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Sycamore Heights: Building an Affordable Neighborhood |
| A small nonprofit housing organization in
rural Mississippi has succeeded where commercial developers have failed:
to build a new, affordable housing community—the 23-acre Sycamore Heights
subdivision in the town of Heidelberg. With various funding sources ranging
from conventional loans to self-help financing, Mississippi Non-Profit Housing,
Inc. (MNPH), has been able to create a financing package tailored to each
family. Through partnerships with state agencies and by stretching federal
resources—such as U.S. Department of Agriculture (USDA) Section 523
self-help programs and Section 502 loans—this 2-person rural housing
organization has made homeownership a reality for more than 20 low- and
moderate-income families.
Established in 1988 MNPH is working to increase the affordable housing supply in Jasper County, a largely rural area with a population of 17,615 and a median household income of $22,278. Approximately 20 percent of county families have below-poverty incomes. In 1995 MNPH identified Sycamore Heights, a 23-acre parcel of land. The site, partially developed in the 1980s by a for-profit developer who abandoned the project for financial reasons, was large enough to support 100 affordable single-family homes. The site’s first street was already in place when MNPH purchased the property in 1996, thereby reducing development costs. Reducing costs through sweat equity. “Building Sycamore Heights for low-income residents has succeeded primarily because of the self-help program,” says Delois Windham, executive director of MNPH. The USDA Mutual Self-Help Housing Program (Section 523) makes homes affordable by providing future homeowners the opportunity to build their own homes. Section 523 provides grants for technical assistance and makes site loans available to nonprofit and local government organizations that supervise the families in the self-help program. “Building a home was much more work than we had anticipated,” recalls Sycamore Heights homeowner Felissa Coleman, “but it was very rewarding working with the other team members to build their homes, making you better neighbors and better friends.” Felissa and Walter Coleman built a new home for their family using the self-help program. In the process they gained skills that have reduced the need to call for home repairs. “Having a home of your own is a big responsibility, but it is extremely satisfying,” says Coleman. The program reduces out-of-pocket expenses and places the participating families in a better position to apply for a mortgage. After the initial $12,000 to $15,000 write-down, funded through a HUD HOME grant, the mortgage totals approximately $40,000, depending on the size of the home. Monthly mortgage payments range between $150 and $200. Insurance and taxes bring a family’s monthly payment to between $250 and $300. The self-help program also provides community-building opportunities. The program accepts 5 to 12 participants per session. Prospective homeowners are responsible for building 65 percent of their own home; they also work as a team to build each others’ homes. A family may move in only after all the homes in the group are completed. The result is a neighborhood whose residents have worked together to achieve homeownership. “Many of the participants have very poor or no credit history,” states Ms. Windham. “We provide a large amount of credit counseling to help them develop better skills. “ In addition to credit counseling, MNPH provides postoccupancy education, including budgeting and financial management skills. The hope is that by providing the new homeowners these skills, they will add tremendous value to their new neighborhood. Combined funding supports development. Households must have an income of 80 percent or less of the area median to be eligible for the program. Families must be without adequate housing but can afford mortgage payments, including principal, interest, taxes, and insurance. USDA’s Rural Housing Service guidelines for these payments are 26 percent or less of an applicant’s income. Applicants must show they are unable to obtain credit on their own but must possess a reasonable credit history. Families with very low incomes living in substandard housing are given first priority. Generally, each household applies for a USDA Single-Family Housing Direct Loan (Section 502) once accepted into the program. This program allows participants to borrow up to 100 percent of the assessed value of the home, eliminating the need for a cash downpayment, which most applicants are unable to provide. The availability of the loan guarantee, along with sweat equity, are the keys to MNPH’s successful financing method, according to Windham. A mix of federal, state, and private funds makes this project work. The Mississippi Housing Corporation provided $61,000, and the nonprofit Housing Assistance Council Self-Help Homeownership Program (SHOP) contributed $44,444. A $500,000 federal HOME grant subsidizes the mortgages. MNPH used $108,000 in Section 523 funding, and the Section 502 program made direct loans to homebuyers totaling $1,760,000. For more information, contact: Delois Windham, Executive Director, Mississippi Non-Profit Housing, Inc., P.O. Box 668, Heidelberg, MS 39439, (601) 787–2183. Or see: “Sycamore Heights Subdivision, Heidelburg Mississippi,” in Combining Funding Sources for Rural Housing Development, 1999. Housing Assistance Council, 1025 Vermont Avenue, NW, Suite 606, Washington, DC 20005.
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