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Volume 1, Issue 3, 2001   Federal Reserve Bank of Dallas

Building for Special Needs in East Texas


Left to right: J. C. Hughes, city manager, Nacogdoches; Andrew Moore and Jerry Moore, Moore Building Associates; Jimmy Mize, Regions Bank; Doug Dowler, Pineywoods; Ron Collins, Regions Bank; and Richard Johnson, former mayor of Nacogdoches.

Riddle: What does it take to build 20 houses in two East Texas communities and make them affordable, accessible to people with disabilities and an asset to the community? Answer: A dedicated nonprofit, a qualified builder, a banker willing to step in when needed, and cooperative state and local governments.

For the past six years, Pineywoods HOME Team, a nonprofit community housing development organization (CHDO), has been building affordable housing in East Texas.

When a survey indicated that Lufkin and Nacogdoches needed affordable housing that could accommodate individuals with special needs, Pineywoods set out to build 20 single-family rental houses that meet universal design accessibility standards. The houses feature wide doorways, low countertops and showers that can accommodate wheelchairs.

Pineywoods purchased 10 contiguous lots in Lufkin and 10 lots in three different locations in Nacogdoches. To construct the homes, Pineywoods hired Moore Building Associates, an experienced local firm. The almost $1.8 million project was financed with three no-interest loans from the Texas Department of Housing and Community Affairs (TDHCA), in exchange for making the rents affordable and reserving half the units for people with disabilities. Eighteen of the units must be rented to people at or below 60 percent of median income; two can be rented to people at up to 80 percent of median income.

The first TDHCA loan, for interim construction, was $800,000 from the Housing Trust Fund. The loan drawdown was based on the percentage of the project completed. When construction was wrapped up, the note converted into a no-interest permanent loan with 30-year amortization. TDHCA made the second loan with $600,000 in HOME funds; Pineywoods will pay it back over 30 years at zero interest. The third loan, for $374,414 from HOME funds, will help Pineywoods manage its operating cash flow. Repayment will be based on the project's net income after the other TDHCA loans have been repaid.

During construction, Pineywoods quickly realized the builder had to be paid before the draw on TDHCA came in. Faced with this dilemma, Pineywoods turned to Regions Bank, which stepped up to the plate with a $100,000 line of credit at market rate.

Doug Dowler, executive director of Pineywoods, praises Regions Bank for coming to the rescue. "We had builders to pay and payroll to meet. The line of credit provided us with the immediate funds we needed while we waited to receive the TDHCA draw."

The bank, in turn, recognizes Dowler's efforts. "Normally projects like these encounter many problems. Doug always found a way for making things work," says Regions Bank executive vice president Jimmy Mize. "Pineywoods has proved that projects like these can work."

City officials in Lufkin and Nacogdoches also wanted to help make the housing developments a reality. According to Lufkin Mayor Louis Bronaugh, affordable housing has been a top priority for his city for the past 18 years. The city waived building permit and tap fees, reducing costs by thousands of dollars.

Nacogdoches waived building and tap fees in addition to constructing new streets for two of the development sites. "The rental units are a great asset to Nacogdoches," says City Manager J. C. Hughes. "The partners in the development are addressing the problem of the lack of affordable housing and are making solutions possible."

Construction on the houses was completed in early May. Today, all are rented, and 85 people are on the waiting list—a reflection, Dowler says, of the need for this type of housing.

Pineywoods was recently selected as a Rural LISC (Local Initiatives Support Corp.) CDC Partner, which will increase its ability to develop affordable housing. Dowler is working with the Department of Housing and Urban Development on a plan to build much-needed affordable housing in a multicounty area in East Texas.

Fast Facts

Accessible, Single-Family Rental Housing in East Texas

When those at Pineywoods HOME Team saw the need for affordable housing that could accommodate people with special needs, they rounded up partners and got to work. Pineywoods, in partnership with Regions Bank, Moore Building Associates, TDHCA, and the cities of Lufkin and Nacogdoches, developed 20 single-family rental houses. The houses meet universal design accessibility standards. In exchange for no-interest financing from the TDHCA, rents and utilities on 18 houses must be affordable to people at or below 60 percent of the median income.

Development Financing  
Project cost to purchase 20 lots and construct 20 houses $1,776,214
TDHCA  
  • Interim construction loan using Housing Trust Fund
$800,000
  • HOME funds used for permanent loan with a 30-year term
$600,000
  • HOME funds used for a permanent loan
$374,414
Pineywoods HOME team $1,800
  $1,776,214


 
Regions Bank
Line of credit at market rate interest
$100,000
City of Lufkin
Waived building permits and tap fees
 
City of Nacogdoches
Waived building permits, tap fees and constructed two new streets
 

Rural LISC Welcomes the Pineywoods HOME Team

Pineywoods HOME Team, a community development corporation based in Lufkin, Texas, was recently selected as a Rural LISC CDC Partner. Rural LISC works with 76 such partners across the country to develop affordable housing and promote economic development in rural communities.

When it started in 1995, Rural LISC's Texas efforts were concentrated in the Rio Grande Valley. This year's move into East Texas has occurred with support from the Meadows Foundation and Bank of America Foundation.

Rural LISC helps its CDC Partners increase their capacity to build affordable housing by offering grants, financing predevelopment and construction costs, investing equity in development, and providing training and technical support. Over the past six years, Rural LISC and its affiliate nonprofit, the National Equity Fund, have invested more than $281.3 million in and through Partner CDCs, leveraging more than $388 million in financing. The result has been almost 7,000 homes, more than 1 million square feet of commercial, industrial and community facilities, 11 child care facilities and 134 small business loans.

Rural LISC expects to provide Pineywoods HOME Team with direct technical assistance, as well as support for a lease-to-own home-ownership project and a multifamily rental housing development. Rural LISC also plans to assist Pineywoods HOME Team with the formation of a community development financial institution and a broad coalition to build affordable housing in a multicounty area in East Texas.


Go to www.ruralisc.org Off-site page to learn more about the resources Rural LISC offers.


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e-Perspectives, Volume 1, Issue 3, 2001

Federal Reserve Bank of Dallas Off-site page
Community Development Office Send an e-mail
P.O. Box 655906, Dallas, Texas 75265-5906
214-922-5377
Gloria Vasquez Brown Send an e-mail
Vice President
    Nancy C. Vickrey
Assistant Vice President and
Community Development Officer
Jackie Hoyer Send an e-mail
Houston Branch
Senior Community Development Advisor
    Veronica Garza
Community Development Specialist
Toby Cook
Community Development Specialist
    Diana Garza
Community Development Specialist
The views expressed are the authors' and should not be attributed to the Federal Reserve Bank of Dallas or the Federal Reserve System. Articles may be reprinted on the condition that the source is credited and a copy is provided to the Community Development Office.

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