Creating Affordable Housing in Rural America

Goshen is a town of roughly 3,300 people. Located just west of Visalia, the community sits in the heart of California’s Central Valley.

In October, local leaders celebrated the opening of Sequoia Commons, a two-phase development that’s brought 126 affordable homes to the town, including 22 permanent supportive housing (PSH) units for people exiting homelessness.

It’s built by Self-Help Enterprises, a longtime community development organization that was traditionally a family housing developer but has been integrating PSH units into all of its developments in the past several years to meet the region’s changing needs.

“The rise in the homeless counts has been dramatic,” says Tom Collishaw, president and CEO of the nonprofit. “It’s been going on for seven to 10 years, but it’s really ramped up recently.”

He and others will tell you that homelessness is not just an urban issue in America.

When people think about homelessness, the image that likely comes to mind is of someone on the street of a major city like Los Angeles, New York, or Washington, D.C., because that’s where people experiencing homelessness are concentrated. But, it’s a problem that’s cutting across suburbs and rural towns as well.

Goshen, located in Tulare County, is just one example. It’s a region of hardworking dairy farms and bountiful fruit crops, but it’s also an area that’s seeing more people without a roof over their heads. In 2020, the annual point-in-time count found 992 people experiencing homelessness in the county, including 420 who were chronically homeless. That’s a 22% jump from the year before and a 60% increase since 2011.

Nationally, on a single night in January 2020, about 18% of all people experiencing homelessness in America were in locations with largely rural Continuums of Care (CoC), local bodies that coordinate housing and services funding for individuals and families that are homeless. What’s more, these regions had the largest percentage of people experiencing homelessness in unsheltered locations, 44%, meaning they were on the street or living in places not suitable for human habitation. One reason for this is there are fewer emergency shelters and other services in rural areas.

Despite housing costs usually being lower in these areas, incomes also tend to be low, so residents are rent burdened much like struggling families in the cities.

The problem also stretches beyond single men and women. The highest rate of growth for student homelessness has been in rural America. Between the 2013–14 and 2016–17 school years, the number of homeless students in rural areas increased by 11% to over 162,000 students. By contrast, the number of homeless students nationwide experienced a more modest 3% increase, reported the Institute for Children, Poverty & Homelessness in 2019.

Despite the growing numbers, these individuals and families are still the “hidden homeless.”

“Homelessness is not as visible in the rural communities,” Collishaw says. “We’ve always known there’s an issue particularly in the agriculturally based communities. It’s always been a challenge with people doubling up and creating unsafe housing for farmworkers. The homeless challenge was there. Now, it’s more visible.”

The increased visibility is leading to a different conversation with politicians and others, who now see a need to address the problem.

The challenge becomes amassing the funds to develop needed affordable housing and providing the resident services in rural regions where resources are often limited.

Self-Help Enterprises’ Sequoia Commons development, with one-, two-, and three-bedroom units, is the organization’s latest effort. The $20 million first phase features 66 apartments, including eight PSH residences, and was completed last year. Collishaw and his team then assembled funding for the $21.7 million second phase, which opened in October with 60 units, including 14 more PSH homes.

Funding sources for the overall project included 4% federal and state low-income housing tax credits (LIHTCs), tax-exempt bonds, and the Federal Home Loan Bank of San Francisco’s Affordable Housing Program. In addition to allocating the credits and bonds, state officials also provided funds through its Affordable Housing and Sustainable Communities, Infill Infrastructure, and Multifamily Housing programs. Red Stone Equity Partners was the tax credit syndicator.

Collishaw’s team is at work on affordable housing projects in Madera and Mariposa, which also will include PSH units.

In addition, the organization has adopted a strategy of expanding partnerships with others working in the space, and it’s collaborating with nonprofit Salt+Light to build a tiny home village in Goshen, with approximately 60 modular homes for people exiting homelessness. The project is also unique because the developers are looking to fund the project without housing tax credits. Instead, they are hoping to leverage other state funds and private donations.

Equal Access for Rural Communities

Jessica Berzac is president of UPholdings, an affordable and supportive housing developer, owner, and manager. The firm has about 1,500 units across the country, with a good number of those being permanent supportive housing in stand-alone projects or integrated in larger affordable housing developments.

With offices in Lincolnwood, Illinois, and Fresno, California, UPholdings has been working in cities, suburbs, and rural communities for almost 20 years.

The firm recently closed on the financing for Finca Serena, an 80-unit development in Porterville in Tulare County. Half of the units will be affordable family housing, and half will be supportive housing for people exiting homelessness.

“There’s not this level of supportive housing within the county, which speaks to the increased demand that rural communities are seeing especially in the past decade and now amplified because of the pandemic,” Berzac says.

While many rural communities like Tulare County are seeing a spike in their homeless populations, it remains an enormous challenge to finance affordable housing. Projects often have to compete with those in the big, urban cities for limited resources.

“We’re just constantly advocating that rural communities have equal access to resources that the large cities do,” Berzac says.

The $32.4 million Finca Serena, which is being developed in partnership with Self-Help Enterprises, will be built with the help of multiple funding sources, including LIHTCs, tax-exempt bonds, and the federal HOME program. The tax credit investor is KeyBank Community Development Lending and Investment.

In addition, the project will receive funds from the state’s No Place Like Home loan program, which was created about five years ago and invests bond proceeds into the development of housing for people in need of mental health service and are experiencing homelessness across California.

“It’s one of the best programs I’ve seen for chronically homeless individuals,” Berzac says. “Without that program, there’s no way these projects would have that level of supportive units integrated.”

The development also will utilize rental subsidies from Kings/Tulare Homeless Alliance, the local CoC, and Tulare County Health and Human Services.

Another challenge for rural development is providing resident programs that are important, especially in developments with PSH units. UPholdings funds some services internally and also partners with local behavioral health and mental health agencies.

Opportunities for Families

Across the country, there’s LaVale, Maryland, a community of about 3,500 in Allegany County, not too far from the West Virginia state line.

It’s home to Magnolia Greene, a new development by Woda Cooper Cos., a leading affordable housing firm that’s active in big cities and rural towns across 16 states. It is ranked the No. 1 owner by the Council for Affordable and Rural Housing this year, with more than 9,100 rural units.

Completed earlier this year, the 40-unit property is a good example of a rural housing development aimed at families, with all two- and three-bedroom units. Thirty-six affordable apartments serve residents earning between 30% and 60% of the area median income, and four are market-rate units, says Zebulin Culver, assistant vice president, development, at Woda Cooper.

The approximately $10 million development, which is financed with LIHTC equity from RBC Community Investments and loans from Huntington National Bank and RiverHills Bank, is likely the first housing tax credit development in LaVale although there are several in the county in the larger cities of Cumberland and Frostburg.

The project provides important housing options for families, allowing them to live in a community that has good economic opportunities and solid schools, which gave it a boost in the competition for housing tax credits.

The fact that Magnolia Green exists is special, according to Culver.

“It’s increasingly difficult to get deals done in these rural areas because a lot of the typical tax credit investors are looking at more populated areas for a variety reasons: They can do bigger deals. They get better rents. There’s just a variety of incentives,” he says. “We want to make sure we don’t leave these rural communities behind. They are facing the same problem that everyone is facing except they don’t have the resources to counter it.”

WHEDA Launches Workforce Housing Program

Many state housing finance agencies (HFAs) dedicate a portion of their annual LIHTC authority to rural projects. It helps ensure that affordable housing is built in different parts of a state.

However, many of the banks that invest in housing credits need to target deals in the big metro areas where they have a presence to meet their Community Reinvestment Act obligations.

On the positive side, Fannie Mae and Freddie Mac are poised to invest more in housing tax credits next year. Federal officials recently increased the amount that each government-sponsored enterprise can invest in LIHTCs to $850 million annually, up from $500 million each. Within the new cap, any investments above $425 million in a given year are required to be in rural areas or other markets that have been identified as having difficulty attracting investors.

Affordable housing supporters also are hopeful that new funding for housing, including rural deals, will be included in the budget reconciliation process occurring in Congress.

“We have an unprecedented opportunity to secure the funding needed to help support the development of and preservation of affordable housing in rural markets that need it so desperately,” says Will Eckstein, senior vice president at Greystone, a firm that provides development and financial services, including many rural deals, each year. “We encourage constituents to contact members of Congress and their staff encouraging them to get it done. If it happens, it would be completely transformative.”

Many state housing finance agencies (HFAs), including the Wisconsin Housing and Economic Development Authority (WHEDA) dedicate a portion of their annual LIHTC authority to rural projects. It helps ensure that affordable housing is built in different communities across the state.

Recognizing that a large portion of Wisconsin is rural, WHEDA also launched a rural affordable housing workforce housing initiative last year that includes a workforce housing pilot as well as supplemental financing tools statewide.

“We were hearing from legislators, communities, municipalities about their concerns related to workforce housing in rural communities,” says Jennifer Harrington, chief operating officer at WHEDA. “We think our initiative is different from what anyone else is doing based on our pilot process.”

The pilot is underway in three communities—Chequamegon Bay, Door County, and Marinette County—that were selected from 13 applicants based on several factors, including the need for workforce housing, local momentum and commitment to housing, and the potential to leverage other resources.

“Part of what we’re trying to do from a pilot perspective is figure out how we can address rural housing across the state where WHEDA isn’t the only answer,” Harrington says.

In each community, the pilot will involve three general phases—research and community engagement, idea generation, and then implementation. Door County, a popular summer vacation destination that has struggled to find seasonal workers because of limited housing options, is the first to get started. It’s exploring several concepts, including establishing a fund that subsidizes the cost of installing infrastructure and a possible design and innovation competition to generate new housing models.

“We hope we get some good ideas from these communities,” Harrington says. “Beyond WHEDA, we want other people engaged in wanting to solve the problem and that the solutions are scalable across the state. Our goal is to come up with ideas and present them to other communities.”

WHEDA’s rural workforce housing initiative, which is targeting housing for those earning between about 60% to 120% of the area median income, goes beyond the pilot. The authority has also expanded and improved its single-family loan options and is providing more funding for multifamily housing in rural areas.

A New Model for Agricultural Workers

In Florida, Steven Kirk jokes that he didn’t plan on being an expert in farmworker housing, but there’s no question that’s what he’s become after years of working to meet the needs of agricultural workers and rural communities.

This year, Rural Neighborhoods and Kirk unveiled the third generation of a shared housing model to serve people with H-2A visas and other unaccompanied workers in Florida’s Miami-Dade County. For years, hotels and resorts have brought in foreign workers to meet seasonal demand. The same thing is happening in Florida’s agricultural industry, says Kirk, president of the nonprofit developer.

The H-2A program allows people to temporarily come to the United States to work in nurseries and row crops. These visa holders have become a growing part of the labor force and now number an estimated 30,000 in Florida.
“These workers tend to end up in what I describe as the ‘last, least housing’ in a community, meaning it’s the last housing to rent and the least in quality,” Kirk says.

They’ve often rented rooms in aging motels along U.S. Route 1, but those facilities lack kitchens, and they can still be costly to lease. Local officials also are concerned there’s less oversight at the motels than at managed apartments.
Rural Neighborhoods has been working on an alternative model. The new Casa OMICA features 32 two-bedroom, two-bathroom units that house four people in a unit.

Kirk stresses that the development is built as a traditional apartment community and not a dormitory or barracks.

“It may not be the least expensive cost per bed, but it’s the most rational cost per bed,” he says, explaining that he’s planning for the possibility that the community’s housing needs will change years from now. With its two-bedroom units, Casa OMICA will be able to convert to family apartments with little change to the design.

One of the largest nurseries in the Southeast with more than 1,200 employees has leased 100 units at Casa OMICA.

Under the H-2A program, an employer is required to provide housing, so a local nursery has a master agreement with Rural Neighborhoods. To protect workers, the nonprofit offers individual leases to residents.

Kirk notes that Casa OMICA and other Rural Neighborhood properties are not solely for agricultural workers. Headquartered in the Homestead area of Miami-Dade County and a multifamily housing footprint from the Florida Keys to Gainesville, Rural Neighborhoods has a portfolio of more than 2,100 single-family, duplex, garden, and mid-rise units. More than 5,000 people resident in housing development by Rural Neighborhoods.

“Depending on the community, we are increasingly finding that older individuals who have few or no family members in the community approach us to use this shared housing to meet their needs,” he says.

He paints the picture of a 58-year-old who may work as a cook at a local restaurant. To form a household and afford housing, the cook would need to find other individuals to live with and negotiate who pays for rental and utility deposits and what happens one housemate moves out.

At Casa OMICA, a resident pays $250 a month for a bed, utilities, and other amenities. “We’re finding it prevents some homelessness,” Kirk says.

It’s also important to note that Rural Neighborhoods is able to manage these shared housing communities efficiently because it constructs these properties as part of larger rental communities. For Casa OMICA, that campus includes 511 single-family townhouse rental apartments and 144 SRO beds operated by the organization.

The approximately $7 million Casa OMICA was financed with funding from Florida Housing Finance Corp.’s State Apartment Incentive Loan program, better known as SAIL, complemented with funds from Federal Home Loan Bank Affordable Housing Program sponsored from South State Bank. “FHFC has a more than 20-year commitment toward evolving innovation in agricultural housing,” Kirk remarks. “It’s unmatched at targeting special needs in our state.”

Two additional shared housing projects are underway. Casa Amigos is under construction in rural Collier County and Casa Delores Huerta will expand the model in Miami-Dade in 2022.