Affordable housing ensures that individuals and families can secure a place to live and enhance mobility for lower-income families. Kathy Makino-Leipsitz, the founder of Shelborne Development, believes in this cause and is committed to rebuilding blighted neighborhoods in Detroit through the historic rehabilitation of buildings that have remained vacant for decades.
With the implementation of the 1986 tax reform act and the creation of the Low-Income Housing Tax Credit, Kathy began to use the incredible tool of tax credits to create affordable housing. In 1995 she built her first LIHTC development in Westland on a vacant school site. This created 60 units of beautiful new affordable apartments in a distressed census tract that had not seen new construction in decades.
In 2000, she formed Shelborne Development to concentrate on rebuilding neighborhoods in Detroit by purchasing vacant/blighted historic apartment buildings and completing historic rehabilitations. For the past 15 years, her work has focused on the neighborhoods of Palmer Park, New Center, and the East Jefferson Corridor.
Kathy Makino-Leipsitz graduated with a Bachelor of Arts in Economics with a minor in Psychology from the University of Michigan-Dearborn. While attending college she bought her first rental property. “I have always loved real estate, children, and travel and have been fortunate enough to pursue my passions through affordable housing development, owning a child care center, and a travel agency.” she says.
The Struggles and Journey of Determination
Kathy Makino-Leipsitz had driven her motivation and inspiration from real-life experiences. Her father was permanently disabled when she was twelve and the youngest of five children. Her family was financially stable and lived in a beautiful neighborhood until that incident. Despite the financial struggles that followed, she showed resilience and started working to help her family survive on a modest paycheck.
She showed a sense of love and gratitude toward the support she got from her family, who made her believe she could achieve anything she set her mind to and become anything her heart desired. Observing a successful businessman in her neighborhood inspired her to save money earnestly. By the age of nineteen, she had saved a generous amount that had helped her with the down payment on a duplex in a neighborhood called Norwayne.
After witnessing the struggles of the families that lived in that area, and living amidst the poverty herself, her perspective on socioeconomic inequality was deeply impacted. This realization motivated her to help the children who had no control over the world they were born into. At the age of twenty-five, she started a daycare center with the hopes of empowering young children to believe in their potential and pursue their dreams.
The Norris Apartments Revolution
By serving in the neighborhood for years, Kathy got an opportunity to develop a site where a vacant blighted school sat in the heart of Norwayne. The Norris Apartments are still considered one of the nicest places to live in Westland. During its construction, she had the vision for its design that anyone living there, particularly the children, would not be able to identify it as affordable housing just by its appearance.
“I truly believe that sometimes we are labeled by what people perceive us to be and being labeled as poor can bring with it a multitude of perceptions,” Kathy Makino-Leipsitz says.
She believes that offering a family a home that is comparable to market rate developments located two miles away with good features, can provide them with an important emotional boost. This can help them feel positive about their environment, take pride in their home, and ultimately enhance their self-belief and confidence in their capabilities.
Challenges in Undertaking Historic Rehabilitation Projects
Kathy Makino-Leipsitz recalls a challenging experience with the National Park Service during the historic rehabilitation of buildings in the Palmer Park Apartment District. It unexpectedly denied the approval of five out of eight buildings after successfully completing seven other historic rehabilitations in Michigan. This resulted in the loss of over $5 million in tax credits. This decision seemed arbitrary, capricious, and politically motivated as it coincided with the change of administration in Washington, DC.
The denial was based on moving an interior kitchen wall to allow for full-size appliances, despite following the approved demolition plans and maintaining the historic integrity of the exterior and common areas.
This highlights the risks and uncertainties faced by developers by undertaking historic rehabilitation projects for affordable housing. Decisions like these can destroy individual projects, impact developers financially, and discourage future investments in historic preservation. It forces developers to reconsider their choices, and sometimes opt for new construction over adaptive reuse of historic buildings. This may disrupt the revitalization of struggling communities, as empty buildings further decay, worsening blight and slowing progress. The fear of unpredictable decisions by the National Park Service, which could lead to project denials, pushes developers to choose less stressful opportunities. This, unfortunately, may result in significant historic building developments being overlooked.
Housing Challenges and Social Inequality
Kathy points out the most pressing challenges in the field of affordable housing development, recognizing every social challenge in today’s time. From rising healthcare costs and inadequate preventive care, the need for criminal justice reform to income and racial inequality, these cannot be effectively dealt with without ensuring access to quality, affordable housing.
“Until our county and our administration commit to fully addressing our affordable housing crisis and finding solutions to give every individual and family access to affordable housing, I truly believe we will continue to face social challenges,” Makino-Leipsitz says.
To overcome these challenges, she points out the need to enhance access to gap financing to enable projects that help residents pay less than 30% of their income on housing. The 9% tax credit is an excellent instrument for assisting those at or below 60% AMI (Area Median Income). The need to implement policies that provide essential housing for those earning between 60% AMI and 140% AMI is also important.
The Vision for Affordable Housing
Kathy Makino-Leipsitz had a memorable journey with Shelborne Development. She believes that the awards the company has received over the years reflect the significant community impact its projects have had. By revitalizing vacant and blighted apartment buildings and introducing commercial and retail spaces, it has created walkable, pedestrian-friendly neighborhoods. This highlights the transformative power that historic rehabilitation creates.
She is passionate about being a part of the continued revitalization of Detroit’s neighborhoods. However, she envisions her future aspiration to extend beyond local efforts. She aims to help create a national policy that will ease the process of developing quality affordable housing. She believes that it shouldn’t be this difficult to address such important societal needs. Through her dedicated efforts in national policy reform, she hopes to make a real difference in improving access to affordable housing and encouraging sustainable communities for everyone.
