The Mayor James Mueller administration wants to give nonprofit developers money to build a large number of new homes in two of South Bend’s most challenged neighborhoods.
The city wants to give forgivable loans to help build a total of 122 new single-family homes. Indianapolis-based nonprofit Intend Indiana would build 92 of the houses in the Lincoln Park neighborhood. That’s west of downtown, between Lincolnway and the City Cemetery.
And South Bend-based nonprofit 466 Works would build 30 homes in the southeast neighborhood.
Sixty-nine of the 122 homes, or 57%, would be available to buyers at lower income levels. The rest would be sold at market prices.
The city would loan the two groups a combined $8.5 million but they wouldn’t have to repay the money if they hit private investment and timeline targets.
Caleb Bauer is the city’s community investment executive director. He says much of the city’s work in affordable housing involves reducing or eliminating the appraisal gap. That’s when it costs more to build a home than what it’s worth in a challenged neighborhood because there are so few comparable newer homes.
That gap has gotten smaller over time in the Near Northwest Neighborhood because its nonprofit development group has worked for years to build new homes. Bauer hopes to emulate that success in these two neighborhoods by creating a mix of subsidized and market-rate new homes.
"If you're working with a community development corporation, you're helping provide some of that gap subsidy where there is still an appraisal gap," Bauer said. "They're building homes. Over time the values and the appraisals in that neighborhood may get closer to those construction prices, meaning that there could come a point that less subsidy is required, or even no subsidy is required, for them to build new homes in the neighborhood."
