Less red tape around vacant properties could mean more green lights for affordable housing non-profits

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JOHNSON CITY, Tenn. (WJHL) – It may not have glittered like diamonds to for-profit homebuilders, but a small vacant lot on Orlando Drive near Mountain View Elementary School looked just right to nonprofit Appalachia Service Project (ASP).

“These lots by and large are perfect for what most of the affordable housing agencies in the area are looking for,” ASP CEO Walter Crouch told News Channel 11 Monday. “The kind of families we serve would love to live within the city, within the county on a lot like this in a nice established neighborhood.”

There was one problem. The annual auction for county-owned property with delinquent taxes — traditionally the only time lots like the one on Orlando become available — was months away.

And ASP has families it can put into homes now. Crouch said similar situations exist for Holston Habitat for Humanity, Eastern Eight Community Development Corp. and other area nonprofits devoted to increasing homeownership for low and moderate-income people.

“They sit on the county or city’s inventory list and they’re really not doing anything for the city,” Crouch said of many properties attractive to nonprofit builders. “The tax auction hasn’t happened yet but the need to use the lots is there.”

Appalachia Service Project CEO Walter Crouch at a lot on Orlando Drive in Johnson City, Tenn. that Washington County is selling ASP “off-cycle” to allow for affordable home construction.

Monday night, ASP leaders learned the Orlando Drive property, and two others the county owns due to tax liens, would be sold to ASP so it could build three new affordable houses and help three families become homeowners.

The break from tradition was possible because buried in Chapter 5 of Title 67 of Tennessee’s code is a section Crouch and other non-profit housing leaders hope local governments will utilize.

It allows sale outside auction time to 501(c)3 nonprofits that are “chartered to construct or to restore residential dwellings for the purpose of creating affordable and habitable housing for the disadvantaged and needy.”

Once construction occurs, the law reads, the property must be “conveyed to an individual or family for use as an owner-occupied residence.”

Washington County Commissioner Phil Carriger chairs the county-owned property committee and said he hopes to see the commission take further advantage of the law.

“It’s better to sell these lots and have them turned into housing for folks and property taxes being paid and (property) being kept up than sitting there as an asset on the county doing nothing,” Carriger said following Monday’s decision.

His committee recommended the move — and as a board member of Eastern Eight, he said the reasons aren’t just financial.

“I think it’s a good idea to turn vacant lots into housing for people,” he said. “We’re in need of housing for folks that don’t make a lot of money. We’ve got a lot of people around here that make 10, 12 dollars an hour or even less.”

Even though the county and Johnson City both have numerous properties in their inventory that have been taken for tax liens and other reasons, the traditional method of selling those properties annually has created some difficulties for nonprofits.

“It is becoming more and more difficult for nonprofit builders to afford buildable land,” Holston Habitat for Humanity Executive Director Laura Kelly told News Channel 11.

“It is not unusual for us to be urgently searching for properties ahead of a project, because we just don’t have enough in our inventory,” Kelly said. “We can’t afford to spend what other for-profit builders do for land.”

ASP’s Crouch said most of the lots are “infill” – often just one lot – in parts of the city that aren’t as attractive to private developers.

And he said with the housing market as hot as it is, few developers are building smaller, affordable homes on the kind of small lots that ASP and others typically covet.

“They make great lots for ASP to build on, and so to get this lot to build a home would be a great thing for a family that doesn’t have a home right now,” Crouch said Monday as he stood in front of the Orlando Drive property.

Next to the lot stood a neat-as-a-pin ASP-constructed home that created a homeowning family back in 2013.

Nonprofits project united front to local government, hope for more ‘outside the box’ action

Crouch, Kelly and Eastern Eight Executive Director Sherry Trent said their agencies – as well as the Johnson City Housing Authority – have begun collaborating more closely regarding the available land issue and the many other challenges they face.

“We recently had a meeting within the city talking about doing renewal work on one of the streets of the city and all of us are cooperating together there,” Crouch said.

Framing is under way at an east Johnson City affordable home ASP is constructing for Eastern Eight Community Development Corp.

And ASP is the general contractor for two current Eastern Eight home construction projects, one in Johnson City and another in Kingsport.

Crouch and Kelly both said they hope the united front can help convince the county and city to stay open to non-traditional approaches.

“This is a fantastic solution,” Kelly said of the “off-cycle” sale approved by the county.

“Streamlining a process where city and county-owned properties can become available to non-profit builders like Holston Habitat eliminates a major barrier for development.”

Crouch said it’s natural to stick with a traditional approach, and that he’s encouraged by the county’s action and the meetings the nonprofits have had with city officials.

“I think anytime we think about how do we solve the problem, rather than how do we protect our processes, we always end up with a better product and a new way of doing things that opens potential for more families and potential for agencies and governments to work together,” Crouch said.

“I love the creative thinking that’s going on. The city’s talking about maybe putting together a land bank that would do this. Any of these kind of innovations we welcome and we welcome those discussions because the need is there.”

Carriger said the government bureaucracy comes from a desire to protect citizens. But he said since the county-owned property committee’s reconstitution a couple years ago, members have tried to take an open-minded look at “the highest and best use in terms of what the taxpayers need.

“We spend money maintaining lots, mowing the lots, having insurance on the lots and it just becomes a drag on the budget. So I think our mission is to slowly go through these properties, look at them and see what we can do with them.”

If the end result is more land transfers that are mutually beneficial for the governments, the nonprofits and families, Carriger said that would make him happy.

“I think it’s great. I really do. I think that’s still the American dream is to own your own home.”

Habitat’s Kelly said the collaboration is a “win-win for everybody.” Habitat homeowners — and those helped by her fellow agencies — contribute to the local economy and provide tax revenue.

“This collaboration will ensure we maintain an affordable housing stock that meets the needs of our community,” Kelly said.

“Holston Habitat for Humanity, ASP, and Eastern Eight all have the same goal: to see our community members housed in affordable, quality housing. I am excited about the ways we’re collectively asking ourselves and our local government: ‘how can we do more for those who need it most?'” 

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