Pawnee City Didn’t Wait for Housing to Happen

The month of May is Affordable Housing Month. Rural Resurrection continues to look at ways to help communities to provide safe, decent, affordable housing.

Across rural America, housing storages are impacting nearly every community. With a variety of factors impacting the housing market, many communities look at the issue as an unsolvable problem. Land prices are high, construction costs are rising, and developers often don’t see a viable profit in small markets. As housing is a need, rather than a desire, it is unlikely that the market will self-correct.

The town of Pawnee City, Nebraska, decided not to let market forces control its housing needs. Instead, the community developed its own solution. Through a locally-driven housing initiative, Pawnee City created a housing fund to incentivize new home construction. A fund targeted to making it possible for working families to purchase a modern, livable home in the community.

Bridging the Affordability Gap

Through the housing fund, qualified homebuyers can receive up to $50,000 in affordability assistance. The funding is structured as a zero-percent interest loan with no monthly payments. The loan stays in place as long as the homeowner continues living in the property. In practical terms, this loan helps to close the gap between rural incomes and current construction costs. It essentially lowers the effective purchase price of a newly built home and makes financing far more realistic for working families.

The program is specifically targeted towards workforce housing, limiting the use of the funding to households earning up to 120 percent of the area median income. This keeps the fund helping those who need it the most.

How Other Rural Communities Can Do the Same

Pawnee City’s approach may look ambitious for a small town, but the basic framework is surprisingly replicable. Rural communities across the Midwest could set up similar proactive programs by focusing on a few key steps:

1. Create a Local Housing Partnership

Successful rural housing programs rarely start with a developer. They start with a group of local residents who love their community. This often includes the city, a community foundation, local banks, and economic development leaders. Nothing needs to be formally created, though it does help at times when you don’t have a community foundation to run funding applications through. This partnership can also be a source of matching funds, the Pawnee City Community Foundation (PCCF) provided the $50,000 local match for the program funding they saught.

2. Secure Seed Funding

Many states offer housing or community development grants that can help jump-start local housing programs. These funds can provide the upfront capital needed to reduce purchase prices or support affordable housing construction. The PCCF was awarded $640,000 in funding provided through the Nebraska Affordable Housing Trust Fund (NAHTF) from the Nebraska Department of Economic Development (NDED).

3. Focus on the Feasibility Gap

In small towns like Pawnee City, the challenge isn’t always the demand for housing, it’s the gap between construction costs and what homebuyers can afford. Programs like down-payment assistance or deferred loans can close that gap. As mentioned earlier, the $50,000 subsidy offered in Pawnee City will be in the form of a 0%, zero payment loan for as long as you own and live in the home.

4. Start Small and Prove the Model

As a town of only 1,000 residents in rural southeastern Nebraska, Pawnee City didn’t strive to build dozens of new homes over a couple of years. They began with a handful of houses that demonstrate the concept, building confidence among lenders, builders, and potential home buyers. Get the program started and move on from there.

5. Treat Housing as Economic Development

As mentioned previously on Rural Resurrection, affordable housing is economic development. It determines whether teachers can move to town, whether healthcare workers stay, and whether those who leave to college return to raise their families. Communities need to treat housing as infrastructure, focusing on it like streets or utilities as housing is important to the economic stability of the whole community.

A Rural Model Worth Watching

Adding to your community’s affordable housing stock doesn’t have to be an impossible mission. With the right structure, a clear vision, and earnestly involved local leadership, even a town of less than 1,000 residents can incentivize new affordable home construction.

Two houses have been constructed in the community so far, with plans to build more once these new houses have been sold. Each of the houses that have been constructed sit on infill lots in the heart of the community. The community didn’t have to pave a new road connection or extend utilities to each of the lots. The new homes are also a reinvestment into an existing neighborhood, expanding the variety of ages and characteristics of the housing stock.

The takeaway from Pawnee City’s program isn’t so much about the details of the program itself. It’s more about being proactive in finding solutions to the housing problem on a local level. Gather those others who see the need and make an effort.