Rural Community Assistance Corporation (RCAC) is tackling the affordable housing crisis in the rural western U.S., an area many others have left behind. As the primary CDFI working in the rural west, it is witness to the effects dwindling government resources and geographic isolation have on low-income communities. People are often desperate for economic opportunities and safe, affordable places to live, but local organizations lack the resources to cultivate growing and thriving communities.
Founded in 1978, RCAC, which serves 13 western states, including colonias and tribal lands, provides rural communities with healthy infrastructures so they can achieve their goals and visions.
Many rural areas have become “development deserts,” places with little to no affordable housing and no local capacity to develop it. In response, RCAC created Development Solutions, a scalable and replicable program that empowers local nonprofits to develop affordable housing.
Development Solutions offers education and training, technical assistance, critical financing, and partnership to build community-based organizations’ development capacity. With it, RCAC is taking on a new role—one that’s substantially different and riskier—as developer, guarantor, partner, and/or owner.”
“In small rural areas, lack of affordable housing resources, and existing housing that’s in terrible disrepair, make it increasingly hard for low- and middle-income families to live in the communities where they work,” said Stan Keasling, RCAC CEO since 2008. “There’s a significant need for smaller development projects, which lack the economies of scale to attract larger developers. With Development Solutions, we can support small projects by filling existing gaps in development financing, expertise, and experience—ultimately enabling local organizations to create housing in their communities.”
One of RCAC’s primary goals for Development Solutions is to boost development in Indian country. RCAC launched The Tribal Housing Excellence Academy to increase the variety and volume of housing on tribal lands. Currently, nine tribal housing entities are participating in the 18-24 month training program. Each will take a project from concept to construction while developing transferable skills and understanding of the intricacies of rural affordable housing development.
Its $2 million NEXT Award will enable RCAC to expand Development Solutions and further extend its new role into more communities. The CDFI intends to leverage the Award into nearly $75 million for Development Solutions financing activity during the next two years.
“In a sense, if Development Solutions succeeds, we’ll put ourselves out of the development business,” explained Keasling. “When our partners—organizations with an intimate understanding of their communities—are able to develop safe, sustainable housing, then RCAC can step back to our more traditional role of financing and technical assistance provider. That is not a bad thing at all.”
After a decade-long foreclosure crisis, the U.S. housing recovery is finally underway. However, in places like New Jersey—which now leads the nation in foreclosures—many low- and moderate-income communities continue to struggle with family displacement and housing abandonment. New Jersey Community Capital (NJCC), a CDFI that’s worked to transform the state’s most underserved urban areas for nearly 30 years, has developed a unique approach to tackling this crisis.
Two years ago, NJCC initiated ReStart, an innovative home preservation program that prevents foreclosures and stabilizes communities. ReStart leverages private capital to purchase large, discounted pools of underwater mortgages. NJCC then partners with local housing agencies to help homeowners modify their mortgages by reducing their mortgage principal to fixed affordable amounts aligned with the home’s market value.
For properties in the pool that are already abandoned—as much as 25% of the stock—NJCC’s real estate development subsidiary, the Community Asset Preservation Corporation (CAPC), rehabilitates empty homes into safe, quality affordable rental or for-sale housing. In certain cases, CAPC will transfer empty properties to other nonprofit developers to rehabilitate into additional housing that is affordable to low-income families.
“Even as other housing markets around the country have started to rebound, New Jersey still struggles under the weight of foreclosures,” said Wayne T. Meyer, NJCC’s President since 2009 and before then a member of its board. “The demand for our work is higher than ever, and we had to figure out a way to keep people in their homes.”
Since ReStart’s inception, NJCC, one of the first mission-driven organizations to use a bulk-purchase model to prevent foreclosures, has acquired more than 800 distressed mortgages, including more than 500 in areas affected by Superstorm Sandy, which compounded the foreclosure crisis. Thus far, ReStart has helped 75 homeowners avoid foreclosing on their homes—and not one of the mortgages modified under the program has defaulted.
“The challenge for all of us working in affordable housing development is how to develop without relying on shrinking government resources,” said Meyer. “ReStart passes the purchase discounts on to renters or homeowners. Housing remains affordable and people stay rooted in their communities.”
NJCC will use its $2.25 million NEXT Award to expand ReStart into more areas of New Jersey, supporting an additional 200 homeowners and developing more than 200 multi-unit affordable rental properties. The Award will also help NJCC respond to a growing interest among CDFIs and partners outside the state that want to implement certain ReStart strategies in their communities.
Said Meyer, “Our mission is to create positive change in the neighborhoods where NJCC works. We can only do this when people have safe, affordable places to live. ReStart presents a pathway to realizing our mission.”
For low-income Floridians, finding a safe, affordable place to rent is almost impossible. Between 2008 and 2012, Florida lost 14,612 affordable housing units. Florida Community Loan Fund (FCLF) seeks to reverse that trend with its Florida Preservation Fund.
FCLF’s mission is to help organizations improve lives and communities through projects that succeed. It provides flexible capital and technical assistance, primarily to nonprofit organizations working in community development.
Ignacio Esteban has been with FCLF since 1997 and CEO since 2000. During this time, he’s seen gaps in affordable housing widen significantly. “The state of Florida was hit harder than almost any other state in the recession. We saw property values go way down and salaries did not rise proportionately. As a result, many people found their rents unaffordable.”
In 2009, FCLF created the Florida Preservation Fund to help preserve affordable housing. The program focuses on smaller projects of 5-100 units, with a special emphasis on those with 5–50.
The Shimberg Center for Housing Studies at the University of Florida—FCLF’s research partner in this program—determined that Florida has an estimated 1,308 properties with 51–100 units, and an estimated 152,848 properties with 50 units or fewer. These properties aren’t large enough to attract Low Income Housing Tax Credits for rehabilitation, which makes financing them challenging. That’s where FCLF’s Preservation Fund plays an invaluable role. The program provides financing to nonprofits to purchase and rehabilitate small properties, paying special attention to supportive housing developments for people with special needs.
With help from the state’s Florida Housing Finance Corporation and other local partners, FCLF piloted the Florida Preservation Fund in three Florida counties: Orange, Palm Beach, and Pasco. Through this successful pilot, FCLF provided approximately $12 million to preserve 429 units of housing for low-income people and families.
With its $4 million NEXT Opportunity Award, FCLF will expand its successful program into more counties in Florida, with the goal of statewide implementation, particularly in metropolitan and smaller rural areas with the highest need. FCLF projects $25 million in new financing over the next three years, which will fund up to 30 projects and preserve up to 900 units of affordable rental housing.
The award will also do for FCLF what the NEXT Awards were created to do—propel FCLF to another level of growth, staying power, and impact.
“Besides the capital, the NEXT Award provides a platform for the Florida Community Loan Fund to gain a new level of visibility that we haven’t had up until now,” said Esteban. “We believe that as Florida’s only statewide CDFI, we have a lot of room to grow. And that’s important because there’s a lot of need that we have yet to address.”
Impact Seven, an Almena, WI-based CDFI, received this year’s $100,000 NEXT Seed Capital Award for its strategy to preserve affordable housing for very low-income individuals and families in rural Wisconsin.
The NEXT Awards Selection Committee chose Impact Seven for the potential to scale its innovative financing initiative to preserve small, multifamily rental properties in rural Wisconsin. This unique program will preserve affordable housing financed originally through the U.S. Department of Agriculture’s Rural Development Section 515 Loan Program. The USDA preservation incentives will expire on thousands of properties across the U.S. over the next few years, and Impact Seven’s pilot in Wisconsin may serve as a model to help solve this issue nationally.
With the Award, Impact Seven will fund a new, targeted program to help mission-based, nonprofit organizations acquire these expiring properties and keep them affordable for those with no other housing options. It will help both the buyers and sellers of these properties navigate the complex process.