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Profiles – Mutual Self-Help Housing in Rural Rhode Island

Fernwood. Pascoag, Rhode Island.

Introduction: Mutual Self-Help Housing in Rural Rhode Island

Resident Jonathan Shaw and his daughter.Joseph Garlick, NeighborWorks'executive director, says it took more than 10 years to get Fernwood off the ground.

"We thought it would be an opportunity to create homeownership in a rural area in northern Rhode Island, says Mr. Garlick. "And we thought the United States Department of Agriculture Mutual Self-Help Housing program was an underutilized resource.

"Our first contract with USDA was for 15 homes, which was also the portion of the project that has received a $250,000 grant from the Federal Home Loan Bank of Boston’s Affordable Housing Program," Mr. Garlick says.

Member Navigant Credit Union sponsored the AHP application and provided construction financing to build the site’s sewer and water infrastructure.

In this AHP multimedia profile, tour the Fernwood site and meet the families who helped to build each other's homes.

In the photo: Homeowners attach siding to the Lowe family home in Fernwood.

The Developer

Joseph Garlick is executive director of NeighborWorks Blackstone River Valley, the developer of Fernwood.

Maliseet house under renovation.

View of the first homes under construction in Fernwood

We started this process about 10 years ago. We thought it was an opportunity to create homeownership in a rural area in northern Rhode Island.

We thought the United States Department of Agriculture Mutual Self-Help Housing program was an underutilized resource. We learned that if Rhode Island didn’t use the available USDA funding, folks from states with a stronger demand would get it.

We always want to try developing new kinds of housing. Given the way the homeownership market has declined in Rhode Island, we just thought the Self Help program would be a good vehicle for families who wouldn’t otherwise be able to afford homes in these communities. Even with the housing price declines in the state, affordable housing is still out of reach for a lot of families at 50 to 80 percent of median income.

Maliseet house under renovation.

William and Pam Cole in front of their Fernwood home

The program’s low-cost financing combined with the sweat equity allows the participants to purchase a house substantially below the market price. The homeowners don’t need to provide a down payment because the sweat equity is the down payment.

The homeowners'mortgage payments will definitely be more or less what they would be if they were paying rent. The families have USDA 502 mortgages, which have a 1- to 3-percent interest rate and a 33- to 38-year term. I think the average mortgage is around $170,000 at from 1 to 3 percent. The mortgages vary a little based on a homebuyer’s income.

In addition to its farm-support programs, the USDA, which has been around since the 1930s, also provides housing in a lot of rural communities around the nation.

Self-Help Housing originated on the West Coast in the 1960s. A lot of farmworker families used it to build homes. But the idea hearkens back to the barn-building and mutual self-help tradition of the Amish community.

The seven families in the first phase of our program are all working together to build their houses. Construction progresses at more or less the same pace on each house. They work on framing one house, then move to the next one. All of the houses maintain the same level of completion, and they will all get their certificates of occupancy at the same time and move in at the same time.

The homeowners have completed the framing, installed all the windows, doors, interior partitions, and rough electric and plumbing. They are working on the siding now and will be starting work on the insulation and drywall in the next couple of weeks. The goal is to be done by the fall of 2016.

We have seven families building houses now but we will eventually have a total of 30 families building homes here. Our first contract with USDA is for 15 homes, which is also the portion of the project that received AHP funding.

Navigant Credit Union is the member bank for the AHP application. They are also providing construction financing to build the site’s sewer and water infrastructure.

Navigant is definitely one of our prime partners in that neck of the woods. They’re great to work with and have a great lending team. They are expanding their footprint around northern Rhode Island. I often joke with them that I want to do an affordable housing development wherever they build a new branch.

Housing Authority Director Aaron Greenlaw.

Residents work on the Lowe family home in Fernwood

We have a great group of homeowners working on the first seven houses. They have been waiting to do this for three years now. Many of them qualified a couple of years ago but it took a while for us to line up all the financing.

It was funny to hear them talk about their sweat equity. Most of them were afraid of heights when they started this project but now they are on the scaffolding doing the siding. They all feel they have conquered a personal issue by doing the project.

The closing process took a while because no one had done this kind of housing before. There has to be an alignment of the housing finance agency and the USDA to get to the closing. The $250,000 AHP grant covers construction costs and soft costs such as appraisals and surveys.

Because this is our first Self-Help project, there are always challenges associated with trying to figure out how all the pieces fit together. There are the different funding sources involved in the project — the AHP, HOME, and USDA funding. The USDA is not used to having these other sources involved in their projects,so trying to sort through all of those sometimes competing requirements is always a challenge. At the end of the day everyone was motivated to make things work in ways they hadn’t worked before. This is what you need to make it work.

Resident Jonathan Shaw and his daughter at home.

Homeowner Tim Guilmain and construction assistant Dave Divine
install sheetrock in a Fernwood home

USDA also provided us with a 523 Technical Assistance Grant to pay the staff that manages the program, which includes our program manager, Daynah, who works with the families, and our construction site supervisor, who helps the families build their houses. Paul has worked in construction for many years and also taught in vocational school. He is the perfect guy to have on the ground for a project like this. Most of the homeowners have no construction skills whatsoever, but they are very motivated to learn.

Rhode Island Housing bought the land about 13 years ago and held it for us in their land bank. I’m sure the land would have been a lot more expensive for us to buy if they hadn’t held it for us.

On a section of the site we also plan to develop Greenridge, a 96-unit rental housing development, which we hope to close on next month. Greenridge was awarded a $500,000 AHP grant and a $1.7 million subsidized advance.

Phase one of the Self-Help project should be completed by August. We’re recruiting now for the next group, which we hope will be building by the end of summer or early fall.

The Maliseet health center.

Dayna Williams and Pam Cole during a Saturday morning build

Rhode Island has a goal for every community statewide to have at least 10 percent affordable housing. Once these ownership and rental units are built the Town of Burrillville, which has been a great partner, will have exceeded their 10 percent.

It took 13 years to make this happen, so patience is an absolute requirement. We could not have done this if Rhode Island Housing hadn’t acquired the land and if the town hadn’t been supportive. These are the things that make all the difference in a project of this complexity and scale.

View of Maliseet Riverside Village.

Homeowners Paul Lowe and William Cole work on Mr. Lowe's house

Video Tour

Take a video tour of Fernwood with Daynah Williams, at sponsor NeighborWorks Blackstone River Valley.

The Numbers: Fernwood

Sources and Uses as of September 30, 2016
Note: project is under construction, numbers are subject to change.

FHLB Boston AHP Direct Subsidy $250,000
Sales Proceeds 2,458,500
Building Homes Rhode Island 250,000
RI Housing HOME Funds 250,000
USDA Self-Help Award 312,500
Buyer Down Payment/Closing Funds 45,000
NeighborWorks America 48,452
Sponsor Equity 580,000
Total Sources $4,194,452


Construction/Rehab $2,667,500
Construction Contingency 167,000
Developer Fees, Overhead, and Consultant 315,000
Soft Costs 667,202
Financing Fees 190,250
Acquisition 187,500
Total Uses $4,194,452

The Residents

Visit the Fernwood residents on the construction site