INHP to invest $5 million in affordable housing stock in three Marion County neighborhoods

Federal New Markets Tax Credit Program leveraged to fund revitalization initiative

INDIANAPOLIS – The Indianapolis Neighborhood Housing Partnership® (INHP) has received a $5 million New Markets Tax Credit (NMTC) allocation to rehab abandoned housing or build new housing for sale to an estimated 36 low- and moderate-income individuals or families within three targeted Marion County neighborhoods. The 36 homes, aimed to help stabilize the neighborhoods’ housing market and remove neighborhood blight, will be ready for occupancy beginning in 2018.

The homes will be in three target areas of Marion County primed for market-based reinvestment and capable of supporting a corresponding housing strategy with specialized programming. Those areas are part of: Riverside neighborhood, Crown Hill neighborhood and St. Clair Place neighborhood. Near North Development Corporation (NNDC), Near East Area Renewal (NEAR) and BWI, LLC, in partnership with Flanner House, will facilitate the home building and rehabilitation in the target areas.

“In terms of transaction size, scope of partnerships and impact in the lives of people and the neighborhoods we serve, this is a historic transaction for INHP,” said Moira Carlstedt, president and CEO of INHP. “The NMTC program funds will provide the spark to ignite substantive change that aligns with the neighborhoods’ priorities.”

How the NMTC allocation will be used

In the Crown Hill neighborhood, NNDC already had plans to develop 12 homes in the coming year, and NMTC funds will allow them to increase that number to 22. “It’s always great to have additional resources available to do more good work in the neighborhoods we serve,” said Michael Osborne, NNDC president, “But one of the most exciting things about this program is its complementary, partnership nature. INHP secured resources not available to NNDC, NEAR or BWI, and we all bring the on-the-ground development experience and capacity that INHP needs to deploy the NMTC dollars. Together, we can have an impact that each of us individually could not achieve.”

NEAR will use NMTC funds to initiate The Teachers’ Village, developing the first 14 of more than 20 affordable houses in 18 months that will be marketed to Indianapolis Public School and urban charter school teachers. “The confidence of INHP in this critical project for teacher retention and neighborhood revitalization gives us the start we need to create what we believe will be a hallmark development in Indianapolis,” said John Franklin Hay, executive director of NEAR.

Within the Riverside neighborhood, a northwest community supported by Flanner House, approximately six homes will be developed. “Flanner House has a long history of creating pathways to equitable housing opportunity for residents of the northwest area, and we are honored to be partnering with INHP and BWI to continue the important work of supporting our community,” said Brandon Cosby, CEO of Flanner House.

“Creating pathways for families and individuals to achieve the dream of home ownership is a critical component to ensuring economic vitality in our neighborhoods,” said Gary Hobbs, CEO of BWI, LLC. “We look forward to working with Flanner House, neighborhood leaders, and residents to develop new housing assets that reflect the community’s vision, and are honored to be a part of this transformative initiative.”

Approximately six additional homes will be developed after the first year of implementation.

Layered strategies and next steps

INHP’s NMTC program is one of several comprehensive community support initiatives in these three target neighborhoods, each focused on different stages of housing stock revitalization. The NMTC program will deliver brand new or fully rehabilitated homes for sale, while new programs called Rehab Match and Home Value Guaranty will incentivize people to buy current vacant or abandoned homes in need of rehabilitation. In addition, the Stabilization Repair program will support existing homeowners in these neighborhoods by providing interest-free loans to those who need to make necessary repairs to keep their home safe and habitable. These new programs were made possible by a grant from Lilly Endowment Inc.  The special five-year, $26.6 million grant approved in 2015 is supporting INHP’s efforts to transform neighborhoods by helping low- and moderate-income families improve their homes or become homeowners.

“The NMTC program plays an important role in a neighborhood’s revitalization and addresses Mayor Hogsett’s goal of bringing back to life the more than 2,000 abandoned houses in Indianapolis,” said Carlstedt. “Homes located in a redeveloping area that are purchased and rehabbed increase the availability of safe, decent and affordable housing stock for families willing to invest in these neighborhoods.”

Development plans for these three areas are currently underway and INHP will begin accepting applications for Rehab Match, Home Value Guaranty and Stabilization Repair in late October.

How INHP received a New Markets Tax Credit allocation

The New Markets Tax Credit program was established by the federal government in 2000 to encourage the investment of private capital in low income areas. Through a competitive process, the federal government awards tax credit allocations to community development entities. INHP received its NMTC financing from the Housing Partnership Network (HPN), the community development entity of which INHP is a member.

Smith NMTC Associates served as consultant, leveraging their strategy – to use NMTCs as a source of funding for affordable single family homeownership – so HPN could provide INHP with a loan product with better-than-market rates and flexibility. US Bancorp Community Development Corporation purchased the tax credits in exchange for equity. HPN then leveraged additional debt to provide flexible, low-cost capital to its members. The capital provided the financing to support INHP’s $5 million allocation to initiate development plans.