Let’s Talk About Missing Middle Housing
Gov. Whitmer recently signed the Building Michigan Together plan that included a $50 million “Missing Middle Housing Fund” that will be administered by MSHDA. This is an exciting opportunity for the State of Michigan to utilize American Rescue Plan funds to invest in new construction and renovation of rental and homeownership units across the state.
The State Land Bank and their local land bank partners can play a vital role in addressing the missing middle challenges across the state. Before we dive into how we can help your community take part in these opportunities, let’s get a lay of the missing middle land.
Why is it Called “Missing Middle?”
To help visualize the spectrum of housing affordability, the graphic below showcases the breakdown of various household incomes (based on Area Median Income) and how all existing housing programs (until now) have either subsidized “affordable housing” or how there are no subsidies, and that housing is priced at “market rate” levels.
This leaves a gap in the middle of households that make too much money to qualify for subsidized rent levels, but don’t make enough to afford market rate. These households are the “missing middle” on the housing affordability spectrum and need help attaining housing in their price range. To distinguish from "affordable housing," the industry began referring to it as "attainable housing."
 About a decade ago, industry leaders also began using the phrase “Missing Middle” in reference to the various types of housing that have greater density (more units per parcel or acre) than single family homes but are not a mid/high-rise apartment building. In 2015, Opticos Design firm published the graphic below that visually illustrates “Missing Middle” housing types.
 How Much Can a Household Earn to Qualify for These “Missing Middle” Units?
While most federally funded programs reference Area Median Income, the Building Michigan Together plan references the federal poverty level and allows for between 185-300% of the federal poverty level eligibility. The graphic below references where households at 185% of the federal poverty level would fall as of May 26, 2020. If there are multiple adults in the household, it includes all earnings. For a household not to be considered cost-burdened by their housing payment, housing costs should be 30% of their monthly pay. The far-right column below illustrates what those monthly rent or mortgage prices start at. The “Missing Middle Housing Fund” is meant to help subsidize the cost of construction and renovation, so rental and sale prices can be attainable for these households.
 How Land Banks Play a Role in Missing Middle Housing
Parcels owned by land banks are uniquely positioned to meet both the housing affordability and the increased housing density needs for communities:
- Land bank parcels can be sold for attainably-priced housing at a lower cost, making the development costs more affordable.
- Land bank parcels can qualify to utilize tax increment financing to off-set certain developments costs, including the gap between sale price and development cost, if the local municipality chooses to support the reimbursement of eligible project costs.
- Land banks, local units of government and for-profit and non-profit developers can use the State Land Bank Authority (SLBA) Housing Loan Program to finance smaller housing projects.
- Land bank parcels can have a "zoning overlay" that allows for up-zoning from a single-family home or duplex to allow for triplex or fourplex construction. These housing types achieve greater economies of scale during construction in upfront architecture and permitting fees and mechanical, electrical and plumbing systems costs (depending on design) and these savings can be the key to making the deal work.
The SLBA is excited for this new fund, honored to be working on the program design with MSHDA staff and continues to look for ways to help local governments and developers utilize land bank tools for public benefit.
This topic easily lends itself to longer discussions for specific community needs. If you or your organization would like to delve deeper into opportunities in missing middle housing, email Emily Doerr, Executive Director, at doerrE1@michigan.gov, or connect on LinkedIn.
To learn more about the SLBA's efforts to improve communities across Michigan, visit Michigan.gov/LandBank.
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