Rural Gateway Case Studies

Housing Development Alliance (HDA) Rural Innovation Fund (RIF)

Project Summary

  • FY 2011 Grant Award: $300,000
  • Grant Category: Comprehensive
  • Applicant Type: Nonprofit
  • Grant Activities
    • Green Housing Construction
    • Homeownership
  • Projected Impact:
    • New housing construction: 25


Hazard, Kentucky map

Hazard, Kentucky

Key Outcomes

  • 25 green homes constructed
  • Supported 25 construction jobs
  • Created a $900+ utility savings per home annually


Scott McReynolds
Executive Director
Housing Development Alliance
(606) 436-0497

Community Description

The HDA RIF project operated in the Greater Hazard Market, which includes the City of Hazard, Kentucky, and surrounding areas in Perry County. The Greater Hazard Market has a population of 5,250 people. Perry County has been listed as an Appalachian Regional Commission-designated Distressed County since 1960; the impacts of more than 50 years of extremely high poverty can be seen in both the housing stock and the economic condition. The poverty rate for the area is 26 percent, and 50 percent of Perry County families with a child or children below the age of five live below the poverty line. The median household income is $27,209, with nearly 45 percent of all households living on less than $25,000 per year. The unemployment rate is 6.3 percent, approximately 40 percent above the national average and 52 percent of the population over the age of 16 are not in the labor force, potentially due to a very high level of “discouraged workers,” or individuals who are no longer looking for work.

Perry County suffers from a significant level of abandoned and dilapidated housing, a median house value of $73,300, and more than 30 percent of the housing stock found in mobile homes as compared to the national average of 6.8 percent. 1.5 percent of the county’s housing units lack complete plumbing, and 7.9 percent of the households utilize coal or wood (stove heat).

The Organization

Community Ministries (CM) began in the 1970s with a group of women who had a mission to help their community, beginning with a local food bank, day care, homeless shelter, and Crisis Aid Program. In the 1990s, CM determined that housing issues were a leading cause of financial distress in the individuals who sought help from the Crisis Aid Program. Subsequently CM learned that the HOME Investment Partnerships Program (HOME) had a set-aside for community-based groups, which led the leadership of CM to form a Board of Directors and HDA which was subsequently incorporated in 1993. Since that time, HDA has grown into a multi-faceted and highly-respected non-profit housing organization and has created a Community Development Finance Institution (CDFI).1 HDA created the CDFI to help their clients develop financial literacy and enable them to offer financial products to clients that commercial banks would not find viable. A lack of credit and significant debt-consolidation loans were two challenges often encountered by individuals wanting to access their services, and were two issues HDA could address with a CDFI.

HDA operates as one of the only producers of low–moderate income housing in the area, competing only with manufactured housing, which builds neither wealth nor equity for the homeowner.

Driven by a strong desire to improve their community, HDA has been able to meet the housing needs of more than 2,300 people while providing a boost to the local economy. HDA frequently partners with faith-based organizations to provide volunteer workers to assist in home construction and reduce costs.

1HDA’s CDFI status occurred following receipt of the RIF grant.

Project Overview

HDA requested FY 2011 RIF funding for their Constructing Highly Energy Efficient Housing (CHEER) project to assist with constructing 25 highly energy efficient homes for low- and very low-income households in the City of Hazard and Perry County. The funds were for energy efficient construction upgrades to the 25 homes. At the time of the application, HDA owned 24 lots and had site control on 12 more.

HDA had received a prior Rural Housing and Economic Development (RHED) grant, which allowed them to construct a new office building. In turn, this had a very positive impact on HDA’s ability to hire capable and qualified staff and increase overall organizational capacity. For example, HDA directly employs several carpenters but hires subcontractors for most other work; for this project, they identified and managed several independent contractors (e.g. heat, ventilation, and air conditioning; electrical; plumbing).

HDA New Home Construction

HDA New Home Construction

Project Resources

Although HDA has a broad array of community partnerships, this does not translate into an equal amount of leveraging, largely due to a lack of funds in the geographic area rather than a lack of interest or effort on the part of HDA. HDA has regularly secured a variety of state and federal grants to fund their ongoing operations and has a strong relationship with the local bank. In addition, their CDFI helps with the funding of local projects.

Despite their smaller network, HDA has established an impressive group of partners throughout their service area of eastern Kentucky. They have established relationships with a number of faith-based social service organizations. The RHED grant they used to construct their current headquarters allowed them to provide a building to a local charity as a homeless shelter. Other local church organizations offer housing for their student volunteers. Other partners include the Federation of Appalachian Housing Enterprises, which services their loans, and AmeriCorps Volunteers in Service to America, which provides volunteer staffing on an annual basis, usually assigned to special projects. The RIF grant, along with other sources of funding ultimately enabled HDA to leverage over $3 million for their housing efforts from sources such as HOME, Self-Help Homeownership Opportunity Program (SHOP), Appalachian Regional Commission (ARC), Section 502 Direct Loan Program (RD 502), Federal Home Loan Banks (FHLB), KY Housing Corporation, and Federation of Appalachian Housing Enterprises.

Program Outcomes

The most obvious and quantifiable outcomes of the RIF project were:

  • Construction of 25 new green homes, which also contributed to the construction of HDA’s 200th home overall
  • Employment of more than 25 people in the construction of these homes, providing jobs and skills training

The following equally significant outcomes are also attributed to the RIF funding.

  • Increasing Stability: HDA believes that the provision of these homes for low-income families contributed to the stability of children in these families, and ultimately their success.
  • Building Organizational Knowledge/Skills: This project also built HDA's knowledge and skills of energy efficient housing construction which has led to the overall construction of more than 75 green homes and an annual reduction in CO2 emissions of 172 tons.
  • Positively Impacting the Local Contracting Economy: RIF funding has enabled HDA to impact local contracting economy in two ways:
    • Improved availability of construction materials, particularly green materials due to an increased demand. According to HDA, local hardware stores and other business have begun stocking materials they purchase frequently, including energy efficient products such as windows and code-compliant building materials that were not previously available locally.
    • Increased demand and therefore availability of skilled workers. Two former employees of HDA have gone on to start their own businesses, with HDA’s support. One individual started an insulation business, went on to employ several individuals in addition to himself, and subsequently invested in a $100,000 piece of spray-insulating equipment.
  • Improving Community-Wide Energy Efficiency: HDA is proud of their environmental and energy efficiency impact. The purpose of their RIF project was to design and build energy efficient homes to reduce the ongoing maintenance and energy costs for the low–moderate income individuals who purchase the homes as well as build a greater demand for such energy efficient technologies and expertise in other projects. As a result of this initial RIF funding, HDA has now built 75 ENERGY STAR® rated homes and an annual reduction in CO2 emissions of 172 tons. Although, individually, the energy efficiencies may be small, roughly $900 per year, per home, overall HDA contends that they have significantly reduced the Home Energy Rating System (HERS) ratings in a number of homes.

HDA energy efficient home

HDA Energy Efficient Home


Energy efficient appliances in an HDA home

HDA Home Energy Efficient Appliances

Looking Ahead

HDA indicated that they owed much of their growth to the RHED and RIF programs. While RHED and RIF were not primary sources of income for the organization (in fact, state HOME funds were cited as their largest source of funds), RHED and RIF grants allowed “experimentation and innovation.” These funding programs had sufficient flexibility built in that they allowed the HDA the leeway to experiment with more innovative projects and test projects that would have been too risky otherwise. For example, one RHED grant allowed them to experiment with purchasing in-fill properties in Hazard, KY and build on the steep lots common in Appalachia.

HDA has an impressive record of long-term capacity building, both in their staff and in their facilities. They are a model organization for rural nonprofits, with steady growth prior to and following RIF funding. They have continually been able to recruit and retain qualified individuals with specialized skills (such as their current Chief Financial Officer and their CDFI Loan Fund Coordinator) and will continue to make positive impacts as they work towards addressing the housing needs in their community.

Energy efficient appliances in an HDA home

HDA Home Energy Efficient Appliances