About Melissa Milton-Pung

Melissa Milton-Pung is a Policy Research Labs Program Manager for the League. You may contact her at mmiltonpung@mml.org

American Council on Germany Sustainable Urban Development Study Tour 2019 Participants, Old Town Mannheim, Germany

Melissa Milton-Pung (right) in Old Town Mannheim. Photo credit: Michael Specht

In early December 2019, I joined seven fellow Americans and eight Germans in touring Dusseldorf, Mannheim, and Heidelberg with the American Council on Germany’s Sustainable Urban Development Study Tour. We met with US diplomatic representatives, local elected and appointed officials, and regional experts on sustainable urban development.

The Michigan Municipal League has a tradition of connection with the American Council on Germany (ACG), a non-profit founded in the immediate post-World War II era. Two of my colleagues took part in a similar tour in the late 1990s. Both tours were an unparalleled opportunity to confer with professionals on both sides of the Atlantic working to improve their cities and the lives of their citizens.

My 2019-2020 group was comprised of not only planners and economic development professionals, but also an attorney with brownfield redevelopment expertise, a transportation journalist, the community relations director for Uber Germany, a landscape architect, and even a city councilperson who also serves as the chief of the local riot police. We covered more than 50 miles on foot through three cities and conducted more than 30 substantive meetings over the course of about six days. It was like drinking from a firehose while walking our way to international urban planning enlightenment. Here are my key observations from the first half of this program:

Trans-Atlantic Understanding Lives with Individual Connections
The implicit purpose of the ACG is to foster greater Trans-Atlantic understanding between nations.  We experienced this principle firsthand while meeting with the US Counsel General, the Canadian Counsel General, the Executive Leadership of the Nordrhein-Westfalen Landstadt (state parliament), and cultural diplomatic representation from the AmerikaHaus. In seeing the work of this “North American Friendship Group,” it was heartening to see such strong, familial working relationships and collaborative diplomacy. In a similar vein, over the course of the week, our tight-knit group quickly found that the Germans’ responses to the Americans’ questions, and vice versa, brought forth even deeper discussions about the base assumptions of each democracy and the economic cultural norms which drive government policies.

American Council on Germany Sustainable Urban Development Study Tour 2019 Participants, Multihalle, Mannheim, Germany

Multihalle Event Hall, Mannheim

Carbon Reduction is the Focus
Climate change is discussed in very real terms, and it directly relates to public dialogue about how German cities are taking steps to reduce carbon usage. If economic benefits can be achieved, great. But profit is not the driving goal. There are deep ideological differences between countries in how basic land use laws are structured, and therefore, how development occurs. In Germany, like in the US, consumer behavior changes are tied to local/state level regulations or financial incentives. A surprise in evaluating building systems and carbon reduction measures is that most existing buildings have already been reused and retrofitted for energy efficiency. The adaptive reuse presently being experienced by many US cities was de rigor in Germany more than a few decades ago, and because those methods have been so fully integrated into the common playbook for planners, it is no longer viewed as innovative. Historic buildings viable for reuse have long ago been absorbed by the markets.

Every Day We’re Hustling
At times, it felt like we were visiting a planners’ utopia. Despite that initial strong showing, the struggle to impart best practices for city building showed through at times in the fatigue which crept into practitioners’ voices when describing plans versus realities. All in all, planners in Germany are better funded, better equipped, but not better skilled. Their problems are simply different than ours. They want to accomplish the same kinds of dreams we forecast here in the US – with a more explicit urban eye. They have the benefit of many more tools for public policy and regulation, such as mandating 40% of all new housing units to fall into the workforce and affordable housing range of rent control or the ability to build out multi-modal transit systems, and yet they continue to look for ways to serve a growing population.

This tour showcased dozens of urban practitioners and elected leaders seeking to accomplish many of the same goals we seek to attain here in Michigan. We covered a broad swath of topics, several of which are related to the topics being discussed currently at the League. Sustainable urban development, with heavy focus on carbon reduction measures, transit systems, housing demand, capacity and focus of public education systems, cultural integration for equity and inclusion, and data tracking for incremental improvements.

Rail System in Mannheim, Germany

Rail System in Mannheim, Germany

This study tour is intense and inspiring, and we’re only halfway done. I returned home delighted to be reunited with my family and colleagues, with my mind still full of tremendous experiences. I can’t wait to share the US, when we tour two yet-to-be-announced American cities with our German colleagues during the second half of the program in Spring 2020!

Want to Apply next time around for this Study Tour with the American Council on Germany? Visit https://www.acgusa.org/study-tours more information.

You may already know about the Public Spaces, Community Places program, and can probably recognize a project in your city or nearby. From historic building rehab and splash pads to public art and recreation fields, this program has dramatically improved public spaces across Michigan. To date, more than 230 projects have been successfully funded through the program run by Patronicity, with nearly $8 million in public investment and $42 million in private donation match. These projects even have an impressive 96% success rate! This format takes many small pots of money and combines them to make a big impact in community projects. It’s succeeded far beyond our expectations.

The cover for the new crowdfunding report.

Now we’re diving even further into what this kind of direct capital infusion can do for making private investments in local Michigan businesses, too.

The counterpoint to Donation-Based Crowdfunding is called Community Capital Investment. This model takes small amounts of private investments from everyday people or larger chunks of cash investment from individual investors or equity groups and leverages them to get small businesses off the ground. It comes with the expectation of return on that investment. Individuals interested in supporting their local businesses can invest anywhere from $100 to $10,000 per company, per year. Investment crowdfunding is structured to provide a return on investment, either through an ownership stake or through a debt position. Investors with a debt position are provided a pre-determined rate of return that can be structured in a variety of ways within the investment offering.

Michigan-based Revalue Investments has a great fact sheet on local community capital investing. They offer one-of-a-kind resources, services, and training workshops for Michigan residents interested in becoming local investors. Learn more at www.revalueinvesting.com

To document Michigan’s work on both donation-based Crowdfunding and Community Capital Investments, the League released a new report this summer, co-written with several partners. We unveiled it in June 2019 at a national conference of investors and community leaders in Detroit, ComCap19, hosted by the National Community Capital Coalition (NC3). The conference drew hundreds of community leaders, ecosystem builders, entrepreneurs, investors, citizens, and practitioners from across the country.

Milton-Pung, Barbash, and Czarnecki presenting at NC3 in Detroit

Milton-Pung, Barbash, and Czarnecki representing Michigan on the national stage

Three key women in this effort – Angela Barbash of Revalue Investing, Melissa Milton-Pung of the Michigan Municipal League, and Katharine Czarnecki of the MEDC – participated in a panel discussion at ComCap entitled “The Evolution of Community Capital in Michigan.” They explored the reasons why Michigan is at the forefront of the community crowdfunding movement.

The biggest takeaway from this national dialogue? When you’ve got the position to champion a good idea, take the calculated risk to boost the message and build confidence by transforming nebulous ideas into pilot programs.

The report, Community Investment, Community Growth: A Retrospective in Michigan Crowdfunding, tells this story of risk and championing. It chronicles the evolution of crowdfunding, including the false starts, the hard work, and the triumphs. This publication, available at www.crowdfundingmi.com, is now being used at the national level as a learning tool that every state can emulate to activate a previously dormant network of community investors. By sharing case studies, it lays out the origins of the movement in Adrian, Michigan, the passage of the Michigan Invests Locally Exemption (MILE) Act in 2013, and specific projects in Detroit, Traverse City, Lansing, Tecumseh, Calumet Township, and Portland.

“This report does an exceptional job of telling the story of one of our state’s best-kept secrets: how Michigan and our supporters are leaders in the nation when it comes to crowdfunding projects making a real impact in our communities,” said Dan Gilmartin, CEO and Executive Director of the Michigan Municipal League. “With community capital, we all can play a part in making our communities better – whether it’s with our ideas, our time, our money or our networks. It all contributes to the inclusivity and opportunity we ultimately seek, and it gives us a voice and a stake in the process.”

“With community buy-in, both figurative and literal, donation-based and investment-based crowdfunding can fill critical gaps in access to capital for businesses and projects in all our communities,” said MEDC Senior Vice President of Community Development Katharine Czarnecki. And Michigan is at the forefront of this community capital strategy. The return on the state’s investment has been incredible. “It’s an amazing return on the state’s investment,” Czarnecki said. “Now, we’re very excited to see other states following in Michigan’s innovative footsteps.”

As for the emergence of direct investment in local startups and business expansions, it’s becoming more normalized every day.
Learn more about community capital investment at http://whatisgrubstake.com

“We’re just now starting to see the market ripen for local community capital investment,” said Angela Barbash, CEO of Revalue. “Building upon what we’ve seen occur with donation-based crowdfunding, we’re now establishing legitimacy in this alternative to traditional market investments.”

Barbash’s firm is dedicated to not only raising the profile of this kind of next-level local economy as well as educating would-be investors to make wise decisions. “Investing in your own backyard seems like a no-brainer to most [of us] but knowing if it’s right for you is another story,” said Barbash. “We are holding workshops all across Michigan to help people dive in to the nuances of community investments. People are excited about these options, and we’re teaching people how to evaluate investments in a new way.”

Detroit Roosevelt MMP

Detroit is midstride in its great comeback, emerging like a phoenix in full burn. In a city which has suffered so much loss, not only are community leaders and private investors acting to salvage what remains, but they are making the city whole again by knitting together gaps with new infill. Big impacts have been directed to the downtown core, yet there’s still much to be done at the neighborhood level.

One of the instruments of Detroit’s success was established during the economic recovery, with an unorthodox approach to building preservation and reuse. In 2013, City of Detroit and the Detroit Landbank Authority (DLBA) received an allocation from the Hardest Hit Fund. Working with an army of volunteers from the Michigan Historic Preservation Network and Preservation Detroit, along with homegrown tech experts from Data Driven Detroit (D3) and Loveland Technologies, they created the Detroit Blight Task Force. Out of this creative partnership, Blexting—short for blight texting—was born.

Blexting created a survey of the condition of nearly every property in the city of Detroit. The results were informed recommendations for the demolition of thousands of properties by DLBA. Instead of blindly pushing through blight elimination dollars, Detroit’s leaders used a more sophisticated approach supported by photos and existing conditions data directly uploaded to the survey. By documenting and evaluating a substantial portion of the city’s building stock, the taskforce effectively put assets into a building savings account for when the market ripened for rebirth.

Less than a decade later, Detroit is now activating those saved assets. Neighborhood-level community plans and new developments contain a mixture of building rehab, adaptive reuse, and new infill construction. Sections of the city which had not seen new work in decades are now receiving reinvestment. And it’s far from done.
Detroit is in many ways unique. Yet in other ways, such as scarcity of resources, lost taxable value, and declined population, it mirrors the disinvestment felt by many Michigan towns. Here are lessons learned for Michigan’s aging building stock.

Strategize & Combine Tactics

The decisions cities make today will shape the reality of their future. Cities need to articulate a consensus vision of who they are and who they want to be. Immediate tactics are site inventory, zoning reform, and the choice of target sites for catalytic reinvestment. Doubling down on existing buildings – both historic gems and simply older sites – and development of vacant lots in core city centers can also help cities respond to increasing interest in lessening environmental impact and improving infrastructure resiliency.

Michigan residents are choosing increasingly to live, work, and be in places of authentic texture. And because energy use is an increasingly important issue, they often want it connected to transit. The Q Line on Woodward is one way that Detroit is concentrating effort along an existing corridor, building in walkable transit-oriented development amid the streetcar suburbs of the last century.

Explicitly Advocate for Diversity

Only 8 percent of National Register sites and 3 percent of our National Historic Landmarks represent people of color, women, or members of the LGBTQ community. As stated by National Main Street CEO Patrice Frey in a recent City Lab article, “The preservation movement is also struggling to tell the full American story.”

Cities must build an authentic local vision by asking their residents to help with asset inventory. Get on the ground and engage in conversations with those who live there. Record what defines the place to avoid sacrificing cultural identity.

Detroit is owning the gaps in its recorded history and they’re doing something about it. Through neighborhood planning efforts, the city is backfilling a broad range of under-told histories which are more reflective of all residents. They’re doing this through a pilot event that brings together several departments to engage with local preservation stakeholders. Tiffany Rakotz, a Preservation Specialist at the City of Detroit, says this dialogue will “focus on thematic topics that impact local preservation efforts during this period of recovery and growth.”

Broaden the Concept of “Preservation” to Plan for Attainable Housing

According to recent discussions at the Urban Land Institute’s spring meeting in Detroit, households are now choosing smaller homes in favor of proximity to parks, walkability to shops, and employment. The magical formula here also includes the key calculation of what people can actually afford.

In considering how to rehab Michigan’s aging housing stock and accommodate gaps with new construction infills, communities must choose a diversity of options instead of one single family housing solution. Prior to standardized zoning, historic neighborhoods had small scale commercial next to single-family homes mixed with multi-unit splits, carriage houses turned into apartments, row houses, and duplexes intentionally built next to single units.

By easing zoning restrictions and allowing these natural adaptations to take place by-right in the code, we can not only legalize what has happened in neighborhoods for decades, we can also encourage reinvestment in those same neighborhoods in new and creative ways.

In choosing to allow for a mixture of building types for rebuilding neighborhoods, cities can also communicate that attainable quality for many income bands does not equal luxury housing. Cities also need to develop alternative financing options so people who want to fix up their aging building stock – either in incremental multi-unit development or single-family rehab – can access the funds to accomplish the work.

Tempering community engagement with realistic expectations is key. In Detroit, members of the community are being actively engaged in “preserving … local history, and in creating a vision for the future,” says Rakotz. “I think it is important for the citizens of Detroit to recognize what resources the City is able to provide and for us as public servants to understand what those citizens want.”

League staff have recently helped educate legislators on the need to reinstate Michigan’s historic tax credit, which could have broad applications for multi-unit rental housing in historic buildings, upper story residential in downtown cores, adaptive reuse of underutilized buildings, and rehab of existing single-family housing. Accessible to both commercial rentals and owner-occupied residential, it would be one more excellent tool in the toolbox, and not only encourage reinvestment in our existing downtowns and already-built-out neighborhoods, it would reduce the ecological impact of building demolition in Michigan landfills.

Related to this push is the demand for a certain kind of housing – think smaller (2,000 sf or less) missing middle – in the workforce price range of 80 to 120% of Area Median Income (AMI). This demand is far outpacing current supply in cities. Part of the problem a lack of multi-family housing options. Part of it is our aging single-family housing stock, a lot of which desperately needs upgrades and repair. Many people don’t buy those older homes in our city centers because of concern over the hassles of fixing up an old house and a dearth of skilled contractors. (Again, this is where the historic tax credit would be tremendously helpful in increasing the relative affordability of this work.)

We also know that new construction costs the earth to build, so the luxury market is where the majority of new builds are happening. Another way to address the housing mis-match could be a loan fund for homebuyers that would allow them to gain access to the capital needed for immediate improvements upon purchase, because many people barely squeak through closing with enough money to buy curtains, much less a new HVAC system.

But even if we get that Michigan historic tax credit back, and we start addressing capital needs in creative ways, we’re still going to need new construction and a skilled labor force to meet our housing demands.

Quickly. And on a budget.

The Need for Skilled Trades

One proactive step could be to address this need by putting a big investment in building out the trades apprenticeship programs. The Michigan Historic Preservation Network created a rather successful program last year doing trades training, and there are other small scale apprenticeship programs out there, but those programs striving to train a dozen people are no match for a statewide initiative that could be created if the resources of a larger government department or non-profit foundation were tapped.

Another way to incrementally expand the skilled trades professions could be to develop dedicated factories for modular housing, therefore creating reasonably permanent construction jobs in a geographically stable area.

Schematic drawings for new homes being constructed in Grand Rapids by Kent County Landbank

Schematic drawings for new homes being constructed in Grand Rapids by Kent County Land Bank

“But, Modular Housing. REALLY?”

Yeah, really. What we really need is a variety of solutions – not one or two good ideas will solve our housing needs. Particularly in the more rural areas of Michigan, those with flat to limited new housing activity, this kind of model would provide the consistency needed for keeping skilled tradespeople engaged in steady work.

Let’s now address the elephant in the room: perceptions of quality. We’re not talking cheap construction, not cookie-cutter plastic houses that all look like they came from Playskool. This kind of housing is known as “indoor stick built” and it isn’t your grandmother’s double-wide trailer. These housing units are widely customizable, and are constructed in sections of moderate to high grade materials such as metal stud walls, integrated insulation and mechanicals, double or triple paned windows, and fiber cement board siding. The built sections are then trucked from the factory and assembled on a foundation already prepared on site. They are available in a variety of configurations to avoid nauseating repetition. This method of construction is, on average, cleaner and more efficient than standard new construction methods, and it minimizes waste.

What are we talking about for prices? According to our recent research with the Michigan Landbank Fastrack Authority, cost for construction is $110 to $115/sf, which is tracking at about $170,000 for a 1,500 sf home, plus land and site work. Some of these units are already being built in Michigan, with a new project led by the Kent County Landbank in Grand Rapids to do infill construction in existing neighborhoods by constructing homes on vacant parcels. And many more Michigan communities are expressing interest.

This also not the first time that this sort of idea has come into vogue in Michigan. As discussed in Mid-Michigan Modern, a 2016 publication by Susan Bandes of Michigan State University, modular construction was one of the ways communities responded to the market demands for workforce housing in the immediate post-WWII era. There are still a lot of mid-twentieth century neighborhoods across our state that were built with modular construction. They just don’t look like it. Consider also the Sears Kit Homes that got built here in the mitten. These beloved homes were products of a factory system of mass-made, high quality homes delivered from the warehouse. Or, closer to home, the Bay City-based Aladdin Homes chosen from pattern books and “Built in a Day.” Only a few steps away from current-era indoor stick-built homes.

In the end, modular housing indoor stick-built housing may not be THE next big housing solution. But it is one more good quality solution that might work for a segment of the population, while we keep working on other fronts, too.