Single Family Home Ownership
Infill Housing Development Initiative
create a partnership between local government and nonprofit sector
developers to dramatically increase the construction of new home ownership units
that are affordable to low and moderate income families.
Developers have difficulty finding market opportunities in
older low income neighborhoods. Redevelopment efforts in these neighborhoods is
risky considering that they are forsaken areas that the local government has neglected
and which often lack sufficient infrastructure. Conservative financial institutions
will not participate unless the risk can be reduced. For the smaller-scale developers
without the deep pockets and for the nonprofits, financial assistance is needed
to cover the extraordinary costs associated with redevelopment.
Redevelopment often involves demolition, clearing title, assembling land, cleaning
up brownfields, relocating residents or businesses, and correcting infra- structure
A primary reason why the private sector has not engaged in this type of redevelopment
has been that the projected cost of production for unsubscribed ventures exceeds
the appraised value of the end product (this happens when there are no neighborhood
comparables of equal value). Obviously a lender will not finance a project when
the equation is out of balance. In addressing this problem
The nonprofit organizations and other builders of small-scale affordable housing
can fill a demand in the market in which the most for-profit developers are not
interested. To be successful, those smaller-scale developers need financial assistance
to remedy site-specific infrastructure problems, along with the other exceptional
costs of developing and retrofitting within urban areas,
The Ingredients of the Initiative:
To be successful the initiative must address
specific barriers that inhibit market driven housing development activities. These
developable parcels, with clear title and adequate infrastructure,
must be assembled and made easily available to participating developers.
* Create a comprehensive inventory of the properties owned by local government that
might be make available for development.
* Properties should be categorized for development depending on their current title/lien
status. Those which can reasonably transferred within a year should be marketed
to interested non-profit developers.
* Establish a system for disposition of inventoried properties. Local government
should convey lots to CDCs that they may utilize them as collateral for construction
financing. Local government can retain a reversionary interest to allow for the
recapture of property where a home is not built in a timely fashion.
Pre-Designed and Permitted Plans:
In order keep predevelopment costs and
to speed the approval process we must create pre-designed units with pre-approved
building permits. Developers should be allowed enough variation in models to prevent
low-income housing from becoming easily identifiable, while also providing the necessary
flexibility when developing odd-shaped parcels.
: Local government must assist with infrastructure related
costs such as for water & sewer connection fees, utilities hookups, sidewalk
requirements, etc., should be waived for units be built by CDC developers pursuant
to this Initiative. Under the present system developers in South Florida are required
to pay for the cost of upgrading the infrastructure needed by their projects. In
the long neglected low income neighborhoods, however, these costs can be considerable.
To make new housing units affordable, therefore, an alternative method must be found.
* Coordinate CDBG cycle with budgeting process for Public Works in order to leverage
infrastructure investment with CDBG development.
* A structured RFA process which targets specific communities, would also allow
for further coordination.
* Pipeline projects with infrastructure needs could solicit a local match to federal
funding for development from sources such as the Capital Outlay Reserve.
Financing: Predevelopment, construction, and permanent financing for projects
must be available and accessible
* smaller-scale developers without the deep pockets need predevelopment financial
assistance to cover the extraordinary costs associated with redevelopment of low
* Local government should commit portion of available federal CDBG or HOME dollars
for pre-development loans and grants for nonprofit developers. This money can be
utilized to either provide funds to the non-profit developers directly or to serve
to underwrite potential losses on a Loan Fund developed by a consortium of financial
* Ready access is also needed to construction and permanent financing.
Home Ownership Counseling & Processing: low income buyers will need an
effective homeownership training program and hands-on assistance in qualifying for
financing and preparing for the closings.
Process: a system must be put in place which oversees and coordinates the
whole Initiative. There must be an entrepreneurial mentality.
Use Lots Already Owned: Local government should commit to contributing land
that it currently owns
Land Banking (additional lots): Local government should commit to acquiring
additional land. Sources, tax foreclosures and CDBG funded purchases.
Land Inventory Data Base of land being made available showing location, zoning,
infrastructure title issues, etc.,
Title Clearance: Title on all land in program must be cleared prior making
it available for development.
Disposition: local government must be willing to convey lots to participating
developers prior to development so that it can serve as collateral for construction
* Deal with infrastructure and hookup issues prior to turning the property over
for development (don't pile fees and infrastructure costs on the back of the builder)
* Coordinate the CDBG funding cycle with the budgeting process for Public Works
so that discretionary public works funds can used for the necessary infrastructure
* Earmark pre-development funds available for nonprofit developers
* Get the banks lined up early in the process so that construction loans are not
* earmark affordable permanent loans for the homebuyers.