Developers say bureaucracy and ‘backyard’ resistance are stalling much-needed housing

Originally posted in Crain’s Grand Rapids Business

February 20, 2024

By Kate Carlson

GRAND RAPIDS, Mi — West Michigan housing experts and developers are calling on the business community for support during what they call an increasingly difficult environment for building attainable housing.

The Grand Rapids Area Chamber of Commerce hosted a housing-focused forum on Friday at its downtown offices. Housing Next Executive Director Brooke Oosterman led panel discussions with local developers and government officials in front of a crowd of about 100 people.

Expanding project timelines is one of the biggest obstacles right now to get housing projects across the finish line, panelists said during the event. They attributed the extended timelines to multiple factors, including the need for more incentives and financing sources to make projects pencil out amid rising interest rates and cost increases across the board.

On top of that, community pushback and the growing number of approvals needed for developments and inconsistencies in the process remain ongoing barriers, panelists said.

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John Bitely, president of Rockford-based Sable Homes, said that when his development company formed in 1996, construction could start within the same year that a property was purchased. If he were to purchase property for a project today, his projections are at least three years out, he said.

“I can not get it approved and ready through all the agencies and regulations (in the same amount of time),” Bitely said.

Bitely cited recently proposed residential building codes from the state’s Department of Licensing and Regulatory Affairs (LARA) as another major obstacle if the regulations become law. LARA’s proposed changes call for updated insulation and framing aimed at achieving better energy efficiency, and mandating sprinkler systems for fire safety in all new residential construction.

The Homebuilders Association of Michigan estimates the proposed code changes would add about $20,000 to the overall cost of building a home, Crain’s Detroit Business reported.

Bitely and Dan Burrill, a local developer who also serves as a Kent County commissioner representing the city of Wyoming, also noted challenges with an inconsistency in inspectors among communities.

“There are some communities I just don’t want to be in because it’s an absolute bear to get through the process,” Burrill said.

More people who are buying homes have to start recognizing the complexities that go into developing a project for the problem to be solved, Bitely said.

“Free market development is becoming dead because we can’t get past all the regulation and all the resistance in our own backyard,” Bitely said, a sentiment he expressed earlier this year.

Brian Hamrick, the owner of Hamrick Investment Group and a partner at Victory Development Group, told panelists that the city of Grand Rapids’ inspection process held up one of Victory’s projects by “about eight months.”

“How do we bring the inspection process into alignment with our urgent need for housing?” Hamrick asked.

The city of Grand Rapids’ planning and inspection staff was recently allocated more staff members to help review permits. The city also has three more positions in the building department to help with the intake process, said Grand Rapids Planning Director Kristin Turkelson.

“It’s a constant workload that is just not possible to accommodate, but we’ve brought on more staffing literally this week,” Turkelson said. “I think that’s really going to help.”

The additional burden that comes with the cumbersome permitting process makes zoning reform, community support for projects and any other way local governments can expedite the process even more important, said Kurtis Fritz, director of construction at Wolverine Building Group.

“Anything we can do to increase the amount of units (allowed) per acre and (increasing) building height for multifamily, that reduces the cost of price-per-square-foot and a per-unit basis,” Fritz said. “All of that helps and the more supply we can get the lower that makes it.”

Meanwhile, the Grand Rapids Planning Commission approved five changes to the city’s zoning ordinance last month that include easing restrictions on accessory dwelling units, reducing parking minimums in certain areas, adjusting group-living requirements and allowing for more small-scale residential infill throughout the city.

Planning staff are hopeful that the Grand Rapids City Commission will approve the changes, which is a necessary step in the approval process.

“We need people like you to advocate and support us to help prioritize housing and people in our city,” Turkelson urged attendees on Friday.