From Portland, Maine to Traverse City, Michigan, many smaller U.S. cities are struggling with densification, NIMBY politics, and housing affordability.
February 29, 2016
By Bill Bradley
A new farm-to-table restaurant selling locally sourced pork and seasonally appropriate vegetables moves into a rehabbed insane asylum. A famous director renovates an 80-year-old theater in the heart of downtown. Coffee shops, breweries and more restaurants pop up and begin serving all their drinks in mason jars. Popularity soars and the rents rise.
Sound familiar? It’s not Pittsburgh or Brooklyn or Detroit. The affordable housing crunch and fire-breathing NIMBYism often associated with America’s rapidly gentrifying cities has reached our resort towns — from the Rocky Mountains to Northern Michigan. Small towns, they’re just like us!
Traverse City, Michigan, with its waterways and nearby ski slopes, is experiencing such a boom. Portland, Maine, a funky town and artists’ haven, is mired in an affordable housing debate that has pitted longtime residents against developers trying to foster smart growth. And Breckenridge, Colorado, has morphed from a town filled with ski bums and bartenders to a destination where the jet set flock to their million-dollar second homes. The rise of telecommuting, the retirement of upper-middle-class baby boomers downsizing into more manageable homes near city centers, and the urban preference of millennials has quickly turned these dream towns into dream cities.
“A lot of people are looking to both downsize and retain the ability to live a somewhat urban lifestyle, but not have to do it in an expensive or congested place like it is in a downtown of a large city,” Stockton Williams, executive director of the Urban Land Institute’s Terwilliger Center for Housing, says. “It makes sense that people now want to live in a quieter, perhaps quainter place, and still want to have that kind of lifestyle.”
Resort towns rely heavily on the service industry, from hotel workers and chairlift operators to cooks and cleaning staff. For years, cities like Portland and Breckenridge and Traverse City were desirable, offbeat towns with affordable rents and ample housing stock. And though these towns vary in size, topography and character, the question remains the same: What happens when the affordable backwoods dream town turns into an urban destination?
A view of the bay and half the pay. Traverse City residents have repeated this mantra — a reference to the Grand Traverse Bay, the slice of Lake Michigan the city sits on, and the largely dismal pay scale — for decades. It was a small town where you could buy a home either on the lake or near it on a teacher’s salary. Now, that’s a pipe dream.
Traverse City only has 15,042 people. But the larger region, Grand Traverse County (which is effectively Traverse City), hit 90,782 in 2014. That’s up 16.9 percent from the year 2000. During that same period, the state of Michigan’s population declined by .3 percent. Though that’s a minuscule statewide population decline, it illustrates the growing popularity of the region. Only 12 percent of people who work in Traverse City live in the city proper.
I would know. I grew up there, on Old Mission Peninsula, a small finger of land that juts out between East and West Grand Traverse Bay. When I moved away in the fall of 2003, it was a region sprinkled with wineries and dominated by cherry farms. (The city calls itself the Cherry Capital of the World.) It was, my parents repeatedly told me, a nice place to grow up. And they’re right! The region’s resources — the Caribbean-blue waters of Lake Michigan were a five-minute walk from my high school, and endless miles of trails and secret bonfire pits dot unmarked county roads — provided the best backyard an adolescent could ask for.
These days, celebrity chef Mario Batali owns a second home on the lake and Michael Moore has hosted a film festival in the city every summer for a decade. In 2013, a restaurateur couple from Brooklyn — who, in a bizarre twist, I worked for when I first moved to New York back in 2007 — opened The Little Fleet, an open-air bar in downtown Traverse City with a rotating cast of excellent food trucks in the parking lot. There appear to be more breweries than public schools.
For me, a 30-something who lives in Brooklyn, all this change has made Traverse City even more fun to visit in the summer. (“Of course we all like to tie one on downtown,” Jim Carruthers, the city’s mayor, told me when we discussed how to balance the burgeoning downtown with the region’s actual needs.) The city’s profile has grown as magazines and national TV shows have descended onto the shores of Lake Michigan. But the meteoric growth has alienated some residents who liked it better when Traverse City was a sleepy beach town.
Now, longtime residents and council members are squaring off against a proposed 9-story development on the edge of the bustling downtown. The tower, dubbed RiverWest, would create 162 new units (64 — or 40 percent — of which would be affordable) and roughly 25,000 square feet of ground-floor retail space that likely would be gobbled up in a heartbeat. The affordable units are intended for people earning wages on par with the service industry — $10 to $15 an hour, developers said — and will be priced from $557 to $784 monthly.
Last year the planning commission approved the development, on what has been a glorified parking lot for as long as anyone can remember, but there’s a wrinkle: Developers had to apply for a special land use permit for the 9-story plan, which exceeds the 60 feet the city’s zoning code allows. City commissioners approved the permit, but in late December local residents filed an appeal, putting the project on hold until the local courts hear the case.
“The problem here is twofold. One, they’re putting 10 pounds of shit in a 5-pound box,” says Grant Parsons, the attorney representing Save Our Downtown, the group that filed the appeal. “They’re crowding us out. Number two, they’re doing it at taxpayer expense. These developers are gaming the tax incentive system to make their money and these guys are what the judge called corporate welfare.”
The infighting that has long characterized development in America’s urban centers, from the Lower East Side to the Mission District, is now at the forefront of growing small towns like Traverse City and Portland, Maine. These small towns are no strangers to debate — you could even argue that small towns are more combative and catty — but they’ve traded arguments over proposed stoplights and school millages for fights about bike lanes and glassy apartment buildings.
The RiverWest saga began in 2011 when Michigan’s economic development agency granted the project a Brownfield Michigan Business Tax Credit worth up to $5.6 million and contingent upon receiving a certificate of occupancy before March 2021 as well as $2.4 million in tax increment financing (TIF) support from Traverse City’s downtown development authority.
City Commissioner Gary Howe says that those opponents who say the project will be a drain on public coffers aren’t considering the new tax revenue the development will deliver to the city.
“This isn’t corporate welfare. That language has no basis and appears to be being used intentionally to create an emotional response and rally the troops as if it is part of some large political machine,” Howe says. “What is currently a private surface parking lot at a per acre taxable value of $7,800, will, at very conservative estimates, become a property with a per acre value of $141,000 the year after it is built, or about $250,000 in tax revenue.”
So while the proposed development is tangled up in courts — both sides expect a decision by spring — residents of this small town continue to debate the future. The constant refrain from opposition is a desire to maintain the “small-town character” and “resort-town charm.” And, as one might expect, the supporters of the development and increased density skew young.
“Fortunately, it’s been healthy for the most part. Unfortunately, there’s been a division between the young professionals and the retirees and the baby boomers who are against this,” Carruthers says. “So much of this has been blown out of proportion due to the under-30ish crowd and service workers who want to live in the core and ditch the car.”
Downtown Traverse City is quaint — a friend who grew up in Detroit once told me it reminded him of Pleasantville — a roughly one-mile strip populated by bars, retail and restaurants. And while RiverWest has become a lightning rod, it wouldn’t even be the tallest building downtown. The 125-foot Park Place hotel, built in 1930, is nearly 30 feet taller than the proposed 96-foot RiverWest. And a 10-story low-income housing development is adjacent to the proposed site.
There’s certainly a market for more rental units. Already, rents are spiking in the city and for the first time in recent memory, people are voicing urgent concerns about affordability. A 2014 market analysis from LandUseUSA found that, in an aggressive scenario, there is a maximum annual potential for 452 new owner-occupied units and 2,462 new renter-occupied units over five years. That’s nearly 2,300 owner-occupied homes and 12,310 rental units over a five-year period.
The city isn’t coming close to that.
“Every study done over the past five years has told us we need to diversify our housing stock and we’re just now beginning to feel the pain of inaction,” says Bradley Matson, a 30-year-old Traverse City native and the organizer of Think TC, a local community organization.
This is all eerily familiar to the residents of Portland, Maine, where apartment vacancy rates are hovering around zero and the average market rent for a two-bedroom has increased by 40 percent over the past five years. According to Zillow, Portland’s median rent rose 17.4 percent from May 2014 to May 2015.
“We have a rental housing crisis in Portland,” says Dana Totman, president and CEO of the affordable housing group Avesta Housing. “The price of rent is not aligned with our traditional rental households and it appears the problem is getting worse.”
The median household income of renters in the Portland region was $30,601 in 2014, down from nearly $35,000 in 2010. But, according to a report from the Portland Press Herald, the average two-bedroom apartment in Portland was renting for $1,560 in 2015 (nearly 20 percent more than 2014). Rent-burdened Americans, according to HUD, include households that spend more than 30 percent of their income on housing; anything over 50 percent is considered severe rent burdened. Factoring in that median income, anything more than about $1,250 a month for many Portland households is beyond severe rent burdened, which falls well under what the red-hot Portland rental market demands.
And, much like Traverse City, the region is in the middle of a protracted battle over a proposed development that would alter the fabric of the region. A development that some policymakers and advocates feel would at least help alleviate some of the current housing crunch.
CPB2, a group of local developers, wants to convert a 10-acre parcel of land on the city’s eastern waterfront into a new neighborhood. They plan to renovate old industrial brick warehouses into lofts with ground-floor commercial space and turn the mostly dormant piece of land into a stylish destination. The developers’ vision sounds like the romantic ideal of a European village — think Moveable Feast-era Hemingway with cafes, bars, artisanal shops and art galleries — one block from the Atlantic. They want to build urban amenities not unlike those found in that other Portland (with the exception of mass transit) and drop it on the picturesque coast of Maine.
58 Fore Street would have roughly 400 total residential units as currently proposed. Developers estimate that it would probably be an even split between rentals and owner-occupied units. Ten percent of the units would be affordable, in accordance with the city’s inclusionary zoning ordinance.
Portland has long been a magnet for artists. But, with the rise of telecommuting, more millennials and young families have flocked to the southeast coast of Maine. “Work tends to be far more portable than it used to be,” Jonathan Culley, a Portland developer, says. “You could live anywhere doing what you’re doing. People are coming to Portland and bringing their work with them. We see a lot of that.”
It has drastically changed the vibe and face of the city, which boasts a population of 66,666 (the greater metro area totals nearly 524,000). The vision for 58 Fore Street is a reflection of that. The city has always had a bustling downtown with good restaurants and art galleries, but now a younger generation is seeking more density in a city that lacks it.
A referendum opposing 58 Fore Street on the basis that it would block some residents’ view of the coast was shot down last November. Development in America’s biggest cities has produced some upsetting arguments, pitting current residents against new faces and market forces. But it can feel more personal in small towns, where you are likely to run into your development foe at the grocery store and even more likely to see them at parent-teacher conferences, or when you take out your trash.
“I was very surprised at how unpleasant the whole experience was,” says James Brady, one of the developers behind 58 Fore Street. “It was unfortunate the way it ended up that way because I think it’s good for people to be neighborly and respectful of each other and it wasn’t always that way.”
And, as political arguments are wont to do these days, it spilled over onto Facebook. Soul of Portland, the opposition group composed of mostly longtime residents afraid of losing their views of the ocean, took some heat. “It’s deliciously ironic that a bunch of yuppie NIMBYs so concerned with their scenic views of beauty would leave trash from their failed campaign littering the neighborhoods they claimed to want to protect,” one commenter vented, posting a photo of a wayward yard sign. “Thanks for the scenic view of slacktivist hypocrisy, you lazy-ass litterbugs.”
Soul of Portland, who, in various op-eds in local papers have maintained they are not anti-development, did not reply to multiple requests for comment.
As more people decide they want the open space and charm of a small town without having to sacrifice the hip restaurants, decent espresso and lively streets of a bigger city, the affordability that made places like Traverse City a dream town in the first place has begun to fade. Urbanization has been good for business — more hotels and bars mean more jobs — but now these former backwoods gems are starting to grapple with the same issues facing urban centers around the world. How do you foster smart growth in a city center without pushing the workforce to the fringes?
Just as in Brooklyn or Detroit, the bigger and more pressing issue is not necessarily more density but the type of density. Specifically: the rise of the luxury condo.
“The fear right now is that it’s all going to be higher-end condos and higher-end apartment buildings,” says Portland developer Drew Sigfridson, echoing the concerns coming out of these much larger cities. “And that it’s going to force out people that have lower incomes.”
The luxury condo market in downtown Traverse City is downright bonkers. As of January, $74.7 million worth of downtown condos are on the market, up from $18 million in April. That’s over $50 million in luxury apartments flooding the market in eight months. And people are buying them — 83 condos sold in 2015, up from 67 in 2014. The average price has risen from $240,597 in 2014 to $401,156 in early 2016, according to Andrew Koons, a local real estate broker at Coldwell Banker Schmidt Realtors.
“High-end condos are all the rage in Traverse City,” says the gregarious Carruthers, who served as city commissioner for eight years before he was elected mayor in November. “I don’t get it. I wouldn’t pay a million dollars for a condo downtown.”
As developers fight to build more pricey condos — though it’s worth reiterating here that RiverWest would have 64 affordable units — the real issue of affordability for these towns’ service industry workers is pushed aside. The same way that lower-income New Yorkers are consistently priced deeper and deeper into the outer boroughs, residents of Traverse City, Portland and Breckenridge are moving farther and farther from where they work and racking up hefty gas bills — and plenty of carbon emissions — as a result.
And the demand for affordable housing close to town is very real. In late January, a new affordable housing complex with 72 units and a separate complex with 112 rehabbed units opened a short drive from the city center. Both filled up at a record pace and have waiting lists “going out at least a year,” according to City Commissioner Brian Haas.
“If you really think about it, affordable housing policies are meant to help people get out of poverty,” Howe says. “You don’t help people get out of poverty by putting them 20 miles south of the core area of services, and you don’t help them get out of poverty when you put them in places where everyone around them is in the same predicament. You integrate them.”
This is where Traverse City and Portland could take a page out of Breckenridge’s playbook.
In 1988, lawmakers in Breckenridge sensing a looming affordability crisis implemented a deed-restricted workforce housing program (occupants must work in Breckenridge) that has created 838 affordable units — 473 owner occupied, 365 rentals — since its inception. That might seem like an insignificant number of units, but with a population of roughly 4,800 in Breckenridge proper and 28,296 in surrounding Summit County the program houses an estimated 24 percent of the city’s local workforce, according to Laurie Best, Breckenridge’s long-range planner. And though it might be a small town, there are 76 restaurants and bars, 203 shops, and 494 hotels, inns and bed-and-breakfasts. Simply put: The city relies almost exclusively on the service industry.
“We need about 6,500 employees,” Best says. “Deed restrictions are one way to ensure that [affordable] housing is available to the local workforce. I am a perfect example. I live in a market-rate home because I built my house in 1989 and was therefore able to afford my home. When I leave the community my house will not be affordable to the next local planner. So, where does that next town planner live? Our hope is that the units we are building will help us replace the market units we are losing and we can stay even.”
Breckenridge is in the process of building an additional 167 deed-restricted rental units. “Even with these additional units we’ll be short of what we need by 400 to 600 units and that gap will continue to grow as the market price of homes continues to rise and we continue to lose the market-rate units that have been historically occupied by local workforce to retirees, second homeowners and short-term rentals,” Best says. “I think the gap will always exist but at least we can try to offset that.”
The affordable housing program is a boon for local residents, but Breckenridge is still facing a housing crunch. “This rental crisis just hit us all of a sudden,” Breckenridge Town Manager Tim Gagen says. “We’ve never had a winter quite like this where people are talking about living in cars because they can’t find a rental unit.”
Breckenridge native and restaurant worker Jenna Sheely felt it firsthand. After growing up in Summit County, she moved away for college and then lived in Crested Butte shortly after graduation. She moved back to Breckenridge four years ago with her boyfriend. When they started looking at both renting and buying last spring, they were overwhelmed — everything, it seemed, was over budget.
“We couldn’t find anything in our price range,” she says. “It would have been over $1,500 [a month], if anything was available. Then we started looking to buy and that was totally unreasonable. Just buying rundown old houses for at least $500,000 and above.”
Then, they hit the equivalent of the Breckenridge Powerball: A deed-restricted home came up for sale.
“We actually got really lucky,” she says. “We got on the list for deed-restricted housing and one opened up and we bought it. So now we own a deed-restricted house. It makes a huge difference because if we didn’t get chosen we probably would have had to go back to the same multiple roommates situation.”
The exact origins of deed-restricted workforce housing in America are unclear. They date back as far as Colonial times and popped up in the ’70s and ’80s from Maryland to Massachusetts to California. The specific rules vary from city to city, but the standards are the same: You must be employed locally to inhabit one of these homes (some of them have income caps).
Deed restriction has been most effective and most prevalent in mountain towns. Park City, Utah, has an ambitious deed-restricted housing program that will expand from 497 units to 621 over the next five years. Aspen, Boulder and Vail all have varying amounts and types of deed-restricted housing stock for their local workforce.
“I do think we could say for certain that they [deed restrictions] are more widely used and they’ve had more impact in mountain towns than anywhere else,” Williams from ULI says. “It does seem to be a particularly effective way to try to maintain affordability.”
When I asked Mayor Carruthers if there was a willingness in Traverse City to explore policy tools — like, say, deed restriction — in an effort to address some of the affordable housing woes, he did not mince words. “Honestly, I don’t think TC has gotten to the point of Breckenridge and other mountain resort towns,” he says. “We have affordable housing in the area, 10 to 15 minutes drive from downtown.”
My sister’s experience says otherwise. She teaches in one of Traverse City’s public elementary schools, and when she was trying to find a reasonably affordable home downtown — or anywhere within “10 to 15 minutes” — the search was a nonstarter. Teachers and bartenders and hotel workers are all in the same boat. “To buy a house is almost impossible for somebody who’s working in the service industry,” Gary Jonas, who owns The Little Fleet with his wife, Allison, says. “To rent a place, the rents are just skyrocketing downtown. What’s happening is a lot of people are moving to the outskirts of downtown, which makes the commute a bit more difficult.”
There is no denying that Traverse City hasn’t reached the height of Breckenridge yet. But Breckenridge implemented its deed-restricted housing program in 1988. And, nearly 30 years later, they’re still struggling to house their workforce. Lawmakers in Traverse City point to an accessory dwelling unit (ADU) ordinance passed last spring, which allows single-family homes to build “granny flats” — essentially a small carriage house or apartment — as a help, but that’s capped at 10 per neighborhood annually, which is not even close to meeting the city’s demands.
“At some point, the housing market will get so difficult for the workforce that due to the economic competitiveness, we suffer. The workers will be taking such long commutes, employers will be having to pay higher wages to offset the cost of that,” Williams says. “And [deed restriction] absolutely can be modeled for other places where these kinds of problems have been playing out.”
Laurie Best says Breckenridge was experiencing similar growing pains and fears when it ramped up deed restriction way back in 1978. “The community was experiencing considerable change and evaluating what we wanted to be when we grew up. Failure to act was not an option, so yes, the community supported progressive policies to address affordable workforce housing to support the local economy and to retain the real town character of the community,” she wrote in an email.
And when I asked her if she felt like Breckenridge was smart to implement the deed restricted policy years ago given the current climate she did not hesitate. “Yes, the earlier the better. Very difficult to rebuild community once workforce and families have left.”
As Portland and Traverse City watch developments that could boost their respective city’s dearth of rental housing stock play out in court, residents and developers alike will continue to fight for what they believe in. And the consensus is simple: People, right or wrong, are often afraid of change.
“There has always been, and I suspect there will always be, opposition of some type when you are proposing something new,” Erik Falconer, one of the developers behind RiverWest says. But cities and towns, no matter their size or economies, are dynamic entities; without movement, they die.
Matson, a vocal supporter for smart growth in Traverse City, has witnessed the venomous debate about change firsthand. One thing he noticed? It’s no different than any other city — big or small. “Opponents to change use the argument of ‘maintaining area character’ to oppose projects in every growing city,” he says. “The argument can be effective because it elicits fear of the unknown without providing any measurable standard. It is without substance.”
But it’s clear that, like New York and Chicago and Los Angeles, America’s small towns are facing an affordability crisis. Everyone — developers, lawmakers and opposition — can agree on that. In the meantime, they’ll continue to battle over the future of their city (before they run into their dissenters at the farmers market). Nine stories might seem small in a big city, but it’s a massive and irrevocable change to a small town.
“If they came in tomorrow and said they want to build five stories of affordable housing, I would support every attempt, every effort that they made to do that,” Parsons, who has been a longtime advocate for the city’s poor and working class, says. “My group is also saying, ‘Dammit, this is Custer’s Last Stand!’ Because, he who wins this issue, he or she who loses this issue, loses it in perpetuity.”
Every time I return to Traverse City something has changed. A new bar, freshly painted bike lanes, a boutique hotel, my favorite secret beach spot somehow discovered and suspiciously crowded. And in the nine years I’ve lived in New York, more and more coastal elites have begun to casually mention my hometown. Traverse City! Batali summers there, right? Delta even offers direct flights from LaGuardia during the summer.
With that popularity, increased population and a burgeoning economy comes a civic responsibility to the current and future residents. You can’t stop the growth. Traverse City is no longer a small town — that ship sailed more than a decade ago. Now, residents and lawmakers have to work together toward some semblance of a solution and plan going forward, whether it’s fostering more density within the height limits of the zoning code or a robust deed-restricted housing program. There’s no silver bullet, but something has to give. Because the current long-range “plans” aren’t going to address the problems they’re facing now, let alone in 10 years. The city simply can’t afford to take growth development by development, protracted public battle by protracted public battle — that would only lead to the kind of erratic growth and community fissure opponents most fear, ruining the small-town character and resort-style charm that brought people there in the first place.