Editor’s note: This is the thrid in a series of articles on affordable housing.
In late September the Iowa West Foundation (IWF) announced a $4 million pledge to the city of Council Bluffs to support the addition of 1,300 new affordable housing units over the next 10 years.
“Our job at Iowa West Foundation is to provide resources that let the experts think outside the box when it comes to housing,” said IWF’s President Brenda Mainwaring.
In July the Greater Fremont Development Council (GFDC) also announced a $1.5 million Nebraska Rural Workforce Housing Grant to target rehabilitation and reconfiguring of current structures in the urban core.
The grant stipulates that renovations must be equal to 50% of the assessed property value to qualify for the grant.
“Those are things that developers aren’t usually interested in because they can’t do quantity,” said GFDC President & CEO Megan Skiles.
She said there have been several applications submitted since the grant was announced in July 2023.
Grants, like the ones above, and other sources of funding are essential to increasing the number of affordable housing units in a timely manner. However, grants are limited, forcing nonprofits with the same goal to compete against each other, and, in some ways themselves.
Unique Financing Structures
Unwilling to accept defeat, organizations are getting creative.
“Creative thinking and innovation are the only way we can hope to solve our community’s housing deficit,” Mainwaring said.
For example, through its partnership with the Council Bluffs Community Development Department, NeighborWorks Home Solutions is offering downpayment assistance through the Infill Homebuyer Program. While completely dependent on income, the program can provide up to $30,000 in assistance at 0% interest. If the owner lives in the home for 10 years the loan can be forgiven.
Three homes have been completed and sold using this program this year. Construction will begin on two sets of townhomes in the near future. Houses include top-of-the-line HVAC and water heaters, more insulation than required, and numerous tests to provide efficiency.
“We want the cost of the home to be as low as possible for the new homeowner to manage,” said COO Phyllis Peterson.
GFDC is hoping to attract rehabilitation projects by utilizing short-term loans, ensuring funds can be redeployed consistently. It’s also working on how to finance projects that regular banks wouldn’t consider “because they might be a little bit riskier.”
“Our board has approved loans about 50 basis points below the five-year treasury, so currently that’s loans below 4%, where a regular bank is running 7-8% right now,” Skiles said.
“We’re also offering it in interest-only payments until the end of the term. That gives the developer a lot of upfront capital to get the project going.”
Peterson, who has over 20 years of industry experience, said finding homes to purchase and rehabilitate is difficult due to the current housing market.
“First you have to find a qualified person and then you have to qualify a home and unfortunately in this market, those homes go no matter what condition they’re in,” she said.
“It’s unfortunate because it prices people out of the market that can’t afford high prices.”
Protecting Affordable Units
A similar situation is occurring with multi-family housing in areas that are being redeveloped. As properties change owners, rents can skyrocket, displacing longtime residents.
It’s become an increasingly real possibility for residents in the Park Avenue neighborhood, which is situated just east of Hanscom Park, one of Omaha’s oldest parks.
Just north of the neighborhood sits Midtown Crossing and Blackstone, two neighborhoods that have been heavily redeveloped in the last two decades. An influx in business on 30th and Leavenworth streets, just blocks north of Park Avenue, promises more development in the near future.
Foreseeing the potential exodus, inCommon Community Development began formulating a strategy for protecting neighbors, starting with purchasing the Bristol Apartments at 1029 Park Avenue.
“We found ourselves in both a human crisis and a mission crisis as neighbors could no longer afford to live [in the neighborhood],” said Christian Gray, co-executive director.
In 2015 inCommon purchased the apartments, renamed them to Hanscom Place Apartments, and began an eight-year, multi-million dollar venture towards preserving the pre-existing affordable housing.
It would later add the Georgia Row Apartments and the 32 Ave Apartments, preserving 75 affordable units, ranging from one bedroom to three bedrooms. Hanscom Place was expected to welcome residents in late September.
Earlier this year inCommon created a separate entity, inCommon Housing Development, to find solutions not only in the Park Ave and Walnut Hill communities but communities across Omaha.
“The goal with inCommon Housing Development is that we’ll be able to provide our neighbors with a whole menu of housing options and opportunities,” Gray said. “We’ve been working with the land bank on purchasing lots [in Park Ave and Walnut Hill neighborhoods], where we could potentially convert a single-family house into something with more density, like a duplex.”
Beyond its partnership with the Omaha Municipal Land Bank, inCommon is working to establish Omaha’s first community land trust. Gray said a land trust holds the deed to the land on which a building sits.
“You separate the land from the built environment on top so that the structure and the land are owned by two separate entities,” Gray said.
This would allow the community land trust to “set the course for that parcel in perpetuity,” by setting rules for how the land can be used.
For example, Gray said if the organization sold the land to a homeowner for below-market value, the homeowner would have to sell for below-market value.
The benefit to the homeowner is that they wouldn’t be purchasing the land, which reduces the overall cost.
For example, if a property is valued at $200,000 and the land trust owns the land, which is valued at $40,000, then the cost to a homeowner would be $160,000.
“What are some of the line items for real estate development that we can remove or reduce so in the end it’s a more affordable product that someone can afford,” he said.
In addition to obvious challenges such as construction costs and interest rates, more complex issues such as credit history, transportation, and social networks, plague the affordable housing crisis.
“Where we build affordable housing matters,” Gray said. “It’s important to build in neighborhoods of opportunity, where people are close to bus lines, job centers, and can remain close to friends and social support networks.”
But, there’s a common phenomenon when affordable housing projects are introduced to neighborhoods called NIMBYISM: Not in My Backyard. From concerns about property taxes to parking to crime, some neighbors may assume the worst from residents of affordable housing projects.
“That’s unfortunate because I think we benefit from diversity,” Gray said. “We need people in the community to be open to it.”
Fremont is an example of a community coming together to support each other, and future generations. The community is partially responsible for the $1.5 million grant previously noted.
“The process that we went through required a community match,” Skiles said. “We went out and asked the community and less than a month later 20 businesses and nonprofits in the community had stepped up to raise the funds.
“It’s amazing to see your community step up like that.”
The Iowa West Foundation is organizing a similar approach in Council Bluffs. Mainwaring said it’s working on organizing a housing coalition comprised of several sectors, from banks to developers.
“Everybody has a specialization, but the common goal is that we can manage the risk and the limited resources to maximize new housing construction across an entire spectrum,” she said.
“If everybody takes a little bit of the risk, then everybody can benefit.”