A bipartisan group of lawmakers from the N.C. House of Representatives have introduced legislation seeking to create a $50 million fund to help nonprofit groups launch affordable housing developments.
The N.C. Housing Finance Agency would oversee the proposed Affordable Housing Infrastructure Development Loan Program. Loans would be available to tax-exempt nonprofits like chapters of Habitat for Humanity who use volunteer labor and donated material to build homes.
"This is a one-time investment of a self-sustaining fund. And it's not just about addressing today's shortage, it's about creating long-term solutions that can continue to work for years to come," Rep. John Bell, R-Wayne, said during a Wednesday press conference. Bell is one of the bill’s primary sponsors.
House Bill 1072 addresses what House Minority Leader Robert Reives, D-Chatham, said affordable housing developers call "the preconstruction valley of death." That includes steps such as buying the land on which the home will sit, paying for surveys, grading that land, securing permits, connecting the site to utilities and installing water and sewer infrastructure.
"For nonprofit affordable housing builders, especially those working with limited margins and mission-driven models, those upfront costs can stop a good project before it ever gets off the ground, causing it to be stuck in limbo," Reives said.
Developers wouldn't be able to use money from the program to fund the actual construction or rehabilitation of homes.
The legislation requires developers seeking funding from the loan program to reserve at least 40% of the homes they are seeking to build for people who are making 80% or less of their area's median income.
Loans would be available at below-market rates, with funds cycling back into the program as developers complete their projects to fund additional housing in the future.
Paul Reeves, the president and CEO of Habitat for Humanity North Carolina, said the legislation can help his organization make a necessary step up from building or rehabilitating homes one-by-one to constructing affordable housing on a subdivision scale.
The challenge, Reeves said, is that preparing a site for construction averages about $50,000. So when a Habitat chapter wants to build a 10-home subdivision, that costs about $500,000.
"That's all money that the Habitat affiliate invests on the front end before they're ever able to build their first house," Reeves said.
With the loan fund in place, Reeves said, Habitat affiliates could build as many as 1,000 additional homes over the next five years.
