FY 97 Homeownership Zone
Indianapolis, Indiana

AMOUNT OF AWARD:

Homeownership Zone Grant — $4,057,500

NEW HOMEOWNER UNITS:

313 (269 new construction, 44 rehabilitation)

COMPLETION:

October 2005

HOMEOWNERSHIP ZONE SITE:

The Fall Creek Place Homeownership Zone (HOZ) is a 189 acre area located two miles north of Indianapolis' central business district and the Herron-Morton historic neighborhood. The zone is bounded by Fall Creek on the north, Broadway on the east, 2nd Street on the south, and Meridian Street on the west. It is located within the City's Enterprise Community area. The Zone is part of the City's Center Township which, at the time of the Homeownership Zone designation, had the largest minority population, the highest poverty rate and the greatest level of physical distress of the City's nine townships. The Zone was highly blighted due to on-going economic distress and large tracks of vacant land remaining from the former Model Cities program.

PROGRAM DESCRIPTION:

The City used its HUD Homeownership Zone demonstration grant as seed money to demolish vacant and blighted houses, build 269 new homes and rehabilitate 44 homes, improve streets and infrastructure, and develop a system of parks and green space. The project reclaimed the majority of the vacant and blighted properties in the area. The federal grant convinced private builders and lenders to join the City in this large-scale undertaking. House designs reflect historic patterns, including many units with front porches. New homes and existing homes fit together seamlessly on each block. New homebuyers received financial assistance and homeownership counseling. The comprehensive approach convinced homebuyers to purchase in the area.

FUNDING:

PARTNERS:

PROJECT OUTCOMES:

The City transformed its Homeownership Zone area, formerly known as "Dodge City" because of its crime level, into a vibrant mixed-income community of homeowners. Violent crime declined by 70 percent and code violations were nearly eliminated. A new home now occupies every previously vacant lot. New homes and existing homes fit together seamlessly. Fifty-one percent of the new homeowners are low-income families and sixty-nine percent are first-time homeowners. New homebuyers received financial assistance and homeownership counseling. A five-year resale covenant requires City approval for the sale or rental of each property. A ten-year resale affordability restriction applies to homebuyers who received down payment assistance. The federal grant significantly leveraged other funds. $55 million in private mortgages was approved for the new homebuyers, $1.2 million in new annual property tax revenues was generated and more than $19 million in new household income has been brought into the area.

INNOVATIONS:

• The Library Foundation sponsored a "house that readers built" contest. Participants in the summer reading program donated their reading points for "Booker Bricks". Each brick was matched by the Foundation until sufficient bricks were donated for the house to be constructed. Once the house was built, a lottery was used to select the low-income family who became the new homeowner. This contest built interest in the Homeownership Zone and was an effective marketing tool.
• A web site (www.fallcreekplace.com) was established to assist in marketing the Homeownership Zone and inform homeowners of the most recent developments.
• The City built an on-site Welcome Center that was professionally staffed. The Welcome Center staff were responsible for a unified approach to promoting and marketing the Homeownership Zone, including special promotional events such as the Parade of Homes. This approach eliminated marketing costs for the builders. The Center also served as a "first point of contact" sales center. Staff ensured that prospective buyers had the information needed to qualify for purchasing a home.
• The City developed five prototype home plans and provided these plans to builders at no cost, thereby reducing the builder's design costs.
• After each buyer was pre-qualified for a mortgage, the buyer selected a builder and house design. This enabled the builder to construct the home for the specific owner.
• All material removed from the home sites during excavation was stockpiled and reused. An on-site concrete crusher and sifter were used to recycle and reuse old sidewalks, curbs and remnants of old basements. Older granite and limestone curbs were salvaged and reused. All trees removed from the site were chipped and the resulting mulch was stockpiled and reused. This reuse of materials not only provided an environmentally friendly approach to construction, but generated significant cost savings.
• The Citizens Gas and Coke Utility provided a $1,500 appliance package to all homebuyers whose homes were equipped with four gas devices.

BEST PRACTICES:

• Using a master developer.
• Designating a full-time project manager.
• Having a staffed Welcome Center on-site as the first point of contact for potential buyers.
• Creating a centralized, professional marketing program.
• Eliminating front-end barriers to builder participation by providing free model homes, a Welcome Center, free marketing, low-cost land, and a joint construction loan pool.
• Using the City's financial participation on acquisition, infrastructure and down payment assistance, and requiring the builders to finance the construction and work with individual homebuyers; this approach eliminated red tape and kept the City out of normal buyer-builder issues.
• Using quality design to blend homes of different square footage and cost.
• Permitting both subsidized and unsubsidized buyers to choose their lots and home designs.
• Convincing local lenders to create unique, customized mortgage products with such features as below market rates, longer lock-in periods, flexibility on private mortgage insurance, down payment flexibility, and to retain the loans instead of selling the loans on the secondary market.
• Allowing existing homeowners to remain in the neighborhood.
• Placing model homes on commuter streets to help market the neighborhood.

LESSONS LEARNED:

• Community support is essential prior to implementation.
• Private sector development expertise is essential.
• Adequate marketing funds must be available, particularly at the front end.
• A clearly defined organizational structure is needed for the role of builder(s), contractors and master developers.
• The target market will be broad and difficult to define.
• Financial incentives are needed for mixed-income initiatives.
• Mixed-income developments must not sacrifice design quality.
• The greatest marketing tool is always visual.

AWARDS AND RECOGNITIONS:

• 2002 Indiana Association of Cities and Towns (IACT) "Community Achievement Award"
• 2002 American Institute of Architects (AIA) Indiana Chapter "Citation for Residential Architecture"
• 2002 Indianapolis Monumental Affairs "Honor Award for Outstanding Community Project"
• 2002 Indianapolis Monumental Affairs "Merit Award for Outstanding Architecture"
• 2003 American Planning Association "Current Topic Award; Outstanding Example of Smart Growth in Urban Revitalization"
• 2003 HUD Award for "Outstanding Use of Public Funds"
• 2003 American Institute of Architects (AIA) Indianapolis Chapter "Citation for Outstanding Architecture"
• 2004 Urban Land Institute "Award for Excellence"
• 2004 NAHB "Best in American Living Award"; "Best Smart Growth Community"
• 2003 and 2004 NUVO Magazine "Best Up and Coming Neighborhood"
• Numerous articles and references: Planning Magazine; New Urban News; Affordable Housing Finance; American Bungalow; Cottage Living; Better Homes and Gardens Planning Ideas

Additional Information

• Project Contact
• MAP
• PICTURES