News for July 2023
RURAL DEVELOPMENT, INC. RECEIVES FUNDING TO PILOT RURAL HOMES PROGRAM
Program will Convert Vacant Properties into Affordable Homes for Low-Income Homebuyers
Greenfield, MA, July 5, 2023 – Rural Development, Inc., (RDI) the non-profit affordable housing development affiliate of the Franklin County Regional Housing and Redevelopment Authority, has received funding from MassHousing and the Mass Clean Energy Center (MassCEC) to purchase and renovate a vacant house in Greenfield, converting it to an energy-efficient affordable home for a low-income, first-time homebuyer. The 3-bedroom home, located in a quiet Greenfield neighborhood, will be the first project completed in the Rural Homes Program, a new initiative being launched by RDI in partnership with the Attorney General Office’s Neighborhood Renewal Division, Franklin Regional Council of Governments, the City of Greenfield, and other Franklin County municipalities.
The program will focus on rehabilitating vacant, distressed properties, removing health, safety, and
code issues as well as neighborhood blight. Franklin County has the highest percentage of homes built pre-1940 among Western MA counties. Deferred maintenance of older homes, combined with hazardous materials like lead and asbestos, can pose serious health and safety concerns and require costly repairs. Several municipalities in Franklin County have been working with the AGO to address abandoned properties. Through a court appointed receiver, these properties are brought back up to code and placed back on the market.
To create affordable housing through receivership, RDI and the AGO are piloting a process where RDI takes ownership of a home prior to rehabilitation, allowing the non-profit to utilize affordable housing programs to fund the renovations. “The cost to rehabilitate these properties is higher than what we could sell them for at an affordable price,” explains Gina Govoni, RDI’s Executive Director. “That’s why subsidy from sources like MassHousing and MassCEC are critical.” The project is receiving a grant from MassHousing’s Neighborhood Stabilization Program to help cover acquisition and rehab costs, and from MassCEC to pay for energy efficiency improvements and converting the home from oil to electric heat pumps. Additional funds will come from a construction loan to be paid back when the home is sold, and other possible subsidy sources.
While Franklin County home sale prices are low compared to many areas in the State, average wages in the County rank lowest in the State. “In the past few years, we have seen home sale prices rise much faster than household incomes,” says Govoni. The annual median single family home sale price in Franklin County rose by 37% since 2019, to $310,000 in 2022 (according to MA Association of Realtors market data), while median household incomes have only risen by 7% (according to U.S. Census American Community Survey data). RDI plans to target households earning no more than 80% of Franklin County’s median income. “A family of four with an annual income of $75,000, for instance, will struggle to find a home in their price range that does not need costly renovations, which are difficult for a new homeowner to afford.”
The Rural Homes Program seeks to create quality, energy efficient homes that are move-in ready at an affordable price. Prospective homebuyers will need to go through an application process to verify eligibility and complete a first-time homebuyer course. RDI plans to work with community partners to help market the opportunity, and especially to engage first-time homebuyers of color, who, because of decades of discriminatory practices, have been shut out of homeownership and the generational wealth building that comes with it.
In exchange for purchasing the home at a below-market value, the home will come with a 15-year affordability restriction. If resold within 15 years, it must be sold at an affordable price to another low-income homebuyer. “The value of the home increases over time, and the homeowner gains equity, just at a restricted amount,” explains Govoni. After 15 years, the restriction is lifted, and the home can be sold at market value. Since 1991, RDI has created over 100 affordable homeownership opportunities in the County. Wisdom Way Solar Village in Greenfield is RDI’s most recent homeownership development, completed in 2012. The Recession and lack of State funding stalled further affordable homeownership development until now.
RDI plans to expand the program to other communities in Franklin County. Initial seed funding to hire program staff came from a New England Rural Health Association grant sponsored by FRCOG and the North Quabbin Community Coalition. The MassCEC award includes funding to support program staff for several years and will help RDI learn best practices in converting homes from fossil fuels and improving energy efficiency. “We see this as a model that can work in all Franklin County communities, and in particular our smaller towns where other forms of affordable housing can be very difficult to create,” explains RDI’s Housing Development Director Alyssa Larose.
RDI currently has a purchase and sale agreement for the first property and will need final court approval before acquiring the home. Tentatively, rehabilitation work is planned to start this year, with the sale to a new homeowner next spring. Marketing of the home to prospective homebuyers will begin once RDI acquires the property. A lottery will be held closer to construction completion to select the purchaser.