Amidst a mounting housing crisis that’s pushing Americans out of the communities in which they work, one firm is leveraging decades of experience to address the missing middle.
Since 1973, The Michaels Organization has specialized in subsidized housing across the nation and has developed and managed everything from affordable to student to military housing. Today, their approach to building attainable housing around the country via partnerships both public and private is bridging the gap between where Americans work and where they can afford to live, all while delivering returns to investors and lifting up the communities they serve. The Real Deal spoke with Michaels’ President of Development Mick Flanagan, EVP Ned Williams, and Maria Barry, Community Development Banking National Executive at Bank of America, about Michaels’ unique ability to deliver attainable housing at scale across the country.
What is Attainable Housing?
“There are three pillars we look for when considering an attainable housing project,” says industry veteran Flanagan. “You need either land, a tax abatement, or help on infrastructure costs to make a deal work.” As the need for housing increases, more corporations and cities are partnering with Michaels to make these attainable housing projects a reality.
The concept of attainable housing will be increasingly important as housing prices continue to climb around the nation. Barry describes attainable housing as housing aimed at people earning between 80% and 120% of an area’s median income, too much to qualify for affordable housing and too little to keep up with rents that can increase by over 10% in a single year. As rents continue to rise, essential community members like teachers are forced to relocate from the neighborhoods they serve, highlighting the increasing need for new attainable housing developments and initiatives.
Attainable housing developments focus on keeping rents within a certain range while providing a high quality of construction and management. “Our goal is to deliver a great product for key contributors at rents that they can afford,” explains Flanagan.
Serving Communities By Building Attainable Housing
A good example of how Michaels partners with corporations to build attainable housing is just getting off the ground in Central Florida. Michaels’ recently-announced project with Disney, which will create a community aimed at providing high-quality homes to Central Florida workers, including cast members at the nearby Walt Disney World resort. Disney’s contribution of nearly 80 acres of land was necessary to get the project off the ground, and the resulting development will help ensure that workers at the resort and surrounding businesses have access to safe and convenient housing within their budget.
“Disney is contributing a very valuable piece of land,” says Williams. “This is not a money-making thing for them at all. They’re doing it for their employees, but it’s also for the folks in Central Florida. It’s a way that they feel like they can give back.”
Disney selected Michaels in part because the company has a proven track record of not only successfully developing but managing affordable housing. “Disney expects that their development will remain attainable for the next 75 years,” explains Flanagan. “It has to be managed the right way to ensure that the residents meet those criteria, and one of Michaels’ strengths is being able to design and administer those programs. Our award-winning management company also ensures that our developments remain high-quality assets for generations to come.”
The Michaels Advantage
Of course, Michaels isn’t the only player in the attainable housing space. The company has to compete with other developers on projects like the Atlanta Civic Center redevelopment, which they were recently able to secure thanks to the depth of experience they bring to every bid.
“Michaels has a unique advantage compared to some of our competitors,” explains Flanagan. “We’re a 50-year-old company and a large part of those 50 years have been spent developing, owning, operating and managing affordable housing.”
Not only has Michaels weathered half a century of economic cycles, the company employs experts who have spent decades cultivating relationships with partners across the continent, giving them a major leg up on every aspect of developing and managing attainable housing projects.
This wealth of expertise is one of the crucial ingredients for growing the company into the largest private holder of affordable housing in America. Another important factor is Michaels’ ability to operate independently of the market. “We’re one of just two of the top 20 multifamily developers in the country that’s privately held,” says Williams. “We’re not beholden to Wall Street, so we don’t have to make decisions based on what our stock price might be next quarter.” This independence is hugely important to partners who want a developer who will build and manage an attainable housing project for the long term.
Attainable Housing Across the Nation
Atlanta and Central Florida are just a couple of the areas where Michaels is developing attainable housing. The trends that make attainable housing necessary are taking hold nationwide, and more individuals, corporations, and cities are taking the steps to bring attainable housing to their regions. Williams highlighted Brown Ranch, the Michaels development in Steamboat, CO, that will be mostly attainable housing stock aimed at housing for people who have been priced out of living in the town.
“It’s located on a beautiful piece of land, it looks like the Duttons’ ranch in Yellowstone,” says Williams. The land, which was contributed to the city by an anonymous donor, is located at the base of a ski mountain, and the development is aimed at providing housing for everyone from bartenders to firefighters who are currently commuting from dozens of miles away. “The Governor of Colorado has already talked about how the project is a model for how to do this kind of development in the West,” says Williams.
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Attainable Housing in 2024 and Beyond
As rents continue to increase and workers are pushed further away from the communities they serve, the need for attainable housing will only grow. “Recruitment and retention of your workforce is a huge driver of attainable housing for corporations and municipalities,” says Williams. “It’s a theme that’s going to be pervasive in the coming year.”
Michaels leverages partnerships with financial institutions like Bank of America, which has funded over a dozen affordable housing developments with the company and is looking forward to partnering with Michaels on future attainable housing developments. “We’re working together to create housing for those who need a safe, affordable place to live, a place they can build the rest of their lives around,” says Bank of America’s Barry. “Having Michaels think about this is so good for the industry, and so good for finding paths forward.”
Ultimately, attainable housing is a group effort that makes communities stronger for everyone who lives and works there. “We feel blessed that people, corporations, and housing authorities trust Michaels to help solve these issues,” says Flanagan. “It’s something we’re very proud of.”
Click here to learn more about The Michaels Organization or contact attainablehousing@tmo.com