LINDA LIPP - firstname.lastname@example.org
When the city of Fort Wayne embarked on an ambitious redevelopment of the city's decaying Hanna Creighton neighborhood, optimistically renamed Renaissance Pointe, Ideal Homes in Decatur was one of three builders chosen to construct what the city hoped would be as many as 400 new homes.
But the timing couldn't have been worse. The program kicked off in 2007, and a scant few months later, the mortgage markets collapsed and the ensuing financial crisis helped push the country into a deep recession.
Four years later, only about a dozen new homes have been built and sold in the southeast Fort Wayne neighborhood by Ideal, Lancia Homes and Delagrange Homes.
Although home ownership is considered one of the most important contributors to the stability of a neighborhood, Ideal President Kevan Biggs began thinking something else was needed to kick-start development in Renaissance Pointe.
"There needs to be investment made. There need to be bodies. You need people who will keep up their homes," Biggs argued. "It became clear we had to think outside the box."
Biggs proposed a buy/lease program, developed under an Internal Revenue Service program that provides tax credits for investment in low-income housing. His companies would develop, build and manage 66 single-family homes that each would be leased for 15 years before being turned over to a nonprofit for sale. Tenants in the homes will not build equity with the rents they pay, but the tenant occupying each home at the end of the 15-year period will get the option to buy it at about 50 percent of its value.
"There was some resistance when people heard 'rentals,' until they heard the details of the plan," Biggs acknowledged. "My goal is still home ownership. It's just a little different path."
Biggs overcame the opposition, obtained all the necessary governmental approvals and plans to begin building the homes later this month. The first new houses will be ready to occupy after the beginning of 2012, with two more new homes to be finished each week until all 66 are done.
There are three basic floor plans for the houses, which will be built on lots on John and Gay streets and Weisser Park Avenue. Each will have three or four bedrooms and an attached two-car garage, and feature energy-efficient appliances and building materials. Ten percent will be fully handicapped accessible.
The style of the homes will be similar to the old-fashioned, front-porch designs originally approved for the redevelopment - with one big difference. Those designs could not include attached garages, under the plan developed by Indianapolis-based Mansur Real Estate Services. That was one of the biggest drawbacks potential buyers cited when they looked at the homes, Biggs said.
Mansur is no longer involved with Renaissance Pointe, so garages have been added to the plans.
The rental rates for the homes will be based on income, so they could range from as little as $285 per month to about $700 per month. Biggs Property Management will manage and maintain the homes while they remain rentals.
Tenants will get instruction on financial planning, home maintenance and other things that will help them qualify for home ownership, along with $500 per year, for up to five years, placed in an escrow account.
"We had to make a lot of promises to get the tax credits," Biggs said. "We don't want to put people in a home if they don't know what to do with it."
If a tenant should be able to qualify for a mortgage to buy a home after just a few years, Ideal can't sell the tenant one of the rentals, "but we can build one you can buy right across the street," Biggs said. He expects the conversion of renters to buyers will boost the total of homes built over the term of the program to about 100.
The permit value of each new home is about $120,000. Biggs estimated his company would be investing about $12 million in the project. That, as much as anything else, helped win over critics of the plan.
"Once the community understood that my tail is on the line and they saw we had been working here for these years, they knew I was doing my best to deliver home ownership here," Biggs said.