Community Banks Come Through--Again and Again
Review advice, updates, and news from West Gate Bank!
April 15, 2021
The SoDo neighborhood of Lincoln, Nebraska is within blocks of downtown, the state capitol building and the University of Nebraska. Despite its prime location, the housing stock in SoDo (short for South of Downtown) is more than 100 years old, much of it run down. Few properties are owner occupied. Lincoln has a large group of residents who need better housing options.
That’s why Lincoln’s West Gate Bank helped create a program that addresses both problems: It improves the housing in SoDo and opens home ownership opportunities to people who might not otherwise qualify for mortgages.
“This really is about fulfilling our mission,” says Carl Sjulin, the community bank’s president and CEO.
The program is a collaboration between West Gate Bank, the City of Lincoln and several local nonprofits. The city acquires dilapidated SoDo homes, razes them and builds new single- and multi-family houses on the lots. The single family homes are sold to people who may not be able to afford both a conventional home and the lot, or are ineligible for a traditional mortgage. Instead, the land is held in a trust separate from the house. If the homeowner remains in the home for a certain number of years, ownership of the land vests with the house.
The first such home closed at the end of 2020. “We provided the mortgage financing for a property in SoDo that was 120 years old, had been largely destroyed by fire and had been vacant for more than 10 years,” Sjulin says. “We worked with some nonprofits to create the community land trust that holds the land and partnered to build a new 1,300-square-foot, two-story, four-bedroom home there. Then we provided financing to a first-time homebuyer, a single mom. It was an affordable option for her.”
Now that the first home has been built and sold, West Gate Bank can use the template again and again. “That first one was really a couple of years in the making,” Sjulin says. “There was a long runway in getting all the players huddled together so that we were all on the same page. It took a unique structure, because we had to work out a bifurcated financing structure with the community land trust and the owner. We had to think through title issues, title insurance issues, mortgage issues and other details to make sure we captured those interests appropriately. The runway will be much shorter for subsequent projects.”
There are already four other homes in SoDo being built using the same template, Sjulin says.
“This is an investment in rehabbing housing stock in the neighborhood just adjacent to downtown. We can’t just let it go and expect our downtown to be healthy,” he says. “The reality is, to get a new home built in this neighborhood and get someone from a lower or moderate income into the home takes a completely outside-the-box mortgage. Community banks are well positioned to put together the time, talent and treasure to come up with unique solutions like this.”
Photo credit Kimberly Dovi Photography