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OVERCOMING EXCLUSION IN RURAL COMMUNITIES: NIMBY CASE STUDIES © Housing Assistance Council, November 1994 Permission is granted ONLY to nonprofit community-based organizations to reproduce and/or adapt this document, and only for their own use.
LAKE HARBOR -- CHARLEVOIX, MICHIGAN
Lake Harbor is a 24-unit rental housing project located in Charlevoix, Michigan. Although Tecklin Corporation11 received the Charlevoix City Council's support to develop a Farmers Home 515 rental project on the Lake Harbor site when they first approached the city in November 1983, community opposition, confusion about the site's zoning, minimum unit square footage requirements and additional requirements imposed by the city delayed the start of construction until May 1986. Neighbors were opposed to the project due to fears that it would ruin the appearance of their neighborhood and lower property values. Community Description: Charlevoix, Charlevoix County, Michigan The City of Charlevoix is a resort community situated north of Grand Traverse Bay on the Pine River, which connects Lake Michigan and 14-mile-long Lake Charlevoix, in northwestern Michigan. The nearest metropolitan or urbanized area is the Saginaw-Bay City-Midland Metropolitan Statistical Area, more than 120 miles southeast of Charlevoix on Michigan's western shore. Population and Housing CharacteristicsThe 1990 year-round population of the City of Charlevoix and Charlevoix County was 3,116 and 21,250, respectively. The Charlevoix Chamber of Commerce estimates that the Charlevoix area's population increases by some 600 percent in the summer months. The chamber's estimate of the City of Charlevoix and immediate surrounding area's (not the entire county's) summer population is approximately 20,000.12 Charlevoix and the entire Grand Traverse Bay area's ever-increasing appeal as a resort location has caused a tremendous rise in area housing costs. Rental units have become especially costly as the demand from summer vacationers drives market value. Many landlords find it is more profitable to rent for only three to five months in the summer at top rates than to rent year-round. The cost of homeownership in Charlevoix is also driven by the summer resort market. According to the 1990 Census, 23 percent of the city's housing units are seasonal units. These 449 homes are primarily used by southern Michigan's upper-middle and higher income families who retreat to northern Michigan during the summer. The area also houses a high percentage (19 percent of the population is over 65 years old) of wealthier relocated retirees who occupy many of the area's recently-built condominiums and lake-front retirement homes. Population, housing, and income data (which do not reflect seasonal population and housing costs) for the City of Charlevoix and Charlevoix County follow. Selected
Population, Housing, and Income Characteristics
In Charlevoix, as in most communities, the high cost of housing is especially burdensome to low-income households. Approximately 46 percent and 50 percent of households with annual earnings of $20,000 or less in the City of Charlevoix and Charlevoix County, respectively, are cost-burdened. The following tables present housing cost-burden data by tenure and income groupings for the City of Charlevoix and Charlevoix County. Housing Costs as
a Percentage of Gross Income by Tenure and Income
Source: 1990 Census of Population and Housing, U.S. Department of Commerce, Bureau of the Census. Housing Costs as
a Percentage of Gross Income by Tenure and Income
Source: 1990 Census of Population and Housing, U.S. Department of Commerce, Bureau of the Census "Charlevoix the Beautiful" Charlevoix is situated in an extremely beautiful natural setting. The small city surrounds Round Lake and the Pine River. The city is bordered on the southeast by Lake Charlevoix and on the northwest by Lake Michigan. The land surrounding Charlevoix is primarily farmland, forest or recreational areas. Other than retirement and vacation homes that dot the Lake Michigan and Lake Charlevoix shores, Charlevoix County is very sparsely populated. Charlevoix's residents, many of whom left the more densely populated areas of southeastern Michigan, are very proud and protective of the city's appearance. The city's motto is "Charlevoix the beautiful." Year-round residents, especially retirees, are wary of allowing rental housing developments to be built next door, because they fear that vacationing families with young children will spoil the peaceful beauty of their neighborhoods and because they associate renter-occupied properties with inconsistent maintenance. As is true elsewhere in the United States, this view of property value decline is amplified when the targeted renters are low-income. Unfortunately, according to a representative of the neighbors who opposed Lake Harbor and a city staff member, Charlevoix residents had reason to complain about the state of disrepair and "problem tenants" at an existing Farmers Home Administration 515 project across town from the Lake Harbor site when Lake Harbor was proposed. Since Lake Harbor was completed, Mayfield (formerly Southside), the other Farmers Home Administration project, underwent a management change, and community impressions have improved greatly.13 The Developer: Tecklin Corporation Although it had not developed any properties in the City or County of Charlevoix when it began considering the Lake Harbor project, Tecklin Corporation, a for-profit developer located in East Lansing, Michigan,14 had already had much experience with Farmers Home 515 projects. As of spring 1993, the corporation has developed and continues to manage 34 Farmers Home 515 properties in Michigan. It also has four market-rate and four mixed-rate (HUD Section 8 and market) properties across the state. Tecklin's track record with their other properties in Michigan softened neighborhood opposition toward the development of Lake Harbor. Project Development and Opposition In November 1983 Tecklin Corporation informed the Charlevoix city manger of its plans to develop a Farmers Home Administration multifamily rental housing project on the subject site and asked for the city council's support of the project. A November 7, 1983 letter from the city manager to Tecklin Corporation indicated that the property was zoned R-4, Planned Residential Zone, which allows for multifamily dwellings of up to 15 units per acre. The city council also gave their support to the project. Tecklin proceeded with an application to Farmers Home for funding and planned rental syndication of the project while purchasing an option on the site. Zoning Confusion During the fall of 1984, as Tecklin began working with the city on site plan approval, city planning department staff discovered that only the east half of the site property was zoned R-4. The city attorney (who lived next door to the subject site and was viewed as one of the project's primary opponents by the developer) determined that despite the city manager's November 1983 letter, the property had been split by a 1978 ordinance that zoned the west half of the property R-1, which allows only single-family residences. At a November 28, 1984 planning commission meeting the City of Charlevoix petitioned the planning commission to have the west half of the site rezoned from R-1 to R-4. The property owners (who were under contract to sell the site to Tecklin) argued that the zoning boundary that had split the property had been mis-drawn in 1978 and that the property had always been intended to be used for multifamily development. The owners stated that they were never notified of the 1978 rezoning, that they had believed the site to be zoned entirely R-4 and that they had been paying taxes on the property as R-4. A representative of the site's neighboring condominium development, Chez Charlevoix, opposed the rezoning based on opposition to the proposed Farmers Home housing project, stating that they believed units similar to their condominiums would be built on the site. A planning commissioner reminded project opponents that the commission was only considering rezoning of the site at that time and not any particular site plans. Still neighbors opposed the rezoning on the basis of the "threat" of the Tecklin project. Another condominium owner stated, "he, too, had been led to believe the lot next door would have the same concept as Chez Charlevoix. He felt they had no problem with that concept, but was against the rezone without knowing what would be going in." The discussion concluded with the commissioners' deferral to city staff's (in this case the city attorney's) opinion on the proper zoning. With a five-to-two vote, the planning commission recommended denial of the rezone. As Tecklin considered legal action against the city, and the city staff, planning commission and city council considered the rezone request further, Chez Charlevoix condominium owners and other neighbors gathered signatures on a petition that stated opposition to the rezone and specifically mentioned the Tecklin proposal. The petition, which was signed by just over 100 people by December 17, 1984 when it was submitted to the mayor, city council and planning commission, stated neighbors' concerns, including "valuations will go down when you put that kind of housing next to us." Further review of the matter by the city attorney revealed that R-4 zones require pre-approved site plans. Therefore, according to the city attorney, even the east half of the property "which was zoned R-4 in 1978 should not have been zoned R-4 without a pre-approved site plan." The city attorney asked that Tecklin Corporation submit a site plan for the planning commission's review at their January 1985 meeting and stated that the planning commission's recommendation would then be submitted to the city council for rezoning and preliminary application approval. Neighborhood Opposition Tecklin representatives presented the site plan for Lake Harbor at the January 14, 1985 planning commission meeting. The city planner stated "that the site plan did meet specific requirements of the ordinance (regarding rezone to R-4)." During the public discussion a representative of the property owner said that some opponents had commented to her that they were opposed to the project only because they did not want low-income housing next door. Opponents expressed concerns about sewer and road adequacy, which city staff said were being considered and rectified. Neighbors also asked about Tecklin's experience and past projects and Tecklin representatives passed around photos of other Tecklin developments. A neighbor who expressed concern that the project would bring his property value down was advised by the planning commissioners to raise those concerns with the city council since the commission could only make a motion on the merits of the site plan in relation to the city's zoning ordinances. After discussion, the commission unanimously passed a motion approving the Tecklin's preliminary site plan and sending its recommendation to the city council. On January 21, 1985 the city council held a public hearing regarding the rezoning request and preliminary site plan review. Opponents of the project argued that rezoning would be "spot zoning" and "change the character of the residential area." They presented a letter from the former Charlevoix County planner, stating that the proposed development would be high density and that it "would not be good planning to place a high density use into a residential area." Opponents also noted that the proposed square footage of the Tecklin development was less than the 780 required by city ordinance. Tecklin representatives responded that the apartment sizes would be changed to comply. After discussion the council members unanimously voted to adopt a rezone ordinance for the property. The council members also agreed to table the site plan request until Tecklin corrected the unit size problem. In February 1985 the proposed Lake Harbor's architects requested, by letter, an interpretation of the zoning code by the zoning board of appeals that would allow "enclosed common building areas, such as stairwells, laundry facilities and heater room areas, to be counted as part of the total square footage of the development and prorat(ed) to the units." They also asked that an average unit size of 780 square feet be allowed. The architects noted that in their past experience of building approximately 14,000 units of apartment and townhouse developments for private and government projects they had never designed a one-bedroom unit with 780 or more square feet and that the few planning codes that they had encountered that had minimum square footage requirements had lower requirements for one-bedrooms and averaged 710 square feet per unit. The architect noted that Charlevoix's code "seems to effectively exclude one-bedroom units from being built."15 The board of appeals allowed for common areas to be prorated for the housing units; however, the one-bedroom units still did not meet ordinance requirements. The planning commission and the board of appeals met to consider a variance request regarding unit size in a public meeting March 11, 1985. Tecklin representatives explained that Farmers Home restrictions set maximum square footage requirements at less than 780. Neighbors opposed the variance. The planning commission denied the variance and recommended further examination of the ordinance to see if it allowed for different square footage for different size units. On June 26, 1985 an amended site plan, which met dwelling unit size requirements, was presented to the planning commission for review. The city planner made three recommendations regarding the project: that a water line be added to accommodate the housing, that Tecklin receive curb cut approval from the highway department, and that Tecklin put a sidewalk in along Petoskey Avenue, which boarders the site to the east. According to meeting minutes neighbors expressed concerns about specifics of the development such as the location of the garbage dumpster and landscaping, but none objected to site plan approval. The commission recommended conditional approval. Neighborhood opposition seemed to lessen toward the project with time. This was probably due to two factors: boredom or loss of interest in the battle and some opponents' realization that they were very unlikely to win. According to a representative of the neighbors who opposed Lake Harbor's development, the city planner had met with them at their request and expressed his opinion that the city had no legal ground for denying the project's approval. He stated that the master plan had accounted for the proposed development and that the site plan met all city zoning ordinances. Still as late as September 1985, the city received a letter requesting that project approval by the city council be denied. In July 1985 the city council postponed site plan approval, asking Tecklin to obtain a study of the water and sewer utility demands generated by the project. Finally, on October 7, 1985, the city council unanimously passed the site plan approval with four contingencies, including . . . (requirements that Tecklin) provide water lines (to the project). On January 29, 1986, an agreement for water main construction was executed between the City of Charlevoix and Tecklin Corporation. Tecklin proceeded with site preparation and financing arrangements, including syndication, during 1986. Lake Harbor was completed and occupied in June 1987. Lake Harbor Today After its completion in June 1987, Lake Harbor rented up quickly and has remained fully occupied with very infrequent turnover of units. The manager estimates that only four households have left since the property first rented up in 1987. The manager also notes that almost all of the tenants lived in Charlevoix prior to moving into Lake Harbor.16 Lake Harbor receives no Farmers Home rental assistance.17 Occupants of Lake Harbor are at the upper end of Farmers Homes eligible income categories.18 Since there is no rental assistance, the minimum income required to occupy a one-bedroom apartment at Lake Harbor, which rents for $270 per month, is $10,800 per year. That income represents approximately 50 percent and 44 percent of the City of Charlevoix and Charlevoix County's respective median household incomes (for all household sizes). Seven of the 24 households occupying Lake Harbor in the summer of 1993 had incomes of which 30 percent equaled more than the basic rent and were paying overage to Farmers Home. Six of the 24 households that occupied Lake Harbor as of June 1993 were headed by retirees; the rest of the heads-of-households work in the Charlevoix area. Since the development has 12 one-bedroom and 12 two-bedroom units, at least half of the tenant households are without children. Most of the heads-of-household work in the service industry in downtown Charlevoix. A few are part of the Charlevoix area's limited manufacturing work force. ConclusionIt seems that neighbors who originally opposed Lake Harbor have learned that its occupants are much like themselves. A Chez Charlevoix resident who represented neighborhood opposition during the project's development stated that she and others had been worried that Lake Harbor would become "another Southside," occupied by young families "on welfare with screaming kids." But, she noted, there is a "good mix" of people living at Lake Harbor now and the management has been very good at "keeping the property up." Soon after it was completed neighbors complained about the property's garbage dumpster and had that enclosed on the sides facing Chez Charlevoix. Other than that incident and a couple early incidents of tenants playing loud music (which she noted happens everywhere), Lake Harbor's former opponent could not think of any complaints. 19
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