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Upper floor housing rehabs spur neighborhood growth
 

A downtown turnaround: Portland property owners, city and state partner to spur growth

Downtown Portland shrinks vacancy rates and boosts investment when public and private partners find a way to overcome a major barrier to growth. A longtime store owner recounts how a public boardwalk, a state housing program and local business owners worked together to pave the way for upper floor housing rehabs to help transform the downtown neighborhood.

It’s no secret that the last several years have been tough on small businesses. Those specializing in goodies, rather than necessities -- such as the colorful and eclectic gifts, flowers and candy found at Downtown Portland’s Distinctive Occasions -- saw serious dips in their sales.

How did Distinctive Occasions’ owner Wanda Urie pull through the rough spots? With a new stream of income, trickling down from upstairs.

“Right about the time we started renting out the apartments, the economy tanked,” says Urie, “so our sales did slow down.
“Right about the time we started renting out the apartments, the economy tanked,” says Urie, “so our sales did slow down. Having the income from the apartments offset that.”
Having the income from the apartments offset that.”


The Pre-Apartment Slump

Had the recession hit much earlier, she might not have been so prepared. When Urie moved into her 1872 downtown building nearly 13 years ago, she loved the character of her shop’s new home, but the neighborhood had some room to grow.

“At the time Portland was experiencing somewhat of a slump,” she says. “I felt like an island the first several years I was in business. We didn’t have a town event that helped give the town an identity, so people weren’t gathering here. It was kind of forgotten, in my perspective.”

About six years ago, however, a couple of things began moving the momentum of Downtown Portland’s development forward. First, the community became a Michigan Main Street program, which Urie says helped to promote the district. Also, Urie and some of her follow downtown property owners learned about the Michigan State Housing Development Authority’s (MSHDA’s) rental rehab program that could help shoulder the cost of renovating their upper floors into rental units.

Except there was one problem: A major block in the center of Downtown Portland was severely limited in what they could do upstairs because the rear facades of their buildings ran parallel to the Grand River -- and had no way for upstairs residents to exit to the rear, a major issue in building codes.


A Team Effort 

The City of Portland and the Portland DDA weren’t about to let that issue get in the way of their downtown’s growth. They partnered with property owners, MSHDA and the Michigan Economic Development Corporation (MEDC) to invest more than $1 million in a new, elevated boardwalk behind the buildings along Grand River, as well as renovations to the rear facades of the buildings.

That project completed in 2008, and the city continued to support the downtown development efforts during the rental rehabs.

“The city has been great,” Urie says. “They facilitated the construction of the apartments. MSHDA had the vision and the city was on board, hiring someone to administer the grant, and facilitating the parking. It’s been something that truly many people have had a hand in, and it has turned out great.”

The construction of Urie’s 800- and 900-square feet apartments was completed in 2008, and they've been occupied for nearly the entire span since. In fact, she reports that shoppers inquire about vacancies at least once a month. Urie only wishes she could have created upper floor apartments earlier, though without the incentives, she says, it wouldn’t have been possible. 
Urie only wishes she could have created upper floor apartments earlier, though without the incentives, she says, it wouldn’t have been possible.


“Not at all,” she says. “It cost more to put in the apartment then we originally paid for the building. We didn’t have that money lying around. The grant made the complete difference.”

Prior to Urie’s rehab of her upper floors, the space had been unoccupied for years. Originally, it had served as the unofficial town hall, hosting meetings and dances. Some time in the late 1800s to early 1900s, the space became a dentist office. When the activity upstairs stopped, so did any benefit to the subsequent property owners. Now, says Urie, everybody benefits.

“Some of my tenants have been customers, but in general,” she says, “the more people who live downtown, the more people who shop downtown. The restaurants probably see them even more than I do. They contribute to the downtown economy for sure.”


The Resident Impact

Imagine that impact times ten. Urie wasn’t alone in taking advantage of MSHDA’s rental rehab program. Eleven new rental units were developed in Downtown Portland in the span of two years, bringing the total number of apartments in the district to 20.

What has that meant for downtown? When the Portland Main Street DDA program first began, it reported a first floor vacancy rate of 8.9 percent prior to the rush of new apartments. Today, that vacancy rate is down to one percent.

When the Portland Main Street DDA program first began, it reported a first floor vacancy rate of 8.9 percent prior to the rush of new apartments. Today, that vacancy rate is down to one percent.
“It’s hard to attribute it to one thing,” Urie says. “I don’t know how much has been the apartments, and how much it’s been people coming together and making things happen, but it’s all been beneficial”

Just as the rental rehabs weren’t the only ingredient to Portland’s growth, no one group of people could have pulled them off on their own. Without the rental rehab grants, the property owners might not have been able to afford the projects, but without the city and DDA’s initiative to build a boardwalk, the renovations might now have been viable at all. And of course, without the property owners’ desire to invest, the public entities would have had no reason to move forward.

All told, the consortium of property owners, local government and state entities invested $1.8 million in Downtown Portland over the past six years. With a one percent vacancy rate and an increasingly vibrant atmosphere downtown, many locals would say it was money well spent.

Upper floor housing rehabs spur neighborhood growth
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Wanda Urie
Owner of Distinctive Occasions and apartments above

What attracted you to investing in a downtown property in the first place?
I loved the character of the building and the overall charm of historic buildings, so to me, it was a natural fit. It was fairly priced, but had lots of space. And I loved the high ceilings.

How has being in the rental business changed they way you operate your retail business?
I don’t have to pay as much of the mortgage from my business. I have more flexibility, and have more money to put into inventory.

What other factors have helped Downtown Portland grow over the past several years?
To me, the beauty of the Main Street program is that we work together. It makes a big difference to me. We’re working to give people a reason to come downtown and promoting downtown as a place to go. If you bring people downtown and they are exposed to my business, that’s half the battle. Though not everybody who owns a business has jumped on board, but the minute they do, they don’t feel like they’re in it alone anymore.

What do you think the attraction is for downtown living?
Downtown is a place where people come and enjoy. There is a sense of being known here. If you go to [a big box store], the odds that you’re even going to see one people you know are slim to none. But if you go into the coffeehouse or the music store, you see the same people over and over again. To me, that’s something I desire. I don’t want to be a number.

How do you like being a landlord?
Truly, it depends on the tenants. We had rental property before, and it was less fun. But with this building, we seem to attract better renters, and it’s made the job easier. Overall, I don’t mind it at all, but I used to hate it.