CDC Spotlight: A holistic approach to housing in Brownsville

Community development corporations (CDCs) are the lifeblood of the low income housing movement, building quality affordable homes and preserving diversity and community in traditionally marginalized areas. In Texas we are fortunate to have several outstanding CDCs working tirelessly on behalf of low income residents. This series of CDC Spotlights will take a closer look at what that work entails, the challenges CDCs currently face, how CDCs are evolving and more. Today’s installment spotlights the Community Development Corporation of Brownsville in South Texas.

The Brownsville-Harlingen area, in the Rio Grande Valley along the Mexican border, is the poorest metropolitan region in America. Its population is also growing rapidly, accelerating the demand for affordable housing options. Many families have little choice but to settle in colonias, the informal communities outside of cities that often lack paved streets, drainage systems, street lights and other basic infrastructure. Nick Mitchell-Bennett, the executive director of the Community Development Corporation of Brownsville (CDCB), calls the colonias the Valley’s “relief valves.”

“The need for affordable housing is massive. It’s bigger than you can imagine,” says Mitchell-Bennett, a recipient of one of our 2015 Texas Houser Awards. People need to live somewhere, and with Brownsville’s poverty rate at more than 35 percent, the colonias often present the quickest route to homeownership. The associated problems of poverty, including a lack of generated wealth, poor finances, predatory lending, substandard housing, subpar public health and more, often follow.

Mitchell-Bennett would like for CDCB to tackle not just the first part of the problem, the lack of affordable housing, but the rest of it as well. This comprehensive mission drives CDCB well beyond the parameters of simple home construction, and serves as a powerful example of what a community development corporation can mean for a low income area.

“What we do is not just housing,” Mitchell-Bennett says. “For us it’s looking at, what are the major issues that face our community?”

‘Vertical’ assistance

CDCB recently celebrated its 40th anniversary. For much of their history, Mitchell-Bennett says, “We were strictly a production group. We had a huge need, and we needed to build. And there’s nothing wrong with that.” But he began to believe that CDCB could play more of a role in some of the interconnected problems facing low income residents of Brownsville. “I started to see more of this financial need in these families’ lives, and owning a house the way we always didn’t wasn’t going to meet their need.”

When a new face walks in the door of the CDCB office in downtown Brownsville, as happens around 70 times each month, they are directed toward a staff housing counselor and financial coach. Then, if the new client decides to pursue a path to homeownership, they move up through a ladder of services offered by the CDC. As Mitchell-Bennett puts it, “We’re very vertically-inclined.” If a client is approved for a loan from CDCB’s state-licensed mortgage lending department, they can work with one of the organization’s partner builders or help design their own home through a customized process with [bc]Workshop. If they want to purchase a pre-existing home and want to live in a certain area, they can work with CDCB’s real estate agent.

Mitchell-Bennett says that CDCB’s step-by-step process helps people with lower incomes find ways to afford a home. But it’s still a challenge, even with the organization’s more than 40 years of experience building quality homes at a low cost. “Every buyer who comes through this place, we get as creative as we can with the financing,” he says. “The problem is that we’re working with clients who make $9 an hour.”

Challenging environment

Construction on a Valley budget is difficult. It’s nearly impossible for CDCB to build a home in their clientele’s price range – which typically means anywhere from $50,000 to $90,000 in construction costs for a new home, or around $67,000 for a replacement house in a colonia – without some outside assistance. CDCB clients work to save money, but the average buyer needs at least $10,000 in assistance from a public or private source in order to make the math work.

CDCB relies on public affordable housing funds such as the HOME program (which is currently at risk on Congress’ chopping block) to supplement construction costs. Last year, the state of Texas and the City of Brownsville both ran out of their allocated HOME funds, meaning that CDCB could only build 60 homes instead of their target 120.

Low Income Housing Tax Credits (LIHTCs) present another option for funding for multifamily developments, and CDCB has applied for state LIHTC dollars three times and been awarded for two projects. But the Rio Grande Valley’s poverty presents issues in the tax credit world as well, as part of the state requirements include fair housing guidelines for prioritizing projects in “high opportunity” neighborhoods. The problem is that the Valley’s widespread poverty makes such an area extremely hard to find – Mitchell-Bennett says that CDCB has identified a small part of downtown Brownsville that qualifies, and is looking into purchasing property there. But typically, LIHTC proposals in the area must negotiate special carve-outs around regulations in order to move forward.

“I’m fully, 100 percent in support of fair housing,” Mitchell-Bennett says. “But we have to find a way to make places like the Valley work.”

Risks of poverty

Predatory lending is a persistent threat for the Rio Grande Valley’s low income families. Presented with the need for outside help when attempting to buy a home, many enter into contracts with small mortgage companies that began to crop up along the border a decade ago. A small down payment but high interest rates, without escrow for taxes or insurance, can cause families to sink into years of mounting debt, or to lose their house entirely.

“There’s been a culture and an allowance of letting people get taken advantage of,” Mitchell-Bennett says. “But the need is so great that that can happen.”

CDCB loans offer a different path. Mitchell-Bennett just announced a large grant from JPMorgan Chase to begin a small dollar lending program as an alternative to payday loans, another industry that has benefited from the debt of low income people in the Valley. And about a quarter of CDCB’s loans go beyond a simple transaction, reflecting the organization’s commitment to address resident needs. The organization maintains an ongoing relationship with the borrowers of these “service loans,” helping them manage their debt and providing financial counseling. For a family that travels around the country picking seasonal fruit, for example, loan payments may have to wait on the harvest calendar. “We have clients who are always late, but we know that,” Mitchell-Bennett says. “We get that, and we work with them.”

After all, only one in 14 clients who initially approach CDCB are eligible for a loan “at first glance,” he says. For the rest, financial counseling is key. Each of CDCB’s staff counselors works with 75 to 100 households at any given time, and not just on home loans – CDCB loans can help a teenager go to college, a couple start a small business and much more.

The goal, Mitchell-Bennett says, is educating residents on how to get on the path to homeownership and beyond to financial security. “You can’t buy a house with a credit score of 490,” he says. “You can’t buy a house if you’re taking out payday loan after payday loan after payday loan.”

Finding solutions

For many CDCB clients, the relationship with the organization doesn’t end on moving day. The organization is expanding its post-ownership counseling to include education around home maintenance, retirement savings, wills and testaments and more. The extra knowledge will help families take advantage of their new homeownership status, according to Mitchell-Bennett. “Most families want to pass down their new asset of a house,” he says.

A new program called Mi Casita incorporates financial planning with a housing model originally developed as a response to natural disasters. The Rio Grande Valley is a large floodplain that abuts the Gulf of Mexico, one of the planet’s prime incubators of hurricanes and tropical storms, and combined with the substandard drainage and housing infrastructure in many colonias, many households are at great risk for damage from disasters. CDCB developed the RAPIDO program along with TxLIHIS and several of our partners, a model for building temporary-to-permanent housing modules quickly after disasters strike, providing families with a shelter to live in while a permanent, customizable home is built out around them.

As Mitchell-Bennett thought about the rising cost of building affordable homes, he started to consider the RAPIDO module as a solution.  “We thought, hell, we already have a disaster in the colonias in housing,” he says.

Developed with [bc]Workshop, the Mi Casita houses are slightly larger than disaster recovery homes and can be built for around $40,000. Then, as the family’s income grows or more outside assistance becomes available, the home can be built out – a bathroom can be expanded, a porch can be added. The savings program associated with Mi Casita has families pay slightly more on loans and put the extra money into a savings account, in order to both prepare residents for higher payments and build savings for a downpayment to eventually purchase the home. Two 500-square-foot casitas for elderly residents have been built so far, with more in the pipeline.

Homes empower

Mitchell-Bennett wants to make sure everything that CDCB does “cross-pollinates” in order to improve lives in the community, from working with local construction firms to buying local building materials to running a construction community service program for high school students. “If we can use what we do to impact families across their lives, then we’ll do that,” he says.

Perhaps the clearest expression of CDCB’s ideals is the customizable aspect of the homes they build. In the past, families could choose from five different housing designs that CDCB offered. But Mitchell-Bennett wanted to experiment to see if residents could have more input in what they wanted out of home while still keeping construction costs low. It’s worked, and Mitchell-Bennett says that families who participate in the customized design process can hardly believe that they have some control over their housing.

“These are typically people who are never given a choice in their lives,” he explains. “Giving a family choice is an empowering process. They have the choice to walk in our front door. They have the choice to take this or that loan product. We make sure we put choices in front of them at all times.”

The philosophy is best expressed in CDCB’s video, “Choice Empowers”: 

By turning homeownership into an educational and empowering process, CDCB wants to kickstart change in other aspects of Rio Grande Valley life.

“We hope that the residual of that will be that they’re more involved in their kids’ school, or their church, or that they vote,” Mitchell-Bennett says. “The American Dream is very much alive and well in Hispanic culture, to own your own home. We can help them do that. But how can they take full advantage of their new asset and their new knowledge to improve their lives for the better?”