South Bend ramps up effort for affordable housing, redevelopment in city center
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South Bend, like many cities that have ridden the waves of industrial change, has a housing problem. And, city leaders this year are seeking creative ways to close the gap.
A series of recently proposed projects — some still seeking funding — promise to bring hundreds of housing units to the area, specifically for low-income residents, while also transforming long-neglected parts of the city.
The recent push was boosted earlier this year by the award of several tax incentives. The city and its partners are now looking to double down on this success in an effort to fill in vacant property, revitalize neighborhoods and spur new investment downtown.
“We’ve tried to position ourselves as a city where developers know we’re willing to be creative and work with them to come up with the best possible project we can come up with,” said Caleb Bauer, South Bend’s executive director of community investment. “We realize it’s not only good for the residents — certainly that’s the most important part — but it’s good for our community as a whole to drive investment in our downtown.”
Caleb Bauer talks about need for affordable housing developments.
The demand for housing among the South Bend’s least wealthy residents sits at about 6,500 units while the city only has about 4,000 to offer, according to a recent Rice University study commissioned by the city. That means South Bend and its partners need to add about 2,500 low-income units to bridge the gap.
But, city leaders say finding the resources in a market that generally disfavors new construction isn’t easy, and South Bend is not alone in its need.
“We still have a big appraisal gap pretty much across all the tracts in South Bend except for those around the University of Notre Dame,” Bauer said. “What that means is, a new construction home, the cost of materials and labor to build it will immediately appraise for less than what it costs to construct and so that obviously is going to make it really difficult for new construction to occur organically within the housing market.”
So, South Bend is throwing its hat in the ring for specialized support.
Indiana’s administration of the federal Low-Income Housing Tax Credit program supports the rehabilitation or creation of new rental housing for lower income tenants.
The grants are competitive and South Bend hadn’t seen an award for years until January, when two projects received funding.
Bauer speaks about the ways South Bend supports developers seeking support for low-income housing.
SB Thrive will be a $14.5 million newly constructed apartment building on McKinley Avenue near Bethel University. The complex owned by the South Bend Heritage Foundation will bring 54 affordable units to the city.
Diamond View Apartments will feature two buildings — one of 60 market-rate apartments and another of 60 low-income units — on a vacant lot across from South Bend’s Four Winds Field.
A third project, The Monreaux, by Notre Dame basketball standout-turned-developer Devereaux Peters, will bring 60 units to the corner of Michigan and Monroe, a couple blocks east of Diamond View. The Monreaux was passed over for an initial round of state tax credits but was later awarded support from a set-side for first-time, underrepresented developers.
The city is now looking to build on its recent wins by partnering with developers who have seen past success reeling in the state tax credits.
The South Bend Common Council last month signaled its support for two additional projects.
One proposed development at Lafayette and Stull streets, being developed by KCG Companies, seeks to add 50 affordable housing units for senior living. Together with Diamond View and The Monreaux, the project would add 170 units near South Bend’s downtown core.
The location, Bauer said, is significant. Not only is it walkable — a short distance from the city’s downtown Transpo bus hub and a host of other city services — but the developments also fill in a long-neglected plot of dilapidated buildings demolished several years ago.
These developments — along with other downtown growth, such as the recent Ivy at Berlin Place apartments overlooking Four Winds Field — seek to expand South Bend’s downtown footprint south.
“To have both of those projects going in, it adds people, it adds vibrancy,” Bauer said. “Those are really exciting from kind of a downtown development perspective.”
The other project supported by city councilors last month, and perhaps the most geographically ambitious plan, proposes 50 residential homes across 35 vacant lots across the city.
The project is being led by Evansville-based nonprofit developer Advantix, which has received multiple tax credit awards across Indiana in recent years. Their South Bend proposal uses pre-approved housing plans adopted by the city last year and puts forward a lease-to-own model, meaning renters may be given the option to purchase their home after living there for 15 years.
Many of the proposed residential units — including a mix of single-family homes, duplexes and townhomes — fall in the city’s Near Northwest Neighborhood and could fill in openings at properties left vacant through tax sale acquisition, the city’s use of a federal blight elimination program and former Mayor Pete Buttigieg’s 1,000 Houses in 1,000 Days initiative that planned rehabilitation and demolition of empty homes across the city. Advantix has committed more than $14 million to this latest proposal, according to city documents.
South Bend owns more than 200 acres of vacant land, according to the Rice University study. Developing a rent-to-own model on some of these spaces provides a long-term solution to chipping away at the city’s housing gap, off-loading and revitalizing property once acquired by the city and returning property to the community’s taxable assessed value, Bauer said.
“The hope is that, you know, as you get some of that momentum, you can see some rising property value for neighbors,” Bauer said. “Certainly, we don’t want to see them really spiking, but we want to see a gradual rise that could get us to the point that we’re seeing market activity without any subsidy.”
Once a project is funded with low-income tax credits, developers have a two-year timeline for completion. The clock is ticking now for the SB Thrive and Diamond View, which received their awards in January. Because it received set-aside credits, Bauer said The Monreaux’s timeline won’t begin until the end of this year.
Applications for the current round of credits are due this month, and Bauer said the city could hear back about awards by November. If chosen, new developments could wrap up by January 2026.