Infill housing development on the rise in South Bend
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Following his career as a large-scale solar developer, Jordan Richardson, co-founder of Inner City Development, moved into real estate development.
Motivated by a desire to take ownership for the advancement of his African American community, Richardson and his business partner, Tony Ruiz, decided it was time to start new builds after a couple of years renovating existing housing stock.
“It was something that I felt I needed to be a part of if I wanted to improve things within my community. The city has a major need for infill development,” Richardson said. “Across the Midwest, there’s a lot of homes that have been left blighted, a lot of those homes get knocked down, and so there’s just a lot of left open lots.”
After connecting with Sam Centellas from CDFI Friendly South Bend at a “Build South Bend” event, the duo worked with the nonprofit that helps match local borrowers with appropriate lenders on several renovation projects.
As the company delivered successful projects in quick succession, Richardson said people started to ask about possible new construction projects. Once again, they reached out to Centellas for assistance.
The developers recently held a ribbon cutting for a brand-new stacked duplex on Sherman Avenue. With one unit on top of the other, the 833 square feet homes boast 2 bedrooms, one bathroom and several luxury finishes.
Construction took about seven months and support for the project also came from the city and other state and local organizations.
“Our units are between 800 to 900 square feet,” Richardson said. “We’re really trying to master that square footage, because we feel at that point things are affordable, they’re rentable and people are happy.”
With construction costing over $300,000, nonprofit community development financial organization Cinnaire provides short term capital to actually build the house, after which Inner City Development would use the house as collateral to secure a long-term loan, usually a mortgage from a traditional bank to refinance the development.
“CDFI Friendly was one of those organizations that was really able to fill a gap for a small developer. We’re working as a unit to make things happen,” Richardson added. “Cinnaire provided the upfront capital under a line of credit tool, and then it is up to us to find long-term capital that we can utilize to finance the project.”
Along with the newly launched building, Richardson said that the company has six active infill projects under management. With winter in full swing, he projects the construction timeline could easily grow by at least 30%.
CDFI Friendly South Bend
Community Development Financial Institutions (CDFIs) usually place emphasis on the development value of a project instead of profit. With a location in Indianapolis, Centellas said Cinnaire provided technical assistance in addition to financial support.
While this is the first infill development for CDFI Friendly South Bend, the organization has helped finance the purchase and renovation of about 20 different properties.
“There’s other infill housing that’s happening in the community. There’s going to be a couple 100 units coming online in the next few years,” Centellas noted. “We’re excited to be a part of that momentum, and to be a spark to keep that going.”
Located in the historically redlined Near Northwest Neighborhood, minority developers like Inner City Development are taking the lead and becoming champions of their community.
“People have wondered if development would come back to this neighborhood, and it’s nice to see that they are starting to come back,” Centellas said. “New things are being built, homes are being fixed and renovated, and those neighborhoods are returning to being great, affordable neighborhoods for families to live in.”
Centellas speaks about the impact this infill development and future projects will have on the historically disenfranchised Near Northwest Neighborhood.
With several lots left vacant, an unintended result of former Mayor Pete Buttigieg’s 1,000 houses in 1,000 days blight elimination initiative, the area had not seen a lot of development in the past decade.
“It’s an ecosystem of people that are helping make this successful,” Centellas added. “Our developers are at the core of helping to orchestrate that system to make sure that it works so that families can have safe and affordable housing in our community.”
City of South Bend efforts
When he took his role as director of planning and community resources for the city of South Bend, one of Tim Corcoran’s first assignments was to address the aftermath of the 1,000 houses in 1,000 days initiative.
Undertaken to redress the nuisance posed by vacant and abandoned houses, there was hardly any “neighborhood” left after the blighted properties were torn down, creating gaps in the community.
“What we found was that no one had all the answers and that the problem was a lot more difficult than people think,” Corcoran said. “We’ve become fairly skilled at knowing where the challenges are going to be and addressing those challenges so that we can encourage and get a lot more interest.”
Now, Corcoran said there has been revived infill development interest from production home builders, coupled with increased participation from residents and nonprofits in neighborhoods that have also been damaged by the housing market crisis, de-industrialization, suburbanization, and even more nuanced policies like redlining.
“Because a new house often will not appraise for the value of the construction cost in that neighborhood, they haven’t worked in some of these older neighborhoods for probably 60 years,” Corcoran noted. “So there’s been decades where homes were being incrementally demolished because people have walked away from those homes.”
Marianne Cusato, director of the Housing and Community Regeneration Initiative at the Notre Dame School of Architecture, added that the mix of private, public and nonprofit investment in infill development projects is necessary to prevent unintended consequences.
“If it’s only private investment, then you’re going to gentrify. If it’s only nonprofit, you’re actually going to probably hold the community down. If it’s only municipal, then it also becomes stagnant,” Cusato said. “Then the heart and soul of the community needs to be felt, and as new people buy into the community, they should be able to plug into something rather than replacing something.”
Instead of continuing to build out, the city is prioritizing infill housing as an important part of its strategy to attract residents to South Bend for several reasons.
“Being able to infill on vacant lots within existing neighborhoods helps make that neighborhood a stronger, more resilient neighborhood by bringing more people and more families to that neighborhood, and that in turn, helps support businesses and the city in general,” Corcoran said. “The first thing that we did was change a raft of zoning policies, allowing for a broader range of housing typologies that naturally occurred in many of these neighborhoods.”
With many Midwestern cities predating the automobile, most neighborhoods were designed to be highly walkable, with a mix of housing types and small business opportunities built in. The city made zoning changes that shrank minimum lot sizes, reduced front setbacks and adjusted or eliminated minimum parking requirements.
“It’s not only economically a great solution for a city to regenerate these communities, socially we’re starting to see a renewed awareness of the value of a walkable community,” Cusato said. “Our neighborhoods, especially neighborhoods closest to our downtown, very often have a lot of what we would call ‘missing teeth.’ Infill housing allows us to fill those in.”
While the city has acquired hundreds of tax sale properties across South Bend, it has concentrated its infill housing efforts in the Near Northwest Neighborhood and the Southeast Neighborhood, mostly because of the active community development corporations in these communities.
“One of the things that the city did to help community development corporations, or anyone who wanted to take part in the healing of these neighborhoods, we developed a series of pre-approved house plans that you can get for free,” Corcoran said. “To have an architect design a house for you may cost $10,000 and we already know that it’s a challenge to make these houses affordable. So even just taking $10,000 off the top is just one little way that we start to chip away at the affordability issues.”
So far, Corcoran estimates that about 25 infill projects using the pre-approved plan have either been completed or are in progress, with another 95 in pre-planning stages. Building permits timelines for projects using pre-approved plans are also significantly shorter, taking only a day most times.
“These range from townhouses, stacked duplexes, side by side duplexes, to accessory dwelling units behind houses as well,” he said. “In some communities, permits can take weeks, months or even years. We are very pro-development, and we really want people to come and live here and build here.”
Apart from its neighborhood revitalization benefits, Corcoran said infill development is “probably the most powerful tool for sustainability in any community.” Since many city services are already established in these areas, the toll on city resources is minimal, as opposed to development on the city’s edge.
“If there’s city funds involved, we also look at how we can add other sustainability measures like additional insulation or heat pumps instead of gas furnaces,” he added. “Those are ways that we could potentially also help the long term lifespan and sustainability of a particular unit as well.”
As the city continues to pursue this sort of development, Cusato said South Bend needs to make sure the right building types are being built on appropriate lots.
“It’s just really important to still have a plan for the scale of the buildings,” Cusato said. “So we’re building communities that are cohesive and not just anything goes.”
Corcoran encouraged aspiring developers to connect with the planning and community resources team at the city to workshop and structure their project ideas.
“We go out of our way to help our small-scale developer community with figuring out the right lots for the right houses and working with them to subdivide the land as efficiently and as effectively as possible,” he added. “If a person is open to it, we will take a very active role in that project, helping that person or that group achieve what they’re looking to achieve.”
Since the city is actively involved in many of these infill projects, Corcoran and his team realized that some developers were shelling out as much as $30,000 to reconnect to the city’s sewer and water networks. Currently, the city is offering a $20,000 sewer lateral reimbursement grant for new infill residential construction with up to five dwelling units. Pre-approval is required.
And while construction costs are expected to keep going up, Richardson hopes to continue to creatively provide “impactful” housing opportunities within his community.
“With these duplexes, we’re on the frontlines helping people understand that they don’t need a 1,000-square-foot, two-bedroom apartment,” Richardson said. “We’re really pushing and trying to understand how to make housing affordable, when the reality is that nothing is affordable.”