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Single Family Home Ownership
Infill Housing Development Initiative

The Goal: 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.

The Challenge: 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 deficiencies.

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 include:

Land: 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.

Infrastructure: 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 income neighborhoods.

* 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 institutions.

* 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.

Implementation Components

Land Assembly:

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 loans.


* 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 and hookups.


* Earmark pre-development funds available for nonprofit developers

* Get the banks lined up early in the process so that construction loans are not delayed.

* earmark affordable permanent loans for the homebuyers.