| Name | Justin |
|---|---|
| Last Name | Tirsun |
| Home Address | 1500 Chestnut Street Suite 102 Chattanooga, Tennessee 37408 United States |
| Organization Name | Chattanooga Neighborhood Enterprise LLC |
| Describe Your Role In The Organization | The Vice President of Neighborhood Investment and Community Engagement is responsible for overseeing CNE’s framework for neighborhood investment and community engagement. This framework is designed to increase neighborhood home value, create high standards for property improvements, and integrate strong community engagement throughout the process. The VP of NICE is also responsible for identifying and sustaining strategic partnerships and seeking out investment and funding opportunities that can be leveraged with existing programs in pursuit of economic prosperity of our residents and communities. |
| Organization Address | 1500 Chestnut Street Suite 102 Chattanooga, Tennessee 37408 United States |
| Website | https://www.cneinc.org/ |
| Best Phone Number To Reach You | 4237566227 |
| Alternate Phone Number | |
| Email Address | jtirsun@cneinc.org |
| Alternate Email Address | jtirsun@cneinc.org |
| Please Describe Your Project In Detail | CNE is proposing that $1 million in recovery funds be allocated for the creation of a purchase-rehab-resale program. This fund will address several problems. First, low- and moderate-income would-be homebuyers are being outbid by investors buying homes with cash. The house is then rented with little to no improvements, perpetuating substandard housing conditions in the neighborhood. The second issue the fund will address is improving housing conditions by bringing houses up to code and livability standards. Once improved, the houses will be restricted for purchase to first time home buyers at or below 80% AMI. We believe the fund will create approximately 20 first time homebuyers. Home ownership is critical to building the individual and community wealth that helps ensure the wellbeing of Chattanooga families and neighborhoods. Chattanooga housing prices have risen dramatically over the past few years, increasing the level of income needed to purchase. The median housing value for Chattanooga has increased 69.8% in the past six years, 50% of that occurring in the past two years to $270,000 (per GCAR 2021 Annual Report). This requires an income of $63,000 to qualify and a minimum savings of $22,950 for the down payment and closing costs. This is out of reach for almost half of Chattanooga households. Housing that is under $150,000 has had a difficult time passing inspection and won’t be approved for a mortgage. Homeowners selling these affordable properties lack the income, and many times the knowledge, to repair their homes on their own. The investment needed to repair the house often is more than its appraised value. This will require grant funding to fill the gap between what the home is worth and what it costs to repair it to a livable condition. CNE’s proposal will allow us to compete with outside investors by paying cash to purchase a property in the $100,000 range. CNE will then bring the house up to current housing code and energy efficiency standards. Based on CNE’s experience with its owner-occupied home improvement program, we estimate that each house will need between $50,000 to $70,000 for repairs. CNE anticipates that the after improved value of the homes will range between $135,000- $150,000 though it could be lower or higher depending upon the condition of the house and the neighborhood. CNE will sell the house at the appraised value. If the combined cost of purchase and repairs exceed the home’s value, the overage will be covered by the fund. Upon resale to an income qualified first time homebuyer, the proceeds of the sale will go back into the fund minus any repair costs that exceed the appraised value. The $1 million dollar funds would act as a sinking fund, with the balance being lowered by the appraisal gap amount in each transaction until the fund is depleted. This program is targeting households in the $35,000 - $38,000 range opening the opportunity to buy an affordable and safe home while improving substandard housing in the city. CNE has a track record of more than 35 years, building and renovating housing throughout the city. |
| Please explain how your project meets the requirements of the American Rescue Plan | The American Rescue Plan seeks to address the pandemic’s widening of public health and economic disparities. Affordable housing is identified in the Treasury’s Interim Final Rule as an allowable use for ARPA funds. The Interim Final Rule states that affordable housing development to increase supply of affordable and high-quality living units are eligible services. Question 9 goes in depth on the ability to rehabilitate properties in disproportionately impacted communities. Both the geography (south and east of downtown Chattanooga) and the population (lower-income households) have been hit hard over the last two years. Living in substandard housing conditions is often cited as a factor that placed households at higher risk during the pandemic. This program will eliminate those conditions. |
| Where would your project take place? | The purchase-rehab-resale program would target homes in the $100,000 range which tend to be for sale in areas disproportionately impacted by COVID, including East Chattanooga and Avondale |
| How much will your project cost in total? | 1 |
| Do you have any matching funding sources from other local governments, private entities, non-profits, or philanthropic entities for your project? | No |
| Please describe the source and list amounts of any other funding. | |
| What portion of the project are you asking the city to fund? | |
| If funded, when would your project start? | March 1, 2022 |
| How long would your project take to complete? | CNE estimates that it could take as much as the full 4 years to expend the funds due to competition with investors to buy a home and then finding qualified contractors to perform the needed work. Due to the demand for homes priced under $175,000, CNE will work to complete as many homes as possible each year. |
| What milestones would you use to measure your project’s progress? | CNE would measure the number of homes bought, rehab, and sold. We create annual KPI’s and have a dashboard report that shows our current actual numbers against our goal for that period. The report is reviewed by the Board of Directors on a quarterly basis. |
| How would you ensure accountability and transparency throughout the project lifecycle? | This project would involve two CNE departments- the Neighborhood Investment and Engagement team as well as the Homeownership Center team. CNE has an experienced real estate professional on the NICE team who would scout out and purchase homes. CNE employs a construction specialist in the Homeownership Center that oversees the inspections, work write ups and contractor selection for the home improvement program. He would perform the same duties in this program. Staff is held accountable for performance measurements and timeframes which are overseen by the managers in the departments. The CNE and Board of Directors reviews the KPIs and measures progress against goals. |
| If successful, how would your project benefit the community? | According to Chattanooga’s Consolidated Plan 2020-2024, seventy-seven percent of the owner-occupied housing stock and 64 percent of the renter occupied housing was built prior to 1980, placing the age of that housing at more than 30 years old. Many of the homes are more than 50 years old in neighborhoods where the median income is very low making it likely that housing conditions generally throughout these areas are poor. This project will help improve substandard housing conditions while creating home ownership opportunities for low-moderate income Chattanoogans. Home ownership is the primary tool to accumulate wealth in America. This is achieved by paying down the loan principal, (serving as a forced savings plan), and the home appreciating in value. CNE recently conducted an analysis of all the homebuyers it has assisted from 2012-2019 and we estimate that on a per household basis, our homebuyers have accumulated equity ranging from an average of $29,000 for homes purchased in 2019 to $96,844 for those bought in 2021. Collectively, our buyers have amassed over $77.4 million in wealth creation over ten years. In addition, CNE’s lending rate to African Americans is 32% versus the overall market rate of 6% (HMDA 2020 data). We anticipate that this number will increase under this program. |
| How will you attract community buy-in for your project? | Affordable housing is consistently raised as an issue by both Chattanooga residents and business leaders. We believe that providing funding to help overcome the affordability gap in the marketplace will be embraced by the community. It is important that the availability of funds is well advertised and understood by those who could benefit from it. CNE will hold informational sessions with the Greater Chattanooga Association of Realtors and conduct outreach with local churches to raise awareness. |
| Name | Justin Tirsun |
| Contact Information | jtirsun@cneinc.org |
| Is there anything else you would like us to know about your project? | |