A Tale of Two Lofts

Michigan Community Capital seeks to address the “missing middle” in Grayling and Boyne City with new apartments

Two northern Michigan projects aimed at addressing a dearth of middle income housing are inching forward after years of delays in Grayling and Boyne City.

Sawmill Lofts – Grayling

On April 8, the Grayling City Council approved a Brownfield tax increment financing plan for Sawmill Lofts (pictured) to help fund 42 new apartments and over 3,000 square feet of commercial space in a nearly 40,000-square-foot, five-story building along Michigan Avenue. The plans have since been approved by the county and the site plan given the thumbs-up by the planning commission.

“Right now, the only housing we have is low-income, so if you’re over a certain percentage you’re not eligible,” Grayling City Manager Erich Podjaske says. “This is really the first apartment project that is going to be outside of low income.”

The $15.8 million project, developed by the nonprofit Michigan Community Capital, is moving ahead with a $3.5 million grant from the Michigan State Housing Development Authority’s Missing Middle Housing Program. Combined with a roughly $6.5 million grant from the Michigan Economic Development Corporation (MEDC), the nonprofit has secured $10 million in funding, creating momentum for a project that was shelved just a few years ago.

“Having housing downtown will be a big game changer,” Podjaske says. “We started on this project in 2017 and 2018, had a groundbreaking in 2020, then costs skyrocketed.”

Marilyn Chrumka, vice president of development at Michigan Community Capital (MCC), says the nonprofit real estate firm launched the Grayling project and others well before the pandemic, focusing on redevelopment-ready sites identified by cities through the MEDC. MCC initially intended to be a co-developer, but “it became clear pretty quickly there was sufficient return on investment to keep these private investors interested” so MCC took over that role, as well, she says.

The Grayling plan calls for large storefronts on the bottom floor, along with a residential lobby and lounge. The upper four floors are a mix of studio, one-bedroom, and two-bedroom floorplans with some apartments overlooking the Au Sable River.

MCC gained site approvals in 2019, but when it came time to bid out construction, the estimated cost was “several million higher to build them than what they would be worth once they were completed,” Chrumka says.

Initially rejected for state funding, MCC shelved the plans for several years before the launch of the Missing Middle Program in 2022 helped to revive the project. The program targets the same middle income residents—those with incomes between 60 and 120 percent of the area median—MCC aims to help.

“The market is not creating housing at a price point they can afford,” Chrumka says. “Regular people making a middle income are really feeling this housing crisis.”

While MCC is working to finalize the state grants, the project’s site plans have moved through the process for a second round of approvals, as prior approvals have since expired. A tax abatement of a little over $6 million is also gaining approvals through a separate three-step process, Chrumka says.

“What we’re asking for is any new taxes paid by our development are eligible to be paid back to the development” for the next 30 years, she says. “That’s basically to ensure long-term the [rental] rates will stay at this moderate level for 30 years.”

Podjaske says he doesn’t expect significant challenges moving forward, noting city commissioners have already approved the project once, and it seems to have strong community support.

“Really, not much is changing,” he says. “Most people from what I’m seeing are fully in support of our project.”

“We’ll be bidding this project out in July, to select a contractor,” Chrumka adds. “If all the pieces come in, we’ll be starting construction this fall.”

Lofts on Lake – Boyne City

It’s a much different dynamic in Boyne City, where an expanded Lofts on Lake project has faced pushback from the community as MCC reworked details to improve its odds for grant funding.

What was initially presented as an apartment complex-slash-commercial space on Lake Street in 2019 was expanded to include a second site at Ray and Park streets in 2022. Per the MCC website, the one-, two-, and three-bedroom apartments will be 12-month rentals.

“Lofts on Lake, located at 110 North Lake Street, as proposed would create 57 apartments and approximately 6,800 commercial square feet. Ray and Park is the redevelopment of 211 South Park Street and 214 Ray Street into 24 apartments, approximately 3,600 commercial square feet, and a new community room for the Boyne District Library,” the plans say.

MCC has made several changes to the plans since the project was first proposed, including reducing the total number of apartments from 107 to 81, adding a fourth floor to the Lofts on Lake site, increased parking, and reworked affordable rent targets that are now 60-120 percent of the median area income, rather than 80-100 percent as initially proposed.

“We’re doing all this in an attempt to become more competitive for funding,” Chrumka says, adding that the $31 million project has been repeatedly rejected for state grants. “Our first step is we need the city to tell us they’re comfortable with our plan.”

That step will be critical after a series of five recent community listening sessions revealed a variety of concerns, from limiting parking downtown to claims the apartments will become multi-million-dollar condos.

Boyne City Mayor Tim Nemecek says a Housing Needs Assessment from Housing North shows the city, the largest in Charlevoix County, has reached a “crisis” level for affordable housing, though he believes MCC’s changes to the plans could “drastically impact the overall chances for approval.”

Nemecek stressed that he’s one member of the five member city commission, and does not speak for the city or commission as a whole.

“Since MCC began doing community engagement meetings with the public, it’s becoming clear that public parking has become a major concern for the community,” Nemecek says. “The community needs to collectively come together and communicate what the priority is; is the priority to bring additional housing units to our community, or is it to reserve the current parking spots available? I believe there is an ability to address both.”

MCC has offered deed restrictions to alleviate concerns about the apartments becoming million-dollar condos, but misinformation about the project persists, Nemecek says.

“It’s truly sad and shameful that some individuals within the community are more focused on spreading fear, misinformation, and inaccurate statements; versus being focused on spreading true and accurate information, which in turn would allow the community … to make the best educated decision for their community,” Nemecek says.

The mayor has focused on addressing community concerns and misinformation both on social media and in public meetings, and is urging the city to take a more proactive approach to address the housing shortage.

“We are in the process of evaluating the feasibility of utilizing other city-owned property for future housing development opportunities,” he says. “We are waiting to hear back on survey results and expect to have those results and other reports sometime this June. These results and reports will indicate to us the next direction we need to head in to continue to take action on addressing … housing opportunities within Boyne City.”

In the meantime, MCC is preparing to bring its plans back to the city commission, Chrumka says.

“We really don’t know how it’s going to go,” she says, noting public comments on a preliminary site plan seemed evenly split for and against. “I don’t know how the public feedback on the project will impact city commissioners.”

Chrumka adds, “We really need local support before we can apply for state funding.”

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