Macon Ridge Community Development Corporation (MRCDC) Rural Innovation Fund (RIF) Revolving Loan Fund Project
MRCDC Home Construction
MRCDC has built over 40 residential homes for low- to moderate-income residents in rural Louisiana since 2002.
MRCDC focused on working with disadvantaged subcontractors to create construction jobs in its RIF project.
Increasing Housing Production
Using an internal revolving loan fund, MRCDC provided their subcontractors with capital to enable them to work on multiple properties simultaneously – increasing and expediting housing production.
- FY 2010 Grant Award: $300,000
- Grant Category: Single-purpose
- Applicant Type: Nonprofit
- Grant Activities: Continuum of Services
- Projected Impact:
- Construction of Green Single-Family Homes: 10
- Homebuyer Education Provided: 150 (10 classes in a variety of locations)
- Reduce Utility Costs: 10
- Create Community Partnerships: 6 organizations
- 10 new green single-family homes
- 50 new construction jobs
- 13 subcontractor entrepreneurial loans
- 150 participants in homeowner education
Lloyd S. (Buddy) Spillers
Chief Executive Officer
Macon Ridge Community Develpment Corporation
The Macon Ridge Community Development Corporation (MRCDC) Rural Innovation Fund (RIF) project was located in a specific census tract in the Town of Vidalia, Louisiana, located in the Lower Mississippi Delta Region. Vidalia is the parish seat of Concordia Parish, which has a population of 20,247 and was formed in 1807 as a cotton community. At the time of the RIF grant, Concordia Parish had a poverty rate of over 28 percent, more than twice the national average. Likewise, the unemployment rate ran close to 11 percent, in contrast to 9 percent nationwide. The median household income was $22,742, well below that of the state median household income, and 32 percent of households earned less than $15,000 per year. The census tract in which the RIF project was focused had a substandard housing rate of 1.9 percent, compared to the nationwide rate of 1.2 percent, and approximately 50 percent of the housing was built prior to 1970. The racial composition of the parish was approximately 40 percent African American and 58 percent White.
MRCDC is a licensed residential and commercial nonprofit building company and was founded in 1996 to combat a growing tide of inadequate housing in rural Louisiana. It is currently a HUD certified Community Housing Development Organization (CHDO) serving the Catahoula, Concordia, East Carroll, Franklin, Madison, Richland, Tensas, West Carroll Parishes.
It has developed 11 multifamily housing projects since 1999 using a variety of federal funding sources, from U.S. Department of Agriculture (USDA) Rural Rental Housing Loans (Section 515) to the U.S. Department of Housing and Urban Development (HUD) Section 202 and Section 811 programs, HUD’s HOME Investment Partnerships Program, and Low-Income Housing Tax Credit (LIHTC). These properties are managed by a group of property managers and consultants overseen by a modest full-time staff at MRCDC.
MRCDC began developing single family homes in 2002. Using funding from USDA Rural Development’s Section 502 Direct Loan Program, they have built over 40 residential homes for low- to moderate-income residents in the Concordia, Catahoula, Franklin, and Tensas Parishes. Additionally, since 2007, MRCDC has built 50 new homes and purchased and rehabilitated 25 vacated or foreclosed properties in the CHDO service area. These program accomplishments were largely due to capacity building grants from Mid South Delta Local Initiatives Support Corporation (LISC) and an original HUD Rural Housing and Economic Development (RHED) award for FY 2003 that preceded the 2010 RIF grant.
MRCDC is governed by a community-based Board of Directors made up of 10 members. The board is charged with ensuring that the staff meets program goals and objectives. Each parish in the service area is represented and, as required with CHDO status under the Louisiana Housing Finance Agency, one-third of the board represents low-income persons. MRCDC is a mostly self-sufficient organization, relying primarily on the revenue it generates from its own development and management fees. Many of the staff are long-serving, including the Executive Director, which helps retain institutional expertise and knowledge and reduce staffing costs caused by turnover.
MRCDC requested $300,000 in FY 2010 RIF funding under the Category 1 Single-Purpose Grant to establish an internal revolving loan fund (named the Louisiana Delta Rural Innovation Housing Program) for the interim construction of single family homes. MRCDC expected to leverage these funds with existing funds as well as new funds.
The first phase of the program focused on the construction of 10 new single family houses in the first 2 years. These homes were marketed to low- to moderate-income families. In addition to the development of new single family homes, the project was designed to promote retail growth in the area (the specific census tract in which the homes were constructed).
Other key elements of the project included:
- Creating construction jobs, focusing on working with disadvantaged subcontractors. Normally, these disadvantaged subcontractors would not have the capital necessary to purchase supplies and equipment, nor would they have the capital to make payroll and purchase insurance requirements for a project of this size. MRCDC set aside program funds and provided these subcontractors with loans that enabled them to grow the capacity to work on all 10 homes at the same time. Once the project was completed, the subcontractors repaid MRCDC so that the organization could provide new loans to other disadvantaged businesses.
- Starting up a revolving loan fund. The RIF funds enabled MRCDC to start up their revolving loan fund by providing the necessary capital to incur predevelopment and interim construction for three houses concurrently, instead of the previous model of building one at a time. The revolving loan fund capital was designed to decrease production time and overhead, resulting in an increase to MRCDC’s overall housing production, through the USDA Rural Development Section 502 programs (both loan guarantee and direct loans). This revolving loan fund also minimized MRCDC’s need to pursue and qualify for conventional bank lending for the development of their houses for low-income individuals.
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Note: MRCDC purposely applied for a Single-Purpose grant as opposed to a larger Comprehensive Grant because they wanted to keep the focus of their organization on multifamily housing development, rather than expanding into some of the other service areas and offerings that other RIF Comprehensive Grantees undertook. This focus has allowed them to be very successful in providing safe, sanitary, and decent housing to the community.
MRCDC is one of the few rural community development organizations operating in rural Louisiana. There are few other community development corporations or CHDOs in the state that have the organizational strength of MRCDC. They have partnered with the Louisiana Housing Corporation as well as other state agencies and benefitted from USDA and HUD funding. MRCDC received some technical assistance funding from national organizations like Housing Assistance Council and LISC, but little in the way of program funds from non-federal sources. MRCDC makes its money from selling homes and is approximately 90 percent self-sufficient, minimizing the need for extensive partnerships or leveraging.
For the RIF project, MRCDC obtained commitment from the Louisiana Housing Corporation for additional interim financing for the construction of 10 homes over a 2-year period. For each house constructed, MRCDC was allowed to borrow approximately $70,000 from the $1,000,000 commitment and combined that with $30,000 from the RIF revolving loan fund. Once the house sold to one of the low- to moderate-income buyers, the $30,000 would be put back into the revolving loan fund and be used again for the next house and homebuyer. The table below details all of the funds leveraged for the RIF project.
|Louisiana Housing and Community Development Corporation||$1,000,000||2-year fund commitment|
|Louisiana Housing Finance Agency||$500,000||Each family receives a grant in the amount of $20,000 from state HOME Investment Partnerships Program funds|
|Federal Home Loan Bank of Dallas||$300,000||Each family receives a grant in the amount of $10,000 from the Federal Home Loan Bank Affordable Housing Program|
|MRCDC Budget||$390,100||Funds to use for leverage|
|Mid-South Delta LISC||$25,000||For salary and training costs|
The primary outcome of the RIF grant was the creation of a revolving loan fund to allow MRCDC to finance housing construction of their homes for low- to moderate-income individuals. This revolving loan fund in turn enabled them to build 10 additional homes, all of which were equipped with energy efficient features that enabled residents to reduce their utilities by approximately $1,000 annually.
Other notable program outcomes include:
- Supporting disadvantaged subcontractors. MRCDC used some of its RHED/RIF funding to construct a warehouse for its disadvantaged subcontractors, allowing them a place to work during inclement weather, store larger equipment, and even borrow equipment when necessary. MRCDC has helped many of these subcontractors (e.g., heating, ventilation, and air conditioning technicians; plumbers; carpenters) establish their own legal businesses, helping them apply for business licenses and secure insurance. At least 13 of these subcontractors took advantage of the revolving loan fund to start new entrepreneurial businesses or expand their existing business. This has helped many of them gain the legal status necessary to compete for contracts to build larger, more lucrative housing in the surrounding areas. Many of these subcontractors are minorities and MRCDC has helped them develop the business skills and financial literacy necessary to operate a successful, legal business.
- Providing housing and credit counseling. The RHED/RIF funding has enabled MRCDC to provide housing and credit counseling to approximately 150 participants. These individuals are not only MDCRC’s own clients, but others in the community that may not end up in a new home, but benefit from credit and financial counseling nonetheless. Many of those counseled by MRCDC ultimately become eligible for home ownership after addressing the blemishes on their credit report or documenting their nontraditional credit history, something they would not have had the ability to do without MRCDC’s services. MRCDC’s Homebuyer Education classes were held in locations accessible to residents of an eight-parish service area.
- Building community partnerships. RHED/RIF grant helped MRCDC develop partnerships with six faith- and/or community-based organizations to expand on the housing opportunities that MRCDC alone could provide for low- to moderate-income families. MRCDC’s focus on single family housing production has raised the level of the local housing stock, helped families build assets and wealth through homeownership, provided more housing choices than the substandard housing that currently exists, and created improved living environments.
MRCDC’s capacity is narrow but deep. The organization owns 11 apartment buildings, directly managing seven of them, and building houses financed through USDA loans and loan guarantees. Through the RIF program, it expanded its business to the building and selling of single family homes to low- to moderate-income residents through a revolving loan fund. This programmatic focus has allowed the organization to be highly self-sufficient and fiscally sound.
MRCDC Home Construction
MRCDC Home Nearly Complete