A $1 million grant will help Appalachian Community Federal Credit Union (ACFCU) and partners to revitalize neighborhoods and allow more than 100 low and moderate-income families to purchase or renovate homes over the next five years in the greater Tri-Cities.
The U.S. Treasury’s CDFI Fund’s “Capital Magnet Fund” award supports affordable housing activities that attract private capital to economically distressed communities. ACFCU has now received three affordable homeownership-related grants totaling $4.4 million since early 2017.
ACFCU and partners will focus on two primary goals with the “Neighborhood Revitalization Program”: improving neighborhoods through upgrading homes – including many that have been renter-occupied – and helping aspiring families complete the journey to homeownership.
“Homeownership is transformative,” ACFCU CEO Ron Scott said. “It transforms families generationally by allowing them to build wealth and stability. When homeownership numbers increase in concentrated areas, it transforms neighborhoods.”
Collaboration and innovation will be essential to the Neighborhood Revitalization Program’s overall success. The grant permits mortgage loans providing up to 110 percent of the home’s value with the 10 percent excess funding renovation, energy efficiency upgrades and closing costs.
Many targeted homes would benefit from extensive renovation, and many eligible families will have financial or credit hurdles to overcome. Fortunately, the program coincides with the Opportunity Zones initiative, a new federal tax credit opportunity to attract capital to distressed census tracts. The Neighborhood Revitalization Program will focus on neighborhoods in the same areas, opening the door to additional investment.
“This is a heavy lift,” Scott said. “It’s hard to transition substandard, investor-owned rental houses to good-quality homes that low and moderate income families can afford. We believe the transformation for families and neighborhoods is worth the effort.
“Homes that could be improved and owner-occupied often are purchased by investors who rent them out,” Scott said. “This usually means fewer improvements, less positive change in neighborhoods and fewer people with the potential to successfully transition to ownership having the opportunity to do it.”
About half the 103 loans will be for families making 80 to 120 percent of area median income (AMI) and half to those making 51 to 80 percent. AMI for a family of four is in the $54,000 range for most of the Tri-Cities. Borrowers must pass an eight-hour, HUD-approved homeownership class to ensure they understand the challenges and responsibilities they’ll face.
With an estimated average loan size of $110,000, ACFCU expects to leverage the $1 million grant award into more than $10 million of economic impact.
ACFCU and a primary partner, the newly formed non-profit Appalachian Opportunity Fund (AOF), will engage community members in targeted neighborhoods to learn how to respectfully help create positive change.
“Working with community leaders around the Langston High School renovation project in Johnson City, we’ve learned how important it is to make sure all voices are heard,” AOF Executive Chairman Adam Dickson said. “The neighborhood around Langston is a good fit for the Neighborhood Revitalization project. We hope to take our experiences with the school project, apply them to this effort to gain trust and buy-in, and repeat that across neighborhoods throughout the Tri-Cities.”
Johnson City Vice Mayor Jenny Brock agreed.
“This program is a significant investment in improving the living condition of many citizens,” Brock said. “If the City also focuses on these same neighborhoods with infrastructure improvements such as sidewalks, streets and lighting then we will truly see revitalization projects that make remarkable differences.
“Property values should increase, providing homeowners greater equity in their homes. We applaud ACFCU for making innovative investments in our community.”
To enhance each home project’s value and affordability, ACFCU and AOF are seeking additional partnerships and grants to acquire labor and materials at or below cost.
“We are thrilled to have yet another opportunity to work with regional partners and area families to improve neighborhoods by attracting capital to them and providing access to the American Dream,” Scott said.