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Attacking Oklahoma's Affordable Housing Shortage |
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Economic expansion and rapid job growth are resulting in a shortage of affordable housing, but residents of Oklahoma and the Choctaw Nation are using innovative ways to address their needs. "We are setting new HOME funding priorities and promoting solutions like modular housing to help address this housing shortage," says Dennis Shockley, director of the Oklahoma Housing Finance Agency (OHFA). Economic expansion brings with it a number of benefits: more jobs, higher wages, a boost to local businesses, and an improved standard of living. However, in isolated rural towns in southeastern Oklahoma the advent of new jobs can place a tremendous burden on the housing supply. OHFA provides these communities with the information and technical assistance needed to access state and federal funding sources, and promotes innovative solutions that add to the state's affordable housing stock. "A good example of the situation confronting us is evident in Pauls Valley," Shockley says. In 1999 Wal-Mart announced plans to open a 1 million-square-foot grocery warehouse in this small town of 7,000 residents. The new warehouse added approximately 200 jobs—paying about $15 per hour—to the local economy. However, Pauls Valley, located approximately 50 miles south of Oklahoma City, lacked the housing needed to support the inflow of workers. OHFA, working with ERC Properties and Neighborhood Housing Services of Oklahoma City, arranged for the construction of 25 single-family homes and an additional 124 units of multifamily housing. OHFA addressed the housing shortage by working with partners and putting them in touch with the financing and technical resources they needed. A 1998 report by the Oklahoma Department of Commerce (ODOC) found that within 5 years, the state would need to add more than 10,500 new single-family homes in 14 of its 77 counties. Growth from employers such as Wal-Mart in Pauls Valley; Sundowner, a manufacturer of high-end horse trailers, in Coleman; and other businesses in cities such as Coalgate along the I-35 shipping corridor contributed to the dramatic increase in housing demand. Without the addition of new housing units, the only revenue that rural municipalities can capture is from a local tax on items workers buy on their way in and out of town."In many of these municipalities a new permit has not been issued in 5 to 7 years," states Shockley. They now have to deal with rapid expansion; that is where OHFA steps in.
"IN MANY OF THESE MUNICIPALITIES A NEW PERMIT HAS NOT BEEN ISSUED IN 5 TO 7 YEARS." Funding approach. In response to the report's findings, OHFA took action. The agency brought the largest housing programs under its jurisdiction: HOME, low-income housing tax credits, and downpayment and closing cost assistance. The agency redirected the programs to promote homebuilding instead of home rehabilitation. "Most of the HOME funds were being used for owner-occupied rehabilitation," Shockley says. In 1998, following the reorganization, OHFA increased the number of housing units built from 10 to approximately 350. OHFA currently distributes its $11 million HOME allocation in five areas: approximately $6.6 million is divided between homeownership and rental assistance; an additional $2.3 million goes for owner-occupied rehabilitation; $1.1 million for single-family mortgage revenue bonds; and approximately $1 million goes to administrative costs, shared with nonprofit housing agencies and other grantees. Leveraging of funds plays an important role in OHFA's new priorities. The highest priority projects are those that leverage $1 of HOME money into at least $10 from other sources. The second priority is given to projects that leverage between $6 and $9 for every HOME dollar. Manufactured/modular approach. Getting units built in the rural areas is a "major problem," according to Shockley. Some small towns that have pressing building needs lack a local supply of contractors and skilled labor. "We see manufactured and modular housing as a good solution to fill this hole," states Shockley. "I'm not talking about typical doublewides but high-quality, factory-built stick homes that are transported to the site." One of the entrepreneurs positioning itself to tap into this market is the Choctaw Nation, located in southeast Oklahoma near the I-35 corridor, and a Best Practices 2000 award winner for its work in the field of affordable housing. Currently, the Choctaw Housing Authority builds approximately 24 homes per year that it sells to tribe members. "We are helping families break from the rent trap," says Russell Soussman, director of the Choctaw Housing Authority. In the housing authority's program the family pays only for the materials in the home, site preparation, transport to the site, and finish work. HUD funds—usually spent on rental subsidies—pay for the labor. The program provides jobs for tribal members, offers them the opportunity to build equity in homes, and helps solve the area's affordable housing problem. The Choctaw program has been so successful in helping to meet the tribe's housing needs that the housing authority is currently building an additional factory. Scheduled to come online in spring 2001, this factory will double the number of units built and provide good jobs for tribal members. "We are trying to get more bang for each aid dollar that we receive," Soussman says. Employees gain construction skills and families are able to purchase homes for the same amount, or less, than the rent they currently pay. An average 1,400-square-foot home costs homebuyers between $40,000 and $45,000. With the subtraction of the labor cost, this represents a savings of about $15,000 resulting in a home payment of approximately $300 per month. Reorganizing and setting new priorities are helping the state address its housing shortage. More important, the work of Shockley and entrepreneurs such as the Choctaw Nation illustrates the opportunities that can be pursued to bring homes to areas with jobs. For more information, contact: Dennis Shockley, Director, Oklahoma Housing Finance Agency, 1140 Northwest 63rd Street, Suite 200, Oklahoma City, OK 73116 or Russell Soussman, Director, Choctaw Nation Housing Authority, (580) 326-7521, ext. 238. Or see: "Job Growth Creates Affordable Housing Shortage in Rural Boom Towns," Affordable Housing Finance, June 1999, and HUD Best Practices 2000 "Best of the Best Winners" awards.
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