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RCAC loan launches Laurel self-help housing project

December 30, 2004

West Sacramento, Calif. — The continuing affordable housing problem in Laurel (Montana) is now being met head-on thanks to a $469,000 loan from Rural Community Assistance Corporation (RCAC) to Laurel Development Corporation, Inc. (LDC). The five percent, 24-month loan will pay for, and begin development of 6.47 acres of land between Fourth Street and Old Highway 10. Organized as a nonprofit agency by Laurel residents in 2003, LDC’s mission is to promote economic development, including affordable housing, in Laurel. Toward that end, the organization plans to build nearly two dozen Mutual Self-Help homes on the newly acquired land over the next two years.

As in rural communities throughout Montana and across the nation where median incomes fall below the national average, many working families in Laurel, a town of more than 6,000 residents 20 miles west of Billings in Yellowstone County, have found themselves priced out of the American dream of home ownership. LDC hopes its Self-Help project will begin to reverse that trend.

In a Mutual Self-Help Housing project, a group of eight to 12 families and individuals work together under the guidance of a construction supervisor hired by a nonprofit housing developer such as LDC. In lieu of a down payment, those in the program provide labor as “sweat equity.” Homes in any given program are built simultaneously, with future owners providing at least 65 percent of all labor. No family moves into their new home until all in the program are completed. Mutual Self-Help home owners have mortgages that are generally far less than those of standard new or resale homes and the program — which has seen nearly 25,000 homes built since 1971 — boasts a delinquency of a mere 3 to 4 percent. LDC plans on building 10 two- to five-bedroom Mutual Self-Help homes ranging from 900 to 1632 sq. ft., all with garages, in 2005 and 10 more in 2006.

Individuals and families taking part in Laurel’s Mutual Self-Help project will eventually have
monthly mortgage payments of between $360 and $600.<> “Laurel Development Corporation is one several nonprofit organizations in Montana helping families obtain affordable housing by offering a Mutual Self-Help program in their service area,” said John Johnson, rural development specialist for RCAC. “Homes are presently being constructed using the Mutual Self-Help program in many other Montana communities including, Livingston, Lewistown, Butte and Somers.”

Already, LDC staff members have begun pre-qualifying several families anxious to be among the first round of Mutual Self-Help home owners in Laurel. There are another 40 families on the agency’s rapidly expanding processing list.

“Montanans are not afraid of hard work. The fact that on the average, Montanans make less money than the rest of the nation should not preclude them from the American Dream,” said Rocky Smith, project manager for LDC’s Mutual Self-Help venture. “RCAC and the Mutual Self-Help program present the opportunity to turn that hard work into a reality of home
ownership.”

RCAC has been involved in the United States Department of Agriculture’s Rural Development Mutual Self-Help Housing Program for more than two decades. Through Mutual Self-Help projects, low to moderate income rural citizens attain the seemingly unattainable goal homeownership.

The LDC Self-Help housing site is considered prime real estate and has been owned by General Parts, Inc. (GPI) since 1980. GPI formerly operated an acetylene bottling plant on the land. The plant closed in 1996. A 2001 environmental assessment of the property concluded there was no evidence of any environmental hazard connected with the land.

Beyond the nearly half-million dollar loan, RCAC is also providing technical assistance to help LDC become an approved Self-Help housing grantee which will allow them to procure more funds from the federal government.

“Rural Community Assistance Corporation has been instrumental in making this project a reality. In addition to financing the site purchase and development, the technical assistance provided by John Johnson from the RCAC office in Bozeman, has been invaluable in helping our understanding of a complicated governmental program such as Mutual Self-Help Housing,” said Smith. “This project will not only help the community by tearing down a decaying and useless industrial building, but will rehabilitate the area into a neighborhood that Laurel can be proud of.” Headquartered in West Sacramento, California, and serving 13 western states, RCAC is a nonprofit agency that provides technical assistance and training to rural communities seeking to develop a wide range of local services including, among other things, community facilities, affordable housing and water treatment facilities. The organization operates a loan fund with $50 million in lending capital that provides low interest loans and grants to further these communities’ goals.

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