A bank few likely ever heard of helps Michigan communities thrive

Kittie Tuinstra outside of the new Shelby Trails Apartments.

As construction prices soared upwards during the pandemic, Kittie Tuinstra began to wonder if Shelby Trails, the affordable housing project her group was spearheading in rural Oceana County, Michigan, would ever get off the ground.

Her organization, Dogwood Community Development, had secured low-income tax credits for the new $4.7 million apartment complex to be built in the Village of Shelby. The project promised to create 15 units of affordable, permanent, supportive housing for adults experiencing homelessness, dealing with disabilities, or fleeing from domestic violence. But the unexpected cost increases that started hitting the construction sector in 2020 threatened to derail the Shelby Trails project from ever becoming a reality.

"We were preparing to build Shelby Trails and then that [financing] gap grew to a point where we were looking at possibly not being able to pursue the project, even though we had a tax credit award already," says Tuinstra. 

Thankfully, a $260,000 Affordable Housing Program (AHP) grant from Federal Home Loan Bank of Indianapolis (FHLBank Indianapolis) allowed Dogwood Community Development to see the affordable housing project through to completion.

Residents Kevin and Charlie Nickleson with Kittie Tuinstra.

Work on Shelby Trails wrapped up in December 2021, and the apartment complex, located on a scenic hillside at 220 Walnut St. in Shelby, is now fully occupied. Residents have their own one- or-two-bedroom living spaces as well as access to a common room and are within walking distance of downtown amenities.  A social worker is also available on-site and a service team made up of six local nonprofits is committed to providing a variety of support assistance to residents on a voluntary basis.

Dogwood Community Development worked with Safe Harbor Credit Union, an FHLBank Indianapolis member institution, to secure its AHP grant. Tuinstra believes the gap financing that it provided was instrumental in helping Shelby Trails see the light of day.

"Their funding was critical in saving this project and being able to move it forward," she says. "It filled that gap that we experienced with those rising construction costs, so we could keep going." Work on Shelby Trails wrapped up in December 2021, and the apartment complex, located on a scenic hillside at 220 Walnut St. in Shelby, is now fully occupied. Residents have their own one- or-two-bedroom living spaces as well as access to a common room and are within walking distance of downtown amenities. A social worker is also available on-site and a service team made up of six local nonprofits is committed to providing a variety of support assistance to residents on a voluntary basis.

Dogwood Community Development worked with Safe Harbor Credit Union, an FHLBank Indianapolis member institution, to secure its AHP grant. Tuinstra believes the gap financing that it provided was instrumental in helping Shelby Trails see the light of day.

"Their funding was critical in saving this project and being able to move it forward," she says. "It filled that gap that we experienced with those rising construction costs, so we could keep going." 

Resident Teresa Brant, her dog, Jack, and Kittie Tuinstra catch up in the hallway at Shelby Trails Apartments.

A variety of community-oriented services in Michigan

FHLBank Indianapolis isn’t a bank in the traditional sense. People on the street will never see a single FHLBank branch or ATM. Simply put, it is a bank for banks, credit unions, community development financial institutions, and insurers. In fact, FHLBank Indianapolis has more than 300 member financial institutions.

Although the Bank is headquartered in Indiana, its district includes both Indiana and Michigan.

“Don’t let the name fool you,” says Anna Shires, FHLBank Vice President and Community Investment Outreach Partner. “We actually have more member financial institutions in Michigan than Indiana.”

Cities across the region benefit from partnerships between the FHLBank and various community-based financial institutions and philanthropic organizations.

Helping community development groups like Dogwood Community Development get much-needed financing is just one of many services that FHLBank Indianapolis offers to help communities in Michigan and Indiana. 

The bank itself is a government-sponsored enterprise and one of 11 banks in the Federal Home Loan Bank system, which was created by Congress in 1932 to provide low-cost funding to member financial institutions. These can include credit unions like Safe Harbor Credit Union as well as commercial banks, insurance companies, and certified community development financial institutions. FHLBanks are owned by these member organizations, are privately capitalized, and receive no government funding.

One of the major responsibilities of the Federal Home Loan Banking system is to offer long- and short-term advances to member institutions, which can be used to fund asset growth, meet real-time cash needs, and to help manage or lessen certain types of interest risks. 
Kittie Tuinstra shows off an apartment interior.

FHLBank Indianapolis also makes at-cost advances for qualifying economic or community investment purposes. A good example of this would be its Community Investment Program, which offered a special low-interest loan through a member institution to help fund the development of Rivertown Market, a neighborhood-style grocery operated by the Meijer's chain that opened in Detroit in 2021.

Another big goal, as seen with the Shelby Trails project, is supporting affordable housing. Each year, FHLBank awards special grants of up to $600,000 through its AHP program to facilitate affordable housing and rental projects. Since 1990, the program has awarded more than $283 million to create or rehabilitate single- and multi-family housing in Indiana and Michigan. Last year alone, FHLBank Indianapolis awarded more than $3 million to seven Michigan affordable housing projects through AHP, including $500,000 to both Walter French Apartments in Lansing and Hartford Terrace Apartments in Muskegon.

FHLBank Indianapolis also has a program called the Neighborhood Impact Program, which focuses on home repairs. The program is designed to help qualified homeowners pay for deferred maintenance repairs. One of the most common areas homeowners use the grant to pay for is roofs.

“This program helps low-income households throughout our district access the support they need to reduce financial stress and live more comfortably,” says Shires. “In the last ten years, FHLBank Indianapolis has invested just over $30 million in critical home repairs across the state of Michigan, assisting just under 4,000 residents. That’s a significant amount of households that no longer have to worry about how they were going to pay for a nasty leak in their roof or repair their HVAC system.”

Small businesses also benefit from FHLBank Indianapolis programs. The Elevate Small Business Grant supports qualifying small enterprises with up to $20,000 in annual grants to assist the growth and development of their businesses, workforce, and the communities where they are based. These funds can be used for workforce training or a variety of other needs. Last year's 15 Michigan recipients included North Harvest CSA, a fruit and vegetable farm in Calumet, and D L Kusky Services, a Flint-based firm that offers employment support services to disabled and low-income clients. Both companies received nearly $20,000 in grant funding.


Shelby Trails Apartments

Beyond this programming, FHLBank also works with a variety of partners to empower local leaders to build stronger and more resilient communities. Through its Community Mentors program, FHLBank works to develop working relationships between members and community leaders to foster community engagement and economic development. Partnering organizations lead a full-day workshop hosted by FHLBank and receive $50,000 grants, which can be used for creating community plans and other purposes.

As just one example of community partnerships, the Federal Home Loan Bank has been collaborating for a number of years with the Community Economic Development Association of Michigan (CEDAM) on projects like the Real Estate Development Boot Camp, which works to ensure the state has a pipeline of developers ready to bring much-needed affordable housing developments to local communities.

"CEDAM is grateful for the FHLBank Indianapolis’s partnership and their support for equitable community development and affordable housing in Michigan. They understand that in order to move impactful community development and affordable housing initiatives forward, their work shouldn’t stop at serving banks that support these important projects," says CEDAM's executive director Luke Forrest. "Their commitment to engaging with practitioners through educational and networking events has resulted in more emerging developers, future small business owners, and community members utilizing the resources the FHLBank Indianapolis has to offer.” 

For over 90 years, FHLBank Indianapolis has been dedicated to developing innovative strategies to support local businesses, communities, and residents. And looking to the future, this Federal Home Loan Bank is dedicated to finding new strategies that meet community needs as they evolve.


David Sands is freelance writer based in Detroit. He's covered news for the Huffington Post Detroit, as an assistant editor, and for Mode Shift, as a staff writer. Follow him on twitter @DSandsDetroit.

Photos by Tommy Allen.

This article is part of the Block by Block series, supported by FHLBank Indianapolis, which follows small-scale minority-driven development and affordable housing issues in the state of Michigan.