This is the second installment of our series spotlighting the different ways communities across North Carolina are tackling their housing needs.
Here, we are highlighting the Town of Troy’s Smitherman Village rent-to-own program which is providing residents with an accessible entry into home ownership.
The idea
The Town created the Troy Neighborhood Redevelopment Corporation (TNRC) to help restore a “blighted” neighborhood, Smitherman Village, through the purchase of property and construction of new single-family homes. The Town purchases dilapidated property in the neighborhood and deeds it to TNRC, which then builds new homes. These homes are then conveyed to their new owners through a rent-to-own program. The Town and TNRC have also partnered with Habitat for Humanity and State Employees’ Credit Union Real Estate (SECU*RE) to construct and manage some of the properties.
Potential owners of these properties rent the newly constructed homes for two years before they are eligible to purchase. During this two-year period, they receive coaching on the various aspects of home ownership (financial responsibility, upkeep, etc.). After the two-year rental period, the homes can be purchased. The homes are purchased at near market price, though they are generally “affordable” due to their small size and the market conditions of the Town.
The homeowners receive these homes from TNRC in fee-simple which means the homeowners can make changes to the property or sell it without restrictions (except for any laws or zoning requirements). The fee-simple deed allows the homeowners to realize any increase in the home and property value if they sell the home.
The funds received by TNRC from the sale of the homes are then used to purchase more property and build more homes, thus creating a revolving fund to continue the program. So far, the program has created at least seven new home ownership opportunities in the neighborhood.
This program was initially funded by several sources including Federal grants (HUD, USDA) and state and private contributions. The Town and TNRC have also received follow up Federal earmark appropriations to expand the reach of the program.
Why we like it
We think this approach is notable because:
- Too often “blighted” areas are designated for commercial redevelopment rather than housing.
- This approach demonstrates that neighborhood redevelopment for housing should be just as serious a consideration as commercial uses when thinking about blighted areas
- The revolving fund nature of the program allows the program to continue after the initial funding investment.
- The Town isn’t trying to erase its housing needs overnight.
- The Town acquires property and builds homes as funds are available leading to a sustainable program for the Town.
- Potential homeowners are provided support during the initial rental period.
- This support likely leads to stronger homeownership skills and better upkeep of the homes.
This example provides a good idea for what you could do if you are looking for a way to spend your affordable housing funds. If you don’t have an affordable housing fund, maybe this is the model you’ve been looking for- we’d be happy to talk to you about the various funding mechanisms such as a penny for housing or bond funding.
Let us know if you’re interested in discussing this idea further or if you’d like our help in setting up a similar program or exploring funding mechanisms for affordable housing.
Next month we plan to highlight one of our favorite projects where a community was able to obtain affordable housing in a planned market rate apartment complex.
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