BRISTOW, VA . - A small housing development in eastern Virginia is offering big discounts on homeownership to teachers, social workers, police officers, and other workers who live in the area but don’t earn enough to buy homes at prevailing market prices.

The 19-unit townhome development, put together by local nonprofit Catholics for Housing (CFH), is meeting workforce housing needs the same way some other projects have: by combining market-rate and subsidized units on the same property, and allowing proceeds from market-rate sales to help fund the rest of the units.

What’s unusual about this project, designed to serve those with incomes at 80 percent of AMI and below, is the scale of the discounts: The townhouses are being sold for more than $100,000 below market prices for similar units, which run from $215,000 to $339,000 in price.

All the units, including the 24 single-family homes on the same property—which range in price from a little less than $440,000 to more than $530,000—are being constructed by luxury homebuilder NV Homes, which worked in partnership with CFH.

The nonprofit purchased the 14.4-acre property at a below-market price of about $770,000 from the Benedectine Sisters of Virginia. With the assistance of Enterprise Homes and Enterprise Financial Services, it then handled the permitting, grading, and installation of infrastructure to get the lots ready for construction.

The lots are being purchased and the construction financed by NV Homes, which has already completed the single-family homes and is scheduled to complete the townhomes by October. “They really stepped up to the plate and participated in this deal,” said Christopher Johnston, executive director for CFH. “Not only will they get a return [on the sale of the townhouses], but we’re going to hand them 19 pre-qualified homebuyers. They weren’t going to have any marketing costs, no model home, none of that.”

Prospective purchasers include a teacher who works at a middle school down the street and a police officer who will be patrolling his own neighborhood once he moves in.

CFH, which found and qualified 22 buyers, also worked with local officials to put together loan subsidies that will lower borrowing and downpayment costs. The Virginia Housing Development Authority agreed to help provide $3 million in permanent financing at rates up to 1 percent below market rates, plus another $236,500 in second-trust financing. The project also tapped $360,000 in HOME funds and a $500,000 grant from Prince William County, which was provided after CFH officials met individually with each county supervisor to explain the project.

Although all of the initial buyers must meet HOME income requirements, the development isn’t imposing any income restrictions on resales. Instead, it is restricting the amount of equity that sellers can keep, depending on how long they remain in their properties prior to selling. Subsidized buyers who sell within the first three years, for instance, will have to return 88 percent of any remaining equity to CFH.

“This is a complete disincentive to flip the things,” said Johnston, who added that CFH may be willing to ease some of its restrictions for owners who later sell to other qualified buyers. And the nonprofit expects its roughly $1.2 million developers’ fee from the project to create more affordable or workforce projects in the area.

Additional project information, as provided in application by the nominator.

Q. Why does the nominated project deserve to be recognized based on the award criteria of this contest?

A. Linton Hall Manor is the director of a partnership between Catholics for Housing (CFH), a not-for-profit sponsor/developer with a vision of creating affordable workforce housing, and a for-profit builder, NV Homes. Working closely with local government, the overall project provides 43 newly constructed homes: 23 single-family detached homes, similar to those in surrounding communities being built and sold at market rates, and 19 town homes that are integral to the overall development and which have all been sold, via proffer agreement, to police, firefighters, teachers, and other civil workers in Prince William County, Va. These categories of the workforce are the backbone of any community, and are those who are sorely needed, yet less likely to be able to afford to live anywhere near where they work in the Northern Virginia area of metropolitan Washington, D.C.

Q. How does this project represent an innovative solution to a specific development challenge?

A. CFH is a small, not-for-profit organization with a limited staff. In order to create this project, significant partnerships had to be created with contractors, a builder, lenders, and both paid and pro-bono consultants, who agreed that this type of housing was needed for the good of the entire community. As a home builder, NV Homes wanted to purchase finished lots, and as a small nonprofit, CFH did not want to take on the supervision of building construction. Therefore, CFH hired the infrastructure contractor for the entire development, and NV Homes purchased the improved lots and built all the homes. In return, CFH provided 19 eligible buyers ready to execute sales contracts.

Further, in order to “fill the gap” between what buyers earning 80 percent of the area median income could afford and the retail price needed to cover costs, CFH staff worked with federal, state, and local housing officials to obtain favorable permanent financing. To maintain the units as affordable and to prevent flipping, provisions for shared equity were written into deeds of trust.