By Colleen Copple, CCDO Consultant
Imagine what could happen to your Weed and Seed community if you helped 50 low-income families in the same neighborhood own a home. A Weed and Seed site in Wisconsin imagined the potential of this asset-building strategy and is working to make it a reality.
The Weed and Seed site in Racine, WI, recently launched its Individual Development Account (IDA) Homeownership Program to nurture home ownership in the community and reap the benefits of individual asset building. The program is designed to help 51 Racine Weed and Seed families establish IDA accounts—savings accounts created exclusively for saving money to buy a home. The benefit of an IDA account over a standard savings account is that Racine is putting $104,000 of city revenue into the project to match the amount of money saved by participants—up to $2,000 per person.
Mayor Gary Becker announced the good news at a press conference in November, where he pointed out why the program makes sense. "The ultimate goal is to strengthen the neighborhoods. The question is, as a city, why do we care? Why do we want to support a program like this? It creates better neighborhoods and a better community."
Home ownership is considered the most important asset-building strategy for individuals, and it has positive effects on families and communities. Building assets increases household economic stability and lowers marital stress, encourages the attainment of education, increases property values and property maintenance, reduces neighborhood transience, and increases local civic involvement. These are all elements that help families stay together, lead communities to prosper, and reduce crime.
The Racine Weed and Seed site is 1 of 17 pilot sites launched in 2006. Nevertheless, Racine's approach to providing the IDA match is somewhat unique. Historically, the city has dedicated a set amount of Community Development Block Grant (CDBG) dollars to a Housing Rehabilitation Loan program. Over time, the interest and payments from the recipients have built a nest egg that the city is using to provide local matching funds for the IDA program.
Last year, CCDO entered into a partnership with the Office of Community Services (OCS) in the U.S. Department of Health and Human Services to build the capacity of Weed and Seed sites to develop IDA home ownership programs. Through OCS's Assets for Independence (AFI) program, IDA programs can receive federal matching funds of up to $2,000 in savings per individual or $4,000 per family. The IDA program must raise local dollars to at least equal the federal match. Some programs match at a rate higher than 2 to 1, depending on the housing market and the cost of purchasing a home in the neighborhood. After local matching funds are secured, the IDA program recruits participants and manages the savings accounts and matching funds. Down payments and closing costs are paid directly to the title and mortgage companies on behalf of the IDA participants.
OCS also plans to study these sites as a demonstration project that will evaluate home ownership as a strategy for stabilizing high-risk neighborhoods. The evaluation will also help determine whether this approach can reduce crime and improve the quality of life in Weed and Seed sites.
In 2006, CCDO provided the sites with technical assistance to help them design and build an infrastructure for their IDA programs so that they were ready to hit the ground running when they applied for and were awarded AFI funding.
The Racine Safe Neighborhood Alliance, which is the Weed and Seed host agency, will administer the program. Under Racine's IDA program, Weed and Seed residents must participate in a 6-month home buyer training program that includes financial literacy training before they can buy homes. In addition, home buyers will receive ongoing post-purchase support from the alliance to ensure that they remain successful homeowners.
Weed and Seed steering committees have been actively involved in the IDA demonstration sites. "Ownership is really a pride issue, and if we can encourage that and turn the neighborhoods around, that would be to the betterment of the community," said Jack Butgereit, a member of Racine's Weed and Seed steering committee.
For more information, contact:
Tanya Canady
262-636-9596
