Affordable Housing Resources of Nashville, Tennessee, developed the 8.9n Townhouse Project to redevelop a deteriorated area in downtown Nashville.

AHR, founded in 1989, is a housing development and counseling organization that provides residential lending and development services, homebuyer counseling and education. Other services include crime-watch awareness, youth employment programs, and youth academic testing programs. AHR serves the entire city of Nashville as well as 10 counties in central Tennessee. It became a chartered member of the NeighborWorks network in 1999.
 
Planning for the Row 8.9n Townhouse Project began in 2001, based on a need for redevelopment and revitalization in the area between 8th and 9th Avenues near downtown Nashville. AHR created 29 new, single-family townhomes (also called “row homes,”) that were contemporary and affordable, and designed to draw both higher- and lower-income buyers to the neighborhood.

The Homes.  The row homes are conveniently located within walking distance of downtown, the local farmers' market, grocery stores, drugstores, and one of the city’s finest parks. Each home was newly built, but included historical design features so they would blend with neighboring homes. AHR hired a top local architectural firm to design the project.
 
The exteriors were constructed with traditional urban finish materials such as brick, stone, siding and copper flashing. Interior features included materials such as steel, hardwoods, and ceramic tile. All units are energy-efficient and were built to standards above local code. The buildings range from 950 to 1,250 square feet. Construction was completed in 2002, and all homes were sold by early 2003. Prices ranged from $109,000 to $175,000.

Buyer Eligibility.  Eleven of the 29 units were set aside as affordable housing, meaning they were reserved for households at or below 80 percent of the area median income. The rest of the homes were for any buyer, regardless of income, though each unit had to be owner-occupied. All first-time buyers were required to attend AHR’s homebuyer education class.

Purchase Assistance.  AHR requested a grant from Nashville’s public housing agency of $650,000, which provided buyers at or below 80 percent of the area median with $15,000 zero-percent loans for down payment and closing costs. The loans were deferred and will be forgiven if the buyer remains in the home for five years.
 
AHR also arranged for a special, low-interest mortgage product through AmSouth Bank. This product was available for all buyers, but was not required. (Buyers could obtain a loan through a lender of their choice.) Each AmSouth loan was originated, processed and serviced by AHR.

Program Partners.  Project partners included the Metropolitan Development and Housing Agency (MDHA), the city of Nashville, Tennessee Housing Development Agency (THDA), NeighborWorks America, AmSouth Bank, Capital Bank & Trust, and Citizens Bank. Most supported the project through financing. Other supporters include the architects, engineers and builders.

Development Team.  During project planning and development, all partners participated on a development team that met once a week. Attendance and participation varied, depending on the phase of the project.

Marketing.  AHR hired Village Real Estate to list and market the properties. Each home was sold before construction was complete. AHR paid the real estate company 6 percent of the purchase price for this service.

Cost.  AHR estimates the overall development cost at about $5 million. Obvious expenses include staff time, construction, materials, copies, mailings, plus building and lending expenses. The predevelopment and planning phases required substantial funds, which made the support from NeighborWorks America and the city of Nashville critical.

Funding.  Project funding came from various sources. MDHA and THDA contributed federal funds. The city purchased the land for AHR, and Citizens Bank and Capital Bank & Trust provided loans to cover the costs of construction. These loans were repaid once the homes were sold.

Twenty-nine new homeowners of various income levels purchased homes in the Row 8.9n Townhouse Project. The exact income range of the buyers cannot be determined, but AHR said that one lower-income family earned about $20,000 a year, while another buyer paid cash. Seventy percent of the customers were first time homebuyers.
 
Twenty-two buyers received loans through AHR and AmSouth bank.
 
The local police force reports that the neighborhood is already improving. Crime activity is down, and the increased homeownership rate has resulted in more community participation.
 
Due to the project’s success, AHR won the gold award in the “Best in American Living” competition in 2003, sponsored by the National Association of Home Builders, Professional Builder magazine, and the U.S. Department of Housing and Urban Development, and, also, the NAHB Townhome of the Year.
 
From February to August 2004, AHR’s project was featured, along with 17 others from around the country, at the National Building Museum in Washington, D.C., as part of an exhibit showcasing good designs in affordable housing. This endorsement gave AHR a great deal of national exposure, plus connected staff members with new and creative ideas.

• Large development projects are too difficult to conduct alone. Nonprofit housing agencies must recruit committed and competent partners, including the city, developers, builders and funders.
   
• Since predevelopment is one of the most expensive and risky aspects of larger projects, agencies must secure strong predevelopment support and financing. Planning these projects takes time, and many partners will not commit unless they are compensated. Consider predevelopment funds a must.
   
• Nonprofit housing agencies should be pioneering into urban neighborhoods. Building in the urban core is expensive, and most for-profit businesses and industries won’t venture into these neighborhoods unless they are thriving or at least improving. Once nonprofits begin revitalizing a community, for-profit businesses will follow. NeighborWorks organizations can play a central role in neighborhood growth and revitalization by designing and building attractive mixed-income housing.

Agency interview on 09-02-04 with: E.D. Latimer, Executive Director