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December Markham’s kids grew up in the house she rents from the city of Wichita. Over the years, though, she’s seen it deteriorate.
An unreliable heater. Flooring that is starting to peel, revealing nails that threaten her feet. She’s concerned that mold is growing on her bedroom wall.
“I like my house,” Markham said. “There’s just a lot of stuff wrong.”
Markham’s home is one of 352 single-family homes that the city owns and rents to income-eligible residents. Many of the houses need significant rehabilitation, according to Sally Stang, the director of Wichita’s Housing and Community Services Department.
“HUD (U.S. Department of Housing and Urban Development) and Congress have underfunded public housing for decades,” Stang said. “And it has deteriorated for decades.”
But a new $5 million affordable housing fund the city is considering could invest in rehabilitating these homes.
“If we can invest in rehabilitating them, we could then sell them and then have that money come back in to refund the affordable housing fund,” Stang said.
A plan to rehab and sell the city’s single-family public housing homes is preliminary. But the creation of an affordable housing fund is moving forward. For the past three months, a committee of nonprofit directors, philanthropy leaders and developers has been discussing how the city can use $5 million in American Rescue Plan Act funds to spur access to affordable housing in Wichita.
The funding is part of $72.4 million in ARPA funds the city has been allocated.
The Affordable Housing Fund Technical Advisory Committee is expected to present recommendations on creating an affordable housing fund to the City Council in December, City Manager Robert Layton said at a Nov. 16 City Council meeting.
“(Affordable housing funds) are emerging across the country,” said Andy Pfister, a senior associate with Development Strategies, a St. Louis-based consulting firm advising the city on the creation of such a fund.
What is an affordable housing fund?
Affordable housing funds typically dedicate dollars to expanding the production of quality housing development.
Their funding sources can vary but they typically combine public dollars with philanthropic or grant money. Affordable housing funds that have “ongoing dedicated sources of public funding” are considered affordable housing trust funds, according to the Housing Trust Fund Project.
The money can go toward a variety of affordable housing efforts, depending on the city’s needs, Pfister said. Across the country, these institutions put their dollars toward developing affordable units for renters and homebuyers, providing financial assistance for homebuyers and incentivizing landlords to accept housing vouchers, among other things.
Pfister added that affordable housing funds in municipalities typically distribute dollars in two ways:
- Grants to third-party organizations, like nonprofits, that provide services like homebuyer education or undergo the development of affordable housing.
- Low or no-interest loans to organizations, including nonprofits and for-profits, to develop or rehabilitate housing.
Some funds also act as an “equity product” and invest in an affordable housing development that expects significantly lower profits, Pfister said.
The city of Tulsa kicked off its affordable housing trust fund in February 2021 with $4 million from the city and $5 million in philanthropic donations, said Kristin Maun, director of housing development and incentives at the Tulsa Authority for Economic Opportunity. The fund offers grants to agencies — all nonprofits so far — to oversee programs that incentivize potential homebuyers and landlords renting to low-income tenants. The fund also offers no-interest loans to developers of low-income rental housing that can’t secure enough funding on their own.
So far, Tulsa’s housing trust fund has issued $800,000 in grants to start a landlord guarantee fund, which reimburses landlords who rent to low-income tenants or tenants with past evictions for unpaid rent, utilities or property damage. The fund also issued its first loan to a local Black-owned business to rehabilitate 10 single-family homes.
“It does not have to be a small local business to qualify,” Maun said. “But I do think it’s a good example of how an affordable housing trust fund can be a more flexible tool, because smaller developers like that are always going to struggle to access resources like tax credits.”
Why an affordable housing fund in Wichita?
Wichita can’t address the need for affordable housing with only the state and federal funding it receives, city officials said.
In 2021, the city of Wichita needed 44,000 more affordable housing units than it had, according to an analysis by Development Strategies. Stang said her estimate is closer to 50,000.
Meanwhile, the U.S. Department of Housing and Urban Development granted the city of Wichita about $4.5 million for affordable housing development in 2021. That was enough to add four new rental units and 19 new homeowner housing units, according to the city’s 2021-2022 Annual Action Plan. The dollars also helped renovate 50 rental units and assist 143 households with emergency home repairs.
These federal funds make “very little dent” in the city’s need for housing, Stang said.
Another popular tool to incentivize affordable housing — low-income housing tax credits doled out by the Kansas Housing Resources Corp. — can be “extremely, extremely, extremely competitive” or require a lot of red tape, Stang added.
The $5 million affordable housing fund could renovate or rehabilitate up to 40 existing homes, offer repairs for 130 homeowners and assist 100 households through homeowner services.
Having an affordable housing fund of the city’s own “provides us a little bit of flexibility,” said Scott Wadle, director of the Wichita-Sedgwick County Metropolitan Area Planning Department. It can also allow the city to focus development in the city center, a priority that is laid out in the Places for People Plan.
“Infill development is important to Wichita residents because it has shown up in the Places for People Plan, through the Comprehensive Plan, through the neighborhood plans that we’ve done,” Wadle said. “It’s a theme that runs through all of them.”
Next steps for the affordable housing advisory committee
After affordable housing shot to the top of Wichitans’ priorities for how to spend American Rescue Plan Act money this summer, the city formed an advisory committee to Layton to consider the next steps for forming an affordable housing fund.
The committee of about 15 people includes representatives from nonprofit organizations focused on neighborhoods and housing, developers and business community representatives. They’re tasked with recommending to the city manager what types of housing, services and income levels the affordable housing fund will support.
Committee members have to “weigh the tradeoffs of focusing on new construction, which uses the funds more quickly just because of economics, versus focusing on home repair,” which can cost less per unit, Pfister said. The committee has also weighed whether the affordable housing fund should invest in properties for rent or homeownership.
Byron Adrian, president/CEO of Mennonite Housing, sits on the advisory committee. He’s pushing for the trust fund to put money toward home repair and new construction.
Adrian said Mennonite Housing sees “a very consistent, strong demand” for homeownership, leading him to push for new construction.
“There’s such demand in that area that I can see that new construction is where we can make a big impact,” he added.
The committee could also recommend the locations of new projects and what types of houses are a priority for funding. Pfister said prioritizing projects that rehabilitate the city’s 352 units of single-family public housing would make the affordable housing fund more sustainable by putting proceeds from the sale of the homes back into the affordable housing fund. The rehabilitated homes could also remain affordable, depending on the types of use restrictions the city assigns to the homes.
“If this is successful, it may become a more sustainable effort over time with philanthropy and the ability to get other grants,” Pfister said. “But it’s important to get it going well — get those first projects done well.”