IDA Demonstration Project
By Maureen Garrity, Consultant, CU Breakthrough, National Federation of Community Development Credit Unions
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In 2005, CCDO had a question: could Individual Development Accounts—commonly known as "IDAs"—serve as a tool to promote home ownership in Weed and Seed sites? To answer that question, CCDO formed a partnership with the Assets for Independence (AFI) program of the Office of Community Services at the U.S. Department of Health and Human Services, and the Weed and Seed IDA Demonstration project was born.
IDAs are restricted, matched savings accounts that help low-income people save money that can be put toward an appreciating asset. In most IDA programs, matched savings may be used to help purchase a first home, pay for higher education, or capitalize a small business. But the Weed and Seed IDA Demonstration Project focused on only one of these assets—home ownership—to test the impact of a geographically concentrated asset-building strategy on community stability and neighborhood revitalization.
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In the last quarter of 2005, CCDO asked all Weed and Seed sites that were interested in the IDA pilot project to submit Letters of Intent to participate. Thirty-eight sites responded and 20 sites were invited to an initial training workshop in Tucson, Arizona. CCDO selected the National Federation of Community Development Credit Unions (through its CU Breakthrough program) to provide technical assistance to help individual sites design their IDA programs and, if appropriate, apply for grants through the federal Assets for Independence (AFI) program. After initial training and consultation, half of the sites decided they were not ready to go forward with IDAs during the demonstration project's timeframe, although most remain interested in pursuing IDAs in the future.
Six Weed and Seed sites applied for AFI grants to establish new IDA grants in their communities and all six were successful. These six grants—for Nogales and Yuma, AZ; Racine, WI; Great Falls, MT; Newburg, KY; and Gastonia, NC—will help nearly 250 individuals or families to purchase homes within their Weed and Seed neighborhoods over the 5-year grant period. These sites have leveraged $615,588 in matching funds that will directly benefit their communities.
Another four sites established formal partnerships with current IDA providers that will expand those programs into the Weed and Seed neighborhoods. The Weed and Seed sites in Atlanta, GA, and Brownsville, TX, both partnered with their local United Way organizations. Atlanta Weed and Seed also contributed to a successful application to augment the AFI grant funding available to United Way. In Ogden, UT, the Weed and Seed site established a partnership with the Utah IDA Network, a national leader in mobilizing local and federal resources for statewide IDA programs. Finally, the Weed and Seed site in Pine Bluff, AR, partnered with the Southern Good Faith Fund, one of the nation's most successful IDA programs, which immediately made 25 fully funded home ownership IDA accounts available to the site.
Although most of the sites have been operating their IDA programs for less than a year, they have already opened 96 accounts. Tanya Canady, Weed and Seed IDA Coordinator for Racine, says that most account holders tell her they thought that their dream of owning a home was not possible due to their low incomes. Individuals who open an IDA with the Weed and Seed demonstration sites receive matching funds, ranging from $2 to $5 for each dollar they deposit into their account. In addition, IDA programs include support services such as budget counseling and home ownership workshops to help participants achieve their goals.
One of the central lessons learned so far is that IDA partnerships can bring unexpected benefits. In Brownsville, United Way of Cameron County is coordinating a team of local financial institutions that are working to develop alternatives to predatory lending. The partnerships created for the IDA project will bring these affordable alternatives to the residents of the Weed and Seed site. These same partners also collaborate on a Free Tax Assistance Project that helped local families access more than $940,000 in Earned Income Tax Credits for the 2006 tax year.
Partnerships have also been the keys to success for the Weed and Seed IDA Demonstration site in Racine, WI. Racine Weed and Seed has developed a partnership with the local housing authority, which has enabled the site to enroll eight people with disabilities as new IDA account holders. All of these individuals are in the Section 8 Rental Assistance Program, which also makes them eligible for the Section 8 Homeownership Voucher Program that allows vouchers to be used to make monthly mortgage payments.
In Great Falls, the Weed and Seed IDA Demonstration site has a partnership with the Montana Home Choice Coalition, whose goal is to create better community housing choices for all people living with disabilities. The coalition has helped more than 40 people with disabilities to purchase homes, overcoming the many financial and regulatory complications involved. The World Institute on Disability Access to Assets Program provided technical assistance to the Great Falls and Racine Weed and Seed sites to help address these challenges.
In addition, Great Falls, Racine, and Ogden all have partnerships with the U.S. Department of Housing and Urban Development's (HUD's) Revitalization Area Program, which also can expand home ownership opportunities in targeted neighborhoods. For example, Revitalization Areas are eligible for the Good Neighbor Next Door program that enables police officers, firefighters, teachers, and emergency medical technicians to purchase HUD-owned homes at 50 percent of their appraised value. This program promotes neighborhood restoration by encouraging people who are committed to public safety and education—the pillars of strong communities—to purchase and live in homes located in economically distressed neighborhoods.
For more information about the IDA Demonstration project, contact:
Maureen Garrity
CU Breakthrough
National Federation of Community Development Credit Unions
406–461–2478
For more information about the Access to Assets Program, contact:
Thomas Foley
Access to Assets Project Manager
World Institute on Disability
510 16th Street, Suite 100
Oakland, CA 94612
510–251–4312
Fax: 510–763–4109
