Trailside45, a 74-unit apartment complex on Garfield Avenue, touted as an ‘affordable housing’ solution for young professionals when it opened in 2018, has been sold to new owners and is being converted into joint ownership. Unit prices – up to $ 300,000 for a 961 square foot unit – and their potential use as short-term rentals have drawn criticism from tenants and city officials struggling with a year-round rental housing shortage. .
Investment firm Traverse City Cochran Booth & Co – as T45 Acquisition Co. LLC – finalized the purchase of Trailside45 from Alpha Development / Westwind last week. In a press release, managing partner Turner Booth said that âdowntown Traverse City has become unaffordable for many first-time homebuyersâ and that âby converting Trailside45 into condominiums, we are reintroducing the possibility of families and individuals to own a home reasonably priced and live close to all that Traverse City has to offer. “The condos will cost between $ 200,000 and $ 300,000, according to the press release, real estate broker HomeWaters dealing with the marketing and sale of the units. The units measure between 604 and 961 square feet.
Tenants at Trailside45 were made aware of the conversion plans this week. According to documents distributed to tenants, the third and fourth floors of the building will be converted first. Tenants receive a required 120-day notice and may remain in their unit until that time or until their annual lease expires, whichever is longer, after which they will be required to vacate the building if they have not bought a home. When the third and fourth floors are exhausted, the owners will begin work to prepare for the conversion of the next floor. âDemand will determine the pace as the process continues from upper floors to lower floors until all units are converted to condominiums,â the documents say, a process expected to take two to three years.
Christian Berry, 23, lives with a roommate in an 890-square-foot two-bedroom apartment on the fourth floor, for which the duo pay $ 1,550 per month (the rate includes several utilities). Berry says sharing the apartment was one of the few affordable solutions he found in Traverse City while working at AmeriCorps by day and Horizon Books by night. Berry balks at marketing language calling the sale price of Trailside45 condos an âattractive price,â claiming that even if he committed to a 30-year mortgage for the asking price of $ 289,000 and was able to find the down payment of $ 28,900, his monthly down payment would increase to another $ 350.
âThese condos are being sold for what I consider an outrageous priceâ¦ it sounds very predatory, even though it’s legal,â he says. âFor some this can be a great opportunity, but a 30 year mortgage for a property that doesn’t include a garage or a yard or much of the privacy you think with the property doesn’t make sense for me. With the prices rising, this seems like a quick way to get people out. I hope someone doesn’t take this risk just to keep a housing option, but unfortunately they may find themselves in this situation.
George Cochran of Cochran Booth & Co tells The ticker he understands that some tenants may oppose the conversion, but defends the project as a âgreat opportunityâ to help young professionals and other tenants to move from tenant status to owner status. âWith interest rates being where they are now, you really have to make that comparison between renting and owning,â he says. âIt’s a great time to be able to go from being a tenant to owning something. They will have the first choice (of units), there is funding readily available. “
Cochran says he is a local investor who is committed to the community, aiming to offer a diverse range of housing at prices ranging from the Garfield Oaks mobile home park to what will now be Trailside45 condominiums. Although Alpha Development / Westwind representatives could not be reached for comment, Cochran says their sale of Trailside45 to its investment group will give former owners the capital to build their new South 22 apartment complex. on LaFranier and Hammond roads next to Ridge45, which they also own.
âThink of it as recycling,â Cochran explains. âWe recycle the capital so they can put twice as many rental units there as we take out. And we create affordable homes for young professionals. You can’t look at a project in isolation. There is as much demand for the price point at which we offer these (condominiums) as there is for rentals. I think this is a very good thing for the community.
City officials, however, are concerned about whether Trailside45 condos will actually be used for year-round housing. Planning Director Shawn Winter notes that the building is in a C-3 zoning district. Unlike some areas of the city that limit vacation rentals to 25 percent of the total number of units, the C-3 has no limits on short-term rentals. âEach of these could be a short-term rental,â says Winter. âIt would essentially be a de facto hotel. This worries me, as my impression as a member of the community was that the nomenclature being sold was that it was housing for workers. Four years later, it’s an about-face.
Blake Bernard of HomeWaters, who is the main seller of the condos, says the goal of converting the building is still to have a “vibrant community of local residents.” Condo owners will be able to rent out their units on a seasonal basis, he says, but there will be limits: three times a year for a minimum of seven to 30 days. âThis limited, short-term rental opportunity can help (offset) the costs of ownership, while maintaining the community of long-time residents as owners rather than mere investors,â says Bernard. Short-term rentals will have to go through an on-site management company. Cochran adds that his investment group specifically chose HomeWaters to represent condos because they have de-emphasized vacation rentals, unlike other companies who vied for Trailside45 and advised new owners to maximize profits by opting for all short-term units. While the restrictions will initially limit the operation of vacation rentals in Trailside45, Cochran acknowledges that the Home Owners Association (HOA) formed by new condo owners could potentially establish their own rules for short-term rentals.
Traverse City Mayor Jim Carruthers believes the changes to Trailside45 may require a discussion with the city about extending the 25% cap on vacation rentals in certain neighborhoods to all neighborhoods in the city, so that â we are not overwhelmed by vacation rentals â. He recalls attending the inauguration of Trailside45 and points out that partners like Venture North and Traverse Connect helped secure the property at a below-market rate from Chemical Bank on the promise that the site would provide housing to the workforce. The city has also waived a purchase option on part of the property to support this housing goal. âThere’s not much nobody can do now, but it does raise a challenge when people come to us with these housing projects to figure out how long they will actually be affordable,â Carruthers says.
As for Traverse Connect – which heavily touted the project as a âbelow marketâ rental option for young workers – President and CEO Warren Call said the organization’s small interest in the building had been paid and Traverse Connect had no decision making. authority âregarding the sale transaction. Call was not with Traverse Connect when the initial development agreement was made, but believes the organization can still be proud of the “little we could do to increase the housing stock in the community,” echoing the comments. Cochran comments that leasing and owning options are necessary. Call says the project illustrates the “real challenge of providing an affordable housing inventory in this environment” and says Traverse Connect will continue to help as it can in tandem with other community partners.
âI think the real solution we are advocating is to offer public-private partnerships,â says Call, âby encouraging the city to consider greater housing density in the urban core and by working with partners like Housing North and Housing Michigan. Coalition on Statewide Means of Addressing Housing Problems.