Affordable Housing Plan Discussed at City Council Work Session, Project in Development


Abe Frato

Eight lots owned by the City would be developed into affordable housing by Revitalization Strategies Group, Inc.

On Monday, City Council held a work session for an affordable housing proposal created by the affordable housing subcommittee in the social equity committee and Revitalization Strategies Group, Inc. City Council and affordable housing subgroup members Ray English, Eboni Johnson, and Elizabeth Meadows led the work session. The public was invited to ask questions and view a presentation on the work done by the subgroup and plans for the proposal.

Throughout 2021 and 2022, the affordable housing subgroup worked to find a developer that would suit the community’s needs. They spoke with Cleveland Housing Network, Woda Cooper Companies, Inc., The Community Builders, and New Sunrise Properties, Inc., before building a proposal with the current partner.

“We got really excited when we first talked with CHN Housing Partners of Cleveland,” English said. “We talked about doing 30 homes with a nine percent low income housing tax credit. And that tax credit basically would have created a huge amount of funding for a large, affordable, owner-owned housing project. They thought we would be eligible for this, but when they looked at it, it turned out we just aren’t eligible. We’re considered a rural community, and that program is only for cities.”

The affordable housing subgroup eventually decided to work with Revitalization Strategies Group, Inc., a developer group led by Michael Bowen. Bowen has 26 years of experience building affordable housing. Since starting his own company in 2017, Bowen has developed about 750 affordable housing units. RSG would build eight rent-to own houses on land owned by the City. The houses would be both accessible and sustainable as well as built in existing neighborhoods. Examples of possible house layouts for a plot at 878 Kimberly Circle were included in the proposal draft. The proposed layouts were two-bedroom, 1.5 bathroom, and 1,462 square feet total, or three bedroom, two bathroom and a total of 1,668 square feet, featuring an open floor plan and covered patio in the backyard.

Before RSG could begin bringing together funding and building the properties, City Council would need to pass an ordinance and enter into an agreement with the company. After the agreement is passed, RSG would be responsible for securing funding for the project. RSG would make use of a variety of funding sources, including applying to grants, working with investors who buy low income housing tax credits, and other investment sources. In the proposal, Bowen outlined five potential sources of funding for the project. Bank financing would account for the majority of funding with $1,200,000 sourced from private banks. The project hopes to earn $520,000 from the Housing Trust Fund, a federal program that allocates funds to states which then allocate money to qualifying projects. In 2022, the Ohio Housing Trust Fund allocated $53 million to various projects across the state.

Additional finances, in the approximate amount of $237,200, would be sourced from the Federal Housing Lending Bank. The Federal Housing Lending Bank is a federally organized group of private banks that provide funding for affordable housing projects. The Federal Housing Lending Bank does not use taxpayer dollars.

According to the proposal, Housing Development Assistance Programs would provide $186,000 for the project. HDAPs provide competitive loans and grants for programs that serve households at or below 50 percent of the area median income.

Oberlin is a part of the Cleveland-Elyria metropolitan statistical area. The median four member household income for the area is $85,400. Fifty percent below the median for a four member household is $42,700. Income can be adjusted based on the number of individuals in the household.

The City of Oberlin would provide the smallest portion of funds in the total finances of the project — $20,000 of American Rescue Plan Act funding per house as a loan.

Despite the $2.3 million price tag of the project, the City is only contributing $160,000. Michael Bowen and his team assume the majority of the financial risk in the project.

“He would take out a loan of over a million dollars to make this whole thing happen, and that is part of his risk in this,” English said. “He has to perform. And to get a loan like that, he would pledge certain assets of his own, where if for any reason he defaulted on the loan or couldn’t come through with payments, he would potentially be in a position where he could lose assets. If this somehow failed like that, which I think is unlikely if he’s able to put together the initial funding of about $2.3 million, then we would have expended ARPA funds when we could have used those funds for something else that might have also improved housing in the community.”

Once RSG has secured funding for the project, the City would transfer the land for the project to RSG. Bowen had requested tax abatement from the City, which would allow RSG to be exempt from property taxes while his company owned the property as well as allowing families who assume ownership to be exempt. English said that he thinks it is unlikely that the City would provide tax abatement.

According to the proposal draft, RSG could begin building in the first quarter of 2024.

When the houses are completed, families will be selected to occupy the homes. According to English, it has been projected that construction could finish in as little as one year after financial closing. While the selection parameters have not been negotiated with RSG yet, English said that Oberlin residents and former Oberlin residents would receive preference for housing.

“A preference will be given to either current Oberlin residents who are rent-burdened, who are paying a much too high percentage of their income for housing, or to former Oberlin residents who want to return here and want to assume home ownership,” English said at the work session.

Additional parameters will likely come from income, as many federal and state funding sources set income limits on who projects that are funded can serve.

“The financing that this company puts together would determine what level of income people would be eligible for,” English said. “And it could be, say, 80 percent of the area median income, it could be 100 percent, or the like. So people would qualify for this, they could apply and be selected and it would be based on their income.”

The selected families would participate in programs to help them prepare for assuming ownership of the home. Within five years, the families would assume a long-term mortgage and transition from renting to owning their home.

“They would pay an affordable rent, which is, again, based on their income, ensuring that they are not rent-burdened by having to pay more than they can really afford for rent,” English said. “Their mortgage payment would be tied and similar to their payment for their rent.” English clarified that the mortgage would not be for the full cost that it took to build the home, but instead would be in the range of $125–150,000.

Attendees expressed both gratitude and concerns to the Council during the work session.

“I would like to thank the social equity committee for their work on this,” William Jindra, a resident of Oberlin, said at the work session. “I would like to see the city take a holistic approach at looking at housing issues. There’s a great need across the spectrum, both for [low-cost,] affordable homes and older people that want to downsize.”