42-home neighborhood gets green light in Portage, construction begins in June

PORTAGE, MI — The city of Portage is the developer on a new 100% affordable housing project — and construction on that development is expected to begin June 1.

The city will build 42 homes on the 4-acre property between Austin Lake and West Lake, just east of Portage Road and south of Lakeview Park.

The City Council authorized AVB to begin building the first 12 homes during its Tuesday, April 29 meeting. It’s dubbed the neighborhood “Stanwood Crossings.”

Starting with just 12 homes will allow the council to monitor project progress and funding, per city documents. Construction will be staggered over the next year.

Builders expect to complete six of the homes before the end of 2025, said Portage Chief Development Officer Peter Dame.

There are four basic designs for the homes, Dame said. Two single-story options and two two-story single-family homes. Each model has several slight variations, resulting in 13 total options.

“It won’t be a neighborhood of all the same-looking houses,” Dame said.

All models have attached garages, two or three bedrooms and two or two-and-a-half bathrooms, per city documents.

Building costs range between $300,272 for a 1,206-square-foot ranch to $350,107 for a two-story home with 490 more square feet, per city documents.

Acting as the developer, Portage has a unique opportunity to make 100% of the homes affordable, Dame said.

“We don’t have a profit motive,” he said.

Buyers must earn 80% to 120% of the area median income to buy one of the homes — that’s $72,640 to $108,960 a year for a family of three.

The new homes will be sold for about 75% of the building cost, Dame said. It’s a loss of almost $80,000 per home.

Future homeowners will be required to sell at the same below-market rate, City Manager Pat McGinnis said.

“They will be able to build wealth in terms of the value of their home. They’ll have a regular mortgage, regular financing, all that,” councilmember Terry Urban said. “When they go to sell it, that resale price again will represent a savings to the potential buyer.”

It’s an opportunity for Portage teachers and police officers to buy a home they may not have otherwise been able to afford, Urban said.

Kalamazoo County is offering $93,000 total in down payment assistance from the Housing for All millage, per city documents. Up to $15,000 will be available per buyer, McGinnis said.

Buyers will own the homes, but not the land they sit on, Deputy Director of Economic Development Jonathon Hallberg said. While the homeowner earns equity on the home, property taxes will be used to reimburse some of the building costs.

The council approved a $3 million grant from the Portage’s capital improvement budget to help cover the gap between building costs and the affordable sale price of the homes.

That money will be reimbursed over the course of 30 years by a tax break also approved during the April 29 meeting.

Under the proposed Brownfield Redevelopment Plan, property taxes would be frozen at their current rate.

As the developer, Portage would recoup up to $12.4 million in local and school tax dollars generated to put toward the development.

MORE: Portage plans funding for $18M development near Austin, West lakes

It’ll cost over $18 million to complete the project, Dame said. Portage has $4.5 million in county and state grant funding.

Any remaining costs not covered by the grants or the city’s own COVID-19 relief funds will be reimbursed by the brownfield plan, Dame said.

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