The clangs of construction coming from Lexington's York Street are music to Susan Burgess' ears. The daily drum of hammers and heavy equipment signals she's getting closer to becoming a homeowner.
The 70-year-old has never owned a home. For the past 20 years, she rented a small, crumbling house on the same plot of land on which her new house is being built.
"It was cheap," she said. "That's why we stayed."
The house under construction now is part of a six-unit neighborhood revitalization project spearheaded by the North Limestone Community Development Corporation.
Kris Nonn, the company's director of design, said preserving the historic shotgun structures wasn't financially feasible at first. So he and his colleagues got creative. The houses incorporate shipping containers, recycled materials and ultra high-efficiency elements.
They call it high-end housing at a low-end cost.
In fact, the single-family units will be designated as affordable housing for at least 15 years after they're completed, Nonn said.
Situated on the edge of the downtown, the York Street neighborhood is ripe for millennial infill — which can lead to higher-priced housing units and push out existing residents. Nonn said it's critical those houses remain affordable for residents who already live in the neighborhood.
But to make the project a reality, Nonn had to call on the city's burgeoning affordable housing trust fund. He applied for grants and loans through the fund and was able to secure about $322,000 to subsidize the development costs.
Without that assistance, Nonn said the project would have never been anything more than an idea.
Lexington's Affordable Housing Stock Swells
More than 430 affordable housing units have been built or renovated since the city began allocating taxpayer money to the Lexington Affordable Housing Trust Fund in 2014, said Rick McQuady, the fund's director.
By comparison, the Louisville Affordable Housing Trust Fund has financed 39 units since its inception in 2008, according to Christie McCravy, the fund's director.
The trust fund in Lexington facilitates the development of affordable housing by awarding low-interest loans and grants to developers, like Nonn. The loans, repaid at 2 percent interest, allow the trust fund to be replenished and continue to fund projects in the future, McQuady said.
"We administer the affordable housing trust fund dollars like a bank," he said, noting each application must adhere to certain criteria.
About $5.2 million has been funneled into the program since 2014. The city council's initial allocation of $3 million is being followed by annual allotments of $2 million, McQuady said. Program directors have used that fiscal commitment to leverage more than $10 million in additional funding for the construction or rehabilitation of affordable housing across the city.
Nearly 30 percent of all affordable units created or preserved in Lexington serve the city's most vulnerable population, McQuady said, including the homeless, survivors of domestic violence, the elderly and disabled.
"I'm very proud of that," he said.
McQuady said the trust fund's success has been inspiring. It's also an inspiration for affordable housing advocates in Louisville.
“We can do that, too,” said Louisville Metro Councilman Bill Hollander. “And we should.”
Hollander has been a leading proponent of strengthening the city's housing fund. But he acknowledged finding a reliable financial source for it has been difficult.
Advocates have pushed for an increase in the city's insurance premium tax to create a dedicated funding stream for affordable housing, but that's been a political nonstarter.
Seeking support in the city budget hasn't been very fruitful, either. To date, just $2.1 million has been allotted to the Louisville Affordable Housing Trust Fund, according to a spokesman for the city's economic development department.
Hollander and other affordable housing advocates are now focused on securing a one-time allocation of $5 million in the upcoming Metro budget. But that still falls short of the the goal of a $10 million dedicated stream of funding.
Metro Council President David Yates has also expressed interest in funding affordable housing efforts, although he wouldn't commit that it would be included in the final budget proposal.
With little clarity on how — and whether — the Louisville Affordable Housing Trust Fund would get city support, McCravy said it may be time to reexamine potential funding mechanisms.
It's unclear, however, what those mechanisms could be.
How Lexington Did It
Lexington Mayor Jim Gray said securing funding in the city budget for affordable housing took work.
Gray commissioned a task force that found about 6,000 Lexington households were considered cost-burdened, meaning they spent at least 30 percent of their income on housing.
Gray said the task force presented its findings coupled with a detailed plan showing how it would go about using city funds. He said if he could offer any advice to Louisville, it would be to focus less on making noise in support of the concept and instead develop a comprehensive plan for addressing the issue.
"It's all about putting together a good business plan," he said. "You can't just flip a switch."
As the economic recession lifted, Lexington leaders began dealing with overspending issues, Gray said. That led to reform in the city's health insurance and pension systems, and cutbacks "across the board," Gray said.
The belt-tightening produced a budget surplus, which made room for an investment in affordable housing, Gray said. And with city revenues trending upward, the mayor said he doesn't foresee the trust fund losing its allocation anytime soon. He said the success of the program has set a precedent.
"Having people in good housing is good for our economy," he said.
Bridging The Gap
Nonn said construction costs for the row of houses on York Street would likely outweigh their appraised value once complete. The subsidy from the housing fund will cover the difference.
"No other funding source would be able to bridge that," he said, noting a private bank would likely turn down their proposal for a loan or impose burdensome interest rates.
The houses will hit the market for about $80,000 apiece, he said. They'll be a middle-of-the-road option in a neighborhood where the choices now are either to buy a cheap house and spend a lot renovating it or buy an expensive house that's already been remodeled.
"We're hoping to bridge that gap in what was available in the neighborhood so there's a full menu of home ownership options," he said.
For Susan Burgess, it's likely the only option.
She works at Walmart. But with a strained knee, standing all day is getting tough. If she has to quit working, she'd be left with nothing but Social Security benefits. That would make it nearly impossible to afford rent elsewhere.
Burgess will pay about $500 per month when she moves in this June. It's a bit more than the $150 monthly rate she paid two decades ago, but it's still a lot cheaper than most other new places near downtown.
"It's going to be a whole brand new house," she said. "I'm thinking it's a real good thing."
