Detroit Needs Affordable Housing. What’s the City Doing to Promote Development?

Michigan's largest city is falling short of its goal to provide affordable housing to Detroiters in need.

In a Sunday, May 4 article, The Detroit News examined data from the city. According to its analysis, 900 new affordable housing units were completed in Detroit between 2018 and 2023. The city has more than 1,400 affordable housing units under construction as of May 6.

An analysis of a 2023 report from the nonprofit Detroit Justice Center found that the city is still 46,000 affordable housing units shy of what it needs to tackle Detroit's housing crisis. According to The Detroit News, this figure reflects the number of owners and renters who are applying more than 30% of their income toward housing — more than 82,000. The 46,000 units figure is also factored into the number of households experiencing homelessness, less the 37,000 representing already existing or planned new affordable units.

Several affordable housing advocates say that locally developed financial incentives, including a new property tax incentive, are essential to enticing developers to build affordable housing for the city's lowest-income residents.

Mayor Mike Duggan and his administration have employed an expanded Payment in Lieu of Taxes ordinance to appeal to developers. As The Detroit News noted, this expansion was adopted last fall to include affordable housing and accelerated projects that maintain a commitment to offering affordable housing for at least 15 years. 

The tax incentive allows developers to pay a percentage of their rental revenue instead of attaching their taxes to property value. The program launched in February. According to the city's housing department spokesperson, Alison DeRees, 74 applications have been completed, and 106 are in progress. 

During the Northern Michigan Policy Conference in late January, Duggan lobbied for governments to subsidize affordable housing developments. At the time, he said that public funding is essential to overcoming the chasm between what developers would charge at market rent rates to make money and the discount they need to offer for affordable housing.

"It doesn't matter if you're in Grand Rapids, or Detroit, or San Francisco, somebody has to pay that gap," Duggan said in a statement shared by The Detroit News. "Otherwise, nobody's building for $1,000 and renting for $800."