Iowa State University Extension and Outreach Community and Economic Development (CED), in partnership with the Iowa Economic Development Authority and the Empower Rural Iowa initiative, has been helping rural communities form local housing policy and create housing action plans through the Rural Housing Readiness Assessment (RHRA) program. To date, CED specialists have worked with seven communities, with five more set to begin the program this winter.
Among the rural communities participating in RHRA, common themes have emerged. For example, housing realities that many communities face are aging housing stock and deferred maintenance. Homeowners may be financially unable to make improvements or are daunted by not knowing where to begin because they lack knowledge or expertise.
A promising practice that communities can use to address these issues is establishing a locally funded and controlled homeowner occupied rehabilitation program.
Repairing and rehabbing existing homes is a good place to begin a housing improvement strategy because it requires less funding than trying to attract a hard-to-find, new-home developer to build in the community. This housing solution has the added benefit of being able to target homes in most need of maintenance, which helps people already committed to living in the community, improves property values, and increases community pride. Also, refurbishing a community’s existing housing often encourages new home development.
Communities considering starting a local home repair and rehab program should research similar programs already serving the area. What services do they offer? What qualification requirements do they have? How are they funded?
Some of the most common home-repair assistance programs available in Iowa are offered by organizations such as USDA, regional or local housing trust funds, councils of government (COG), County General Assistance, Community Action Agencies, Habitat for Humanity, faith-based good Samaritan funds, or volunteer groups. A thorough scan of existing resources can help a community identify where gaps exist or what barriers have prevented existing programs from working effectively.
Often, assistance programs aren’t fully effective because residents who could use such programs simply don’t know they exist or that they qualify. Indeed, assistance usually comes through referrals from other agencies; hence, if a household isn’t in contact with service agencies, they aren’t aware of repair programs. Communities can promote home repair programs further by using existing networks such as faith organizations, local employers, and schools.
Other common reasons why people do not access available resources is they don’t understand how the programs work, or they mistakenly believe that any home improvement will cause property taxes to increase dramatically.
Given the financial limitations of most rural towns, it is impractical to believe that a local repair or rehab program will address all needs for all residents. Any local resource should be designed to complement other existing resources. For instance, most home repair programs follow these parameters:
- Target owner-occupied units
- Don’t address homes being purchased on contract or rent-to-own opportunities
- Require that property owners be current on taxes and utilities
- Require that liens be placed on the property
- Require legal U.S. residency status
- Require extremely low-income guidelines
- Have very low budget allowance
- Target exterior improvements or emergencies only
Knowing where gaps exist can go a long way toward creating a home repair program that addresses the unique and unmet needs of a community. Communities offering locally controlled and funded programs may want to consider broadening eligibility parameters to include
- Performing repairs on very visible or dangerous rental units
- Providing services for homes being purchased on contract or other unique purchasing arrangements
- Not automatically denying applicants who are not current on taxes or utilities (those individuals and homes may be the most in need)
- Only utilizing forgivable liens
- Making home repair assistance available to all residents, regardless of legal residency status
- Considering providing assistance for families above 80% of area median income (AMI)
- Providing higher repair budgets to ensure improvements are solutions and not just “Band-Aids”
Once a local home improvement program has been created, it should be marketed alongside all other available assistance programs. Useful in this marketing effort is a clear line of progression for accessing services: first apply for program A, depending on qualification and whether or not need is met contact program B, and so on.
One Iowa community that has been successful running its own local home repair and rehab programs is DeWitt. The funding mechanism it uses is a TIF LMI set-aside fund. DeWitt has three new home development projects of varying sizes that contribute to the home repair and rehab fund. All three developers are local. Since the creation of the program in 2014 they have averaged five repair projects per year. DeWitt encourages residents to apply and selects qualified projects every year. The number of projects varies depending on the funds available.
In addition to the LMI Fund, DeWitt applies for a variety of local and government grants and conducts additional local fundraising. A variety of fundraising mechanisms is advisable because it allows for greater flexibility in the use of the funds.
One more funding option for a local home repair program is through Local Option Sales Tax (LOST). This option requires thoughtful planning, legal advice, and most importantly, community support. For more information about LOST communities can consult the city attorney or visit the Iowa Department of Revenue website (https://tax.iowa.gov/faq-category/lost?page=4).
DeWitt’s home repair program parameters include:
- Investing in projects up to $15,000
- Funding in the form of forgivable loans
- Requiring applicants’ household income to be at or below 80% of AMI
City staff run the program to maximize the benefits of the funds. The city finance director processes all applications and administers the program, the building inspector and permit technician conduct project inspections and create plans of work, the finance director bids out work and releases projects, and the building inspector reviews progress and completion of projects. Residents who have received funds can apply every five years once their loan is forgiven, but priority is given to new applicants.
According to Deanna Rekemeyer, DeWitt city finance director, the town opted to create and run its own program because over the years it has become extremely difficult to obtain community development block grant (CDBG) and HOME funds. DeWitt continues to apply for these funds, and when successful simply folds those additional funds into the existing program.
Other benefits of locally run home repair programs are that the administrator - i.e., the city - has a more intimate knowledge of the community, knowledge of where potential projects exist, and the strong relationship with residents needed to encourage them to apply to the program. Also, local programs have added flexibility in how the funds are used. DeWitt has not encountered difficulties running its own home repair program while still collaborating with other housing partners that serve the community.
Rural housing is a real issue in Iowa. Finding solutions to local problems often requires creative local solutions. For some communities this may mean exploring the creation a local home repair and rehab program. Communities with questions on this topic or RHRA program can contact Omar Padilla at firstname.lastname@example.org or Jon Wolseth at 515-509-0558, email@example.com.