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Using HOME

Family Rental Housing
Indianapolis, Indiana

The Ohio Street Townhomes occupy a formerly vacant lot in the Highland-Brookside neighborhood.

The Highland-Brookside neighborhood of Indianapolis was facing a variety of problems by the time HOME funds first became available in 1992. The area had a high proportion of substandard housing and few owner-occupants, and had lost some 35 percent of its population since the 1950s. A proposal to build 20 new rental units for low-income households and to help the tenants move to homeownership within two years was an effective and welcome use of HOME funds.

HOME funds provided by the City of Indianapolis became a key element in funding the Ohio Street Townhomes, a development with a unique emphasis on tenant empowerment. The project was co-developed by Eastside Community Investments, Inc. (ECI), an experienced nonprofit housing developer and qualified community housing development organization (CHDO), and Pedcor Investments, Inc., a for-profit firm experienced in using low-income housing tax credits for new construction.

The primary challenge was structuring the project financing to support homeownership opportunities for the low-income tenants. The resulting funding structure provides for home ownership development accounts (HODAs) through which tenants can earn credits that help them move into homeownership.

Development costs for the townhomes totaled $1,661,230. In addition to the HOME grant and community development block grant (CDBG) funds, the city provided a 10-year tax abatement, the first ever granted to a residential development. Funding was obtained from a variety of sources, and $1 million in equity was generated by the sale of low-income housing tax credits to two bank subsidiaries. Most important, the equity investors agreed to use the cash flow from the project to fund the HODAs rather than receive distributions as limited partners.

The project site and design are well suited to residents' needs. The site is approximately one mile from downtown, close to neighborhood schools, shopping, entertainment, and transportation. There are 12 three-bedroom, 6 two-bedroom, and 2 one-bedroom units (both of which are adaptable for physically handicapped persons). The site includes substantial green space and off-street parking.

All the units are occupied by households with incomes at or below 60 percent of median; 20 percent of the households are at or below 50 percent of median income. To earn credits of up to $1,000 in their HODAs, tenants must agree to participate in credit and homeownership counseling provided by ECI in conjunction with Inland Mortgage Corporation. Through this counseling, every resident develops a plan to purchase a home within 24 months. Home ownership specialists work with the families throughout this period and beyond to ensure success.

The resident empowerment mechanism offered through the HODA program is a unique approach to achieving homeownership for low-income families. Because tenants must leave Ohio Street Townhomes and move to homeownership within two years, affordable rental housing can be used by many families while they are assisted in building assets they need to become homeowners.

The development of the Ohio Street Townhomes transformed a vacant parcel in a neighborhood in great need of revitalization. At the same time it presents a model for physical development on an urban infill site and an important financial structure to promote low-income homeownership.

Contact: Sherry Kohlmeyer, Administrator, Housing and Development Services, 317/327-5894

Copyright 1997 - 1998 - 1999 - 2000
Affordable Housing and HOME
National Association of Housing and Redevelopment Officials (NAHRO)
630 Eye Street, NW
Washington, DC 20001-3736
Telephone: (202) 289-3500
Fax: (202) 289-4949