North Dakota HFA: Developer Closes Value Gap with Investment Incentive

BISMARCK, ND - Building Innovations, LLC of Underwood, ND, closed a financial gap between construction costs and property values with the North Dakota Housing Finance Agency's Rural Housing Investment Incentive Pilot Program.

 

"The intent of the incentive is to help rural communities meet an increased demand for housing by encouraging private sector investment," said Jolene Kline, NDHFA planning and housing development director. "Our goal is to keep the housing affordable."

 

Building Innovations received an $18,000 grant from the NDHFA. The funds supported the construction of a speculative single-family home in Underwood.

 

"Being able to provide new homes in a rural community keeps that community going. Without new construction, they lose residents and businesses to more urban areas," said Ryan Tacke, Building Innovations vice president of operations. "Continued development is necessary for economic growth."

 

By matching private sector investment, the RHIIPP supports development of single- or multi-family housing, or the substantial rehabilitation of existing structures in areas of the state that are difficult to develop. Eligible contributions include financial investments, donated property and infrastructure improvements.

 

Building Innovations estimates the cost of constructing the Underwood home at $186,000 and the projected value is $150,000. The result is a value gap of $36,000. In addition to the funds received from the NDHFA, the City of Underwood, Underwood Economic Development Corporation and Building Innovations all contributed equity to the project. Debt financing was provided by North Country Bank through a participatory agreement with CommunityWorks North Dakota.

 

"The partnerships we have with NDHFA, CommunityWorks, our local lender and the community all helped us address the challenges we faced," said Tacke.

 

NDHFA has invested $400,000 in the pilot program. The agency will report its findings to an interim legislative committee later this year.

 

The Industrial Commission of North Dakota, consisting of Governor John Hoeven, as chairman, Attorney General Wayne Stenehjem and Agriculture Commissioner Doug Goehring, oversees the NDHFA.