City, nonprofit explain $240,000 cost to rehabilitate one Evansville home

Evansville Courier & Press

This vacant, dilapidated house at 101 E. Tennessee St. will be turned into a home for a low-income family at a $240,000 public cost.

EVANSVILLE, Ind. – In August 2019, a local nonprofit obtained a vacant, dilapidated house at 101 E. Tennessee St., with the goal of turning it into a rehabilitated home for a low-income family.

HOPE of Evansville paid $11,000 for the property, according to Vanderburgh County Assessor’s Office records. Last week, a city government board approved a grant agreement enabling HOPE to move the project forward.

The grant is for $240,000.

If that seems like a lot of money to save one damaged property, it is. But because the funds are from the U.S. Department of Housing and Urban Development (HUD), the city and HOPE are operating under federal rules, said Kelley Coures, director of the Evansville Department of Metropolitan Development.

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The house at 101 E. Tennessee St. is in Jacobsville, a neighborhood where city leaders have prioritized creating decent, low-income housing opportunities.

Built in 1909, the house has broken windows and a damaged brick foundation. A fire-damaged property sits across the corner at East Tennessee and North Elsas Avenue.

HOPE has the goal of completing about 60 affordable housing units for about $12 million. The city has relationships with other agencies with similar missions. Coures said the average cost to do one unit under federal guidelines is more than $200,000.

“The difference between the federal funds and Habitat (for Humanity) is Habitat can use volunteer labor,” Coures said. “With federal funds, everything has to be bid out. You have labor costs, as well as the acquisition of the property.”

Also required is a multi-tiered environmental review that covers lead-based paint, asbestos and a determination if any Native American tribes lived on the land.

“Only $187,000 of that $240,000 grant is for actual work inside the home,” Coures said.

HOPE of Evansville obtained a vacant house at 101 E. Tennessee St. last summer for $11,000. A City of Evansville board last week approved $240,000 in federal funds to rehabilitate the property for use as low-income housing.

The City of Evansville annually receives $500,000 to $700,000 from HUD’s Home Investment Partnership program. Coures said these funds can’t be used for any other purpose, and if the city doesn’t spend them, they go to other communities.

HUD rules require that one project must not exceed $260,000 to complete, and the home can’t be sold for any greater than 90 percent of the area’s average home price. In Evansville, that’s about $125,000. The buyer must meet low-income requirements.

“HUD doesn’t care what it assesses for,” Coures said. “It only cares that you put a low-income homebuyer in that property. If they tried to sell that house for greater than $125,000, the City of Evansville would be sued for violating (HUD) policy.”

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HOPE of Evansville and the city turned their attention to 101 E. Tennessee St. when a project on Mary Street, using the same funding source, did not pan out. It became cost-prohibitive due to excessive lead-based paint and other environmental issues, according to officials.

“That caused us to sit on the money and look for another project,” said Josh Case, executive director of HOPE.

Traditionally, HOPE’s effort to establish new affordable housing in the city, using federal assistance, has focused on the Haynie’s Corner area. But Case said Haynie’s Corner has made so much progress in recent years that private investors are now building and selling homes there for a profit.

In high-poverty Jacobsville, many lots are empty due to the city's recent priority of removing blight. Those lots await infill housing construction through a partnership involving the Vectren Foundation, the city and nonprofits.

The three-bedroom house at 101 E. Tennessee St. is still standing, and it was deemed a good candidate for the HUD-funded project.

Coures said the fact that it will again become someone’s home in the future is good news, even though the public price is high.

“The thing to remember is there is a cost to develop housing for a low-income homebuyer," Coures said. "It’s greater than a person doing a home rehab on their own, or Habitat using volunteer labor. It’s a whole different animal.

“If a person disagreed with HUD policy, they should write their congressman, because that’s where HUD policy starts.”

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