Newport received a federal grant of $994,818 to be used by the housing authority to build five single-family homes as a form of “income-aligned housing.”
The funds come from the Community Development Block Grant Program which is administered by Kentucky through the department for local government. The homes will be built on five vacant lots at 1036 Hamlet St., 111 and 516 W 9thSt., 429 Hodge St. and 208 W 11th St. The Newport City Commission discussed approval of the project at its Jan. 21 special meeting.
The homes will be two-story houses with three bedrooms and two bathrooms. They will have a brick façade and most of them will have off-street parking.
These homes are not public housing. They are single-family home ownership housing; however, there are restrictions on who is eligible to purchase them.
“The ADD District (Northern Kentucky Area Development District) did a menu of options for what we would call income aligned housing issue that we have in our region, throughout the eight counties, and this is a nice example,” Newport Commissioner Mike Radwanski said. “This is not affordable, vouchers are something totally different. This is income aligned, and it’s designed to get folks that are would be teachers, nurses, first responders.”
A study of housing in Northern Kentucky has revealed troubling trends for housing in the region, with the largest need being for “workforce housing” for households earning between $15 and $25 per hour, with monthly housing costs between $500 and $1,500. The region needs about 3,000 more housing units to provide for people within that income range, according to the study. The demand for one- to two-bedroom rentals and owned properties consistently exceeds their supply, while supply for three and four-bedroom properties consistently exceeds demand. The study suggests that the region needs to build 6,650 housing units to support economic development in the next five years, which equates to 1,330 units per year. Read more here.
Understanding NKY’s housing shortage
According to Dennis Elrod with Neighborhood Foundations, Newport’s housing authority, buyers must have adequate credit and acquire a 30-year fixed rate first mortgage. Buyers must finish the home buyer education program that is offered through Brighton center and have no prior felony convictions.
The buyer’s income must not exceeding 75% of the area median income which is adjusted by household size ($76,400 for a family of four.)
Roughly 90 to 120 days from the homes being available to sell, Elrod said there will be advertisements placed in the local newspaper and a notice on the city’s website announcing that applications are open. Those on the waitlist will be selected on a first-come-first-serve basis.
The homes are priced at $190,000, with the buyer needing a $170,000 mortgage and receiving $20,000 in down payment assistance from a Community Development Block Grant. This assistance doesn’t require any payments or interest, but there are conditions.
If the homeowner violates code (like maintenance regulations) during the first five years, they must repay the entire $20,000.
If the homeowner stays compliant with the code, starting in year six, 20% of the assistance will be forgiven each year. By the end of 10 years, the entire $20,000 could be forgiven if they meet all the requirements.
Elrod said these homes usually attract first time homeowners, but you do not have to be a first-time homeowner to qualify; however, you cannot apply if you currently own a home.
Treasurer of Newport, Millennium Housing Corp (the projects builder/developer) Ron Rawe said if somebody should sell one of these houses within the first 10 years they must turn around and sell it to another qualified home buyer.
“This isn’t a get quick scheme,” Rawe said. “We’ve had that happen, not that the buyers have intended to do that, but we’ve had a couple buyers that have turned around sold the house within less than two years, and they probably doubled their price on what they’ve actually bought the house for. So that’s not the intent of this, this home ownership program. The intent is to get it to qualify home buyers and make that their home and hopefully stay here and live here in the city for a great deal of time.”
The Northern Kentucky Area Development District issues a letter of support for this project.
“The work that will be done with this community development block grant will be to build infill housing on the Westside of Newport, helping to continue this resurgence the neighborhood has been working so hard for, while also creating a path to affordable homeownership for those who otherwise would not have it,” Executive Director Northern Kentucky Area Development District Tara Johnson-Noem said in the letter.
The project also received letters of support from Southbank Partners, signed by its president Will Weber, ReNewport, signed by its board president Gordon Henry, and Newport Independent Schools, signed by superintendent Tony Watts.
Rawe said this project is not unlike other projects the city has supported in the past though now construction costs are even higher.
“Construction costs have gone up drastically over the last four to five years, where we used to be able to do these somewhere in the low $200,000 to $250,000, now they’re well over $300,000,” Rawe said.
Other homeownership units include:
Elrod said every year, less and less money is being allocated for the housing piece of the Community Development Block Grants. There is a $1 million maximum allocation per grant.
“We do talk about affordable housing, we talk about income aligned, and there’s a lot of layers of understanding on all that, but what it really comes down to is that a lot of families are getting to live in some very fine homes,” Newport Vice Mayor Julie Smith-Morrow said. “As I am out in the city and talking to people, I’ve had so many people say how much they appreciate those opportunities through the Neighborhood Foundations projects.”
More information about the program, and photos of completed homes can be found here.
