Federal Block Grant Funds are critical to housing development in limited-income neighborhoods

In financially distressed communities, projects that are subsidized with federal funds may be the only housing activity occurring.

Signs of rising property values and new construction are positive indicators that the housing market is improving. However, those initial signs are most likely to occur in more affluent communities and cities. For those less affluent cities, new market rate housing may be a few years away.

An example of this disparity is the city of Inkster, Mich. Before the housing crash in 2008, the primarily African-American community had one of the hottest housing markets in the Detroit metro area. The city of 30,000 residents and 6.3 square miles was building its second single-family subdivision, had scattered infill construction as well as a major condominium development on Michigan Avenue, the major thoroughfare that divides the north and south boundaries of the city. If all of the projects had been completed, the city would have had more than 250 new units construction in a 5 five-year period!

Today, its second subdivision project, located south of Michigan Avenue remains largely vacant and has left the city with a 4 million dollar infrastructure bill with very few homes constructed to pay the special assessment. Such projects are common throughout southeastern Michigan, empty fields with new infrastructure and too few homes to cover the cost of such improvements. With no market-rate new construction, the city will need to pursue community-based housing agencies that can fill the market gap until the market can generate such construction in the future. These housing agencies can tap into federal and state funds for new housing development and can even provide mortgage reduction assistance to eligible families. Federal funds can be used to acquire vacant properties, rehabilitate and/or demolish properties. Funds can be used to provide site improvements, such as sidewalks and curbs. Some funding sources even allow design and planning as eligible costs. The goal will be to find a group that understands and can work in the Inkster market.

If the current market will not support new construction, then the city will need to focus on housing rehabilitation. Even with the rehabilitation focus, the federal funding sources can be used to increase home ownership for low and moderate income families. If Inkster, and cities and communities like Inkster cannot find a way to improve their neighborhoods, the process of population loss and increased vacancy rates will be their future.

For more information or to speak with a Michigan State University Extension Educator, visit Michigan State University Extension website.

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