N.H. Tries Bootstrap Housing

A VISITOR asked to drive down East Side Drive in Concord, N.H., and pick out the low-income housing units would have no problem. The bleak, brick row-house complex, framed by dirt lawns and debris, surely that must be it.

True enough. But the three-bedroom townhouses across the street, with lush grass and hanging baskets of flowers on porches are also low-income housing. These are owned cooperatively by families who earn between $15,000 and $30,000 a year. The East Side Village Cooperative project won a national award from the Fannie Mae Foundation this year as one of the six best examples in the country of affordable housing.

It also exemplifies a new approach to financing community-development projects at a time of persistent government budget deficits. The East Side Drive project was initiated by the New Hampshire Community Loan Fund, a nonprofit group committed to lending to individuals and distressed neighborhoods abandoned by traditional banks. Such so-called community-development financial institutions (CDFI) ``genuinely seem to be plugging up gaps in the credit system,'' says Avis Vidal, of the Community Development Research Center at the New School for Social Research in New York. ``They provide funds to people who have no other options in their own communities.''

In New Hampshire, a real-estate boom in the 1980s produced an abundance of malls, one- and two-bedroom condos, office buildings, and vacation homes. But low-income working families found themselves shut out of the rental markets. Average rents in Concord increased from $380 to $630 a month between 1980 and '87. Moreover, both the federal government and traditional banks were opting out of financing housing in so-called distressed urban areas.

Then real estate values tumbled. Eventually, five major banks in New Hampshire failed in 1990.

``There was little or no support for affordable housing in this state from the governor or state representatives,'' says Janice DeAngelis, acting president of the New Hampshire Community Loan Fund. ``But when people see other people pulling themselves up by the bootstraps, they'll help.''

When a group of tenants on East Side Drive learned that the owner of their 14-unit apartment building wanted to sell, they asked the Loan Fund for help raising $527,000 to buy the property. John Hamilton, who worked for the Loan Fund, took on the project in December 1988. Mr. Hamilton had spent the last five years redesigning old federal public-housing projects in Massachusetts, where he says he learned a lot about what didn't work.

``The first objective of the Housing Act of 1949 was to create jobs, clear slums, and provide affordable housing,'' Hamilton says. ``So you got projects as big as possible located in slums, built way too dense and in bad locations. If you start with the objective of putting affordable housing first, you'd build lower density townhouses and gardens, with a sense of individuality and space - like the East Side Village Cooperative,''

``This is a fundamental shift,'' he adds. ``People have realized the shortcomings of public housing.''

Hamilton and the Loan Fund organized the state's first consortium of banks to provide funding for a land trust to help buy the land. ``We were the first in the state to create a local bank pool, which has provided us with great access to capital at a time when the real estate industry was in a tail spin,'' Hamilton says.

The new Concord Area Trust for Community Housing (CATCH) took on the East Side project and agreed to construct 26 three-bedroom townhouses on the site. In addition, CATCH is providing two years of training for the residents in budget management, group decisionmaking, and property management. After the training is completed, CATCH will sell the buildings to the cooperative but retain ownership of the land.

``CATCH has taken out loans for individuals who would not have qualified on their own,'' says Nadine Salley, vice president of the Merrimack County Savings Bank and chairperson of the Concord Housing Investment Pool that financed the East Side Village Cooperative. ``When CATCH puts a proposal forward, it is in a form banks can readily understand. CATCH also has access to other funds so they can put more equity into a project.''

President Clinton pledged early in his administration to support CDFIs and is expected to sign a banking bill this week that will provide a $382 million fund to promote CDFI formation and expansion.

``The bill came out better than we would have hoped for. It's a remarkably strong program,'' says Mark Pinsky, national coordinator of the Coalition of Community Development Financial Institutions. In the current political climate, ``to get any new program started is a real coup....

``In New Hampshire, in the late 1980s, the rest of the banking industry went south. CDFIs were the only ones left standing,'' Mr. Pinsky says.