A #CDFIStory of a New Vision for Housing in a Rural Town
Client: Dogwood Estates
Client Location: Walkerton, IN
CDFI: Cinnaire Lending Corporation
CDFI Service Area: Delaware, Illinois, Indiana, Michigan, Texas, Wisconsin
Housing to organizations
For Cinnaire’s Keith Broadnax, the revitalization of the former West York neighborhood is one of the most memorable and impactful deals he has ever underwritten in his 15-year career. Before the revitalization, homes in the rural Indiana town of Walkerton were infested with insects, and there were serious health and safety issues. Built during World War II to accommodate factory workers, the homes were called Plywood Villages, built on piers with no insulation or foundations. The intention was to provide temporary housing and demolish the neighborhood after the war—that never happened.
By 2008, the 85 families living in the neighborhood were paying outrageous rents for substandard housing. Due to the poor construction of the homes, utility bills were forcing most residents into a life of poverty. Some of the poorest people in the county were living in the neighborhood. Ceilings were caving. Floors had holes. The city received more than 20 calls a month for frozen pipes, and the streets were so narrow, an ambulance, fire truck or emergency personnel couldn’t access the homes.
The Town made the bold choice to tear down the neighborhood and revitalize the area. The time was right—thanks to stimulus funding, developers Steve Walters and Mitch Walters worked with the Town of Walkerton, Cinnaire, First Source Bank, the Federal Home Loan Bank, Neighborhood Development Association and others to secure a complex financing package that allowed them to tear down the existing homes and develop 40 beautiful, affordable, lease-to-purchase homes on the site. Now known as Dogwood Estates, the project has provided an unprecedented impact on the small community, spurring economic development, improving the school systems and changing the lives of over 200 families.
Cinnaire provided a $5MM LIHTC equity investment to finance the total demolition and reconstruction of the completely redesigned neighborhood. The project financing included a first mortgage loan from First Source Bank, an AHP loan from Federal Home Loan Bank of Indiana, stimulus funding from the Neighborhood Stabilization Program, HOME Investments Partnership Program funding, and Section 1602 federal stimulus money. If not for Federal and State financing, stimulus funding, and the community expertise of Cinnaire to create and secure a complex financing package, this impactful project would not have been possible.
Teresa and Tim, who were living in South Bend, IN, heard about Dogwood Estates. As the parents of five children, they wanted a safe, affordable place to call home. Although both employed full-time, Teresa’s student loans limited their options and they found their family living in public housing that was unsafe, in a neighborhood where the children couldn’t play outside. Now, they live in a 4-bedroom, 2-story affordable home, with plans to purchase the home after the 15 year LIHTC compliance period. Tim is thrilled to be out of the toxic environment they were previously in. “Living here has made me a better husband and father. I feel lucky to speak to my neighbors, to know they look out for my children. I love living here, there is no place we would rather be!”