administration and property taxes. I was surprised at what a large percentage of the cost is of a build-by-right, unsubsidized apartment (complex) in the city limits, in terms of just the taxes added on to the rent.”

The final term often used to describe housing units - market-rate - is another loosely defined category, essentially described as whatever the market can bear. That could range from $500,000 luxury condominiums downtown to higher-cost rental apartments affordable mostly to those working in white-collar or professional careers. New apartment complexes such as Boardman Flats, Ridge45 and 918 West list rental rates starting for their smallest units between $900 and $950, with rates climbing up several hundred dollars more for larger units. The new TC Lofts project on State Street, which also bills itself as market-rate, is advertising units ranging from $1,150 for the smallest one-bedroom, one-bathroom unit to $2,000 for the largest two-bedroom, two-bathroom unit.

Regardless of the housing terminology used – whether low-income, affordable, workforce or market-rate – Lentych says there is a need for an increase in supply across the spectrum in Traverse City.

“I know for a fact we need housing on every level," he says. "The needs of this community are particularly going to be for young families. We don’t have enough housing here for them.” Lucas agrees many families and young professionals are "falling through the cracks." She adds: "Any housing development helps right now, because it takes a little of that pressure off."