The Housing Channel
Housing Channel, a local nonprofit developer, used its $5M allocation to implement a housing development program in collaboration with the City of Arlington and for-profit program partners to revitalize the designated East Arlington Promise Zone (EAPZ). The EAPZ has the highest unemployment rates, lowest literacy rates, highest number of public benefit recipients, and the lowest household incomes in the county. The development area spanned five census tracts with poverty as high as 26.9%, MFI as low as 51.6% and unemployment up to 1.73 times the national average. The EAPZ plan details a significant need for quality affordable housing available to low- and moderate-income families in this urban neighborhood where the housing stock was primarily built between 1954 and 1970. Old housing with greater repair needs tends to be concentrated in neighborhoods with the lowest per capita incomes. Developing housing in these neighborhoods is challenging because the cost to acquire and rehabilitate the properties exceeds the market value of the homes. Additionally, many of the homes in the neighborhood were identified by the City as dangerous, substandard and needing demolition. These properties were even more difficult to handle because the cost of acquisition, demolition and new construction is even costlier than rehabilitation. With the subsidy made available by NMTCs, these homes could be developed while still keeping them affordable for low-income families. Housing Channel has committed to selling at least 20% of the homes funded with NMTC financing to individuals with an income at or below 80% of the median family income.
Housing Channel used private bridge capital to complete scattered-site acquisition/rehab of 10 single-family homes and construction of a 47-unit townhome development in the target area. With average total development costs exceeding the market value for these units, Housing Channel utilized NMTC funding as a subsidy to provide an affordable sale. Housing Channel served as the project developer; the real estate broker/agent, including conducting marketing and outreach to low-income households; HUD-certified financial counselor and homebuyer education provider; and provider of $10,000 in down payment and closing cost assistance to increase the affordability of the homes for low-income families.
Housing Channel has worked with Smith NMTC since 2017 when it received this allocation from The Housing Partnership Network (HPN). As HPN’s partner, Smith NMTC structured the transaction to aggregate multiple Qualified Active Low-Income Community Businesses (QALICBs) into a single closing to reduce closing and ongoing expenses by sharing them across QALICBs, maximizing the net benefit for each organization.
AT A GLANCE
Single-Family Acquisition/Rehab and New Construction
Project Close: August 2017
CDE: The Housing Partnership Network
Tax Credit Investor: US Bank CDC
Homes Built: 57
- Poverty: 26.9%
- Median Family Income: 51.6%
- 1.73 x national unemployment rate