DELTA HOUSING DEVELOPMENT CORPORATION:
SELF-HELP HOUSING PROJECT IN THE HENRY ROSSER SUBDIVISION
IN SUNFLOWER COUNTY, MISSISSIPPI

The Delta Housing Development Corporation is a nonprofit housing developer that provides single-family and multifamily homes to qualified low-income families throughout Sunflower County. The organization, incorporated since 1971, is an experienced housing developer. It has developed or rehabilitated over 450 single-family homes, built and managed 181 units of rental housing, and helped more than 3,000 families with weatherization aid. The organization utilizes a variety of funding sources for its housing activity: it works with area banks for site acquisition and construction financing; state and federal funds are used to subsidize rental property and home mortgages. One of the most successful programs it has undertaken is the provision of housing through Rural Development's self-help housing program. This program requires the family who will occupy the house to perform most of the labor to construct the unit. This contribution of sweat equity helps bring down the cost of the house, making it affordable to low-income families. Delta Housing is one of the largest producers and oldest self-help housing developers in the region.

One of the newer self-help projects undertaken by Delta Housing is the construction of 32 single-family units as part of a 58-lots in the Henry Rosser subdivision in Sunflower County. Financing for site development comes through the Department of Housing and Urban Development's new Self-Help Homeownership Opportunity Program (SHOP). The special feature of this program is that 75 percent of the SHOP loan is forgivable, providing the requirements of the program are fully met. This forgivable portion will enable Delta Housing to set up its own revolving fund to undertake additional self-help housing development in the area. This project illustrates an innovative approach to addressing the financing challenges faced by nonprofit housing developers in the Delta.

Overview of Sunflower County

Sunflower County reflects the population and poverty characteristics observed in most parts of the Delta. The population decline that began in the Delta in the 1940s continued through the 1980s.¹⁶  Sunflower County reflects this trend as well. The county's population dropped by 5.7 percent from 34,844 in 1980 to 32,867 in 1990. As in other counties of the Delta, the greatest decline, 11 percent, was among the white population. In contrast, the black population declined by 2.5 percent. This decline continued through 1995 with the Census Bureau reporting a population of 10,374 in 1995. The population decline in Sunflower County is even more dramatic when compared to the overall population change in all the Delta counties in Mississippi and the state as a whole. (See Figure 3.1.)

Figure 3.1.  Population Decline from 1980 to 1990 by race

Figure 3.2.  Dependency Ratio in Sunflower County by race, 1990.

Only about a third of the county’s population had completed high school education according to the 1990 Census, with the education rate for blacks half that for whites. Median household income was $14,431 according to 1990 Census figures. Families in the Delta earn an average weekly salary of about $339 according to calculations made by the Mississippi Employment Security Commission in 1995. Sunflower County also had an unemployment rate at 13.1 in 1995, one of the highest in among all the Delta counties in the state.¹⁸  This rate, at 15.6, is even higher among women.

Census data from 1990 revealed that 37.3 percent of the county’s population lived below the poverty level. This was a slight increase from the level reported in 1980, despite the decline in overall population. Census figures from 1995 report 41.6 percent of the population living in poverty, also an increase from previous levels. The percent of black people below poverty was even higher at 52.5 percent in 1990, representing almost no change from 1980 Census figures. The number of female-headed families below poverty was a staggering 62 percent in 1990. Extreme levels of poverty were also reflected among other vulnerable sections of the population such as the elderly and children.

Agriculture has long been part of the economic engine in Sunflower County. Visitors to the county are often greeted by the quintessential Delta vista of a panoply of white undulating cotton fields dotted with the bright red of mechanical cottonpickers. One has to look closely to pick out the other world that persists and contrasts with this. This other world is one of abject poverty, gross undereducation, extreme unemployment, of dilapidated housing and nonexistent sewage systems, and of dirt roads alongside new highways. Between these extremes is a reality that Delta Housing has helped to build through its diligent efforts over the past 28 years: a world of modest but decent housing, built by the labor of the homeowners that now proudly reside in it.

Creating a Self-Help Housing Program

In 1970, 10 miles from the town of Indianola, seat of Sunflower County, a tornado touched down and destroyed everything in its path, leaving people homeless and with nowhere to go for assistance or shelter. Delta Housing Development Corporation was born out of the need to help these people rebuild their lives. The organization began to develop affordable housing in 1972. In order to make the houses affordable for the low-income population in the county, Delta Housing adopted the mutual self-help housing program administered by the Rural Housing Service (RHS), formerly known as the Farmers Home Administration.

RHS's mutual self-help program is modeled on the old "barn raising" concept, involving neighbors helping each other to build their homes. Six to ten families form a workgroup that performs volunteer, unskilled labor, coupled with licensed contractors and supervision by Delta Housing to complete the homes. This process truly serves to empower the poor through homeownership. The beneficiary families contribute a fair amount of sweat equity to the project and receive home loans from RHS, the lender of last resort, since they are not able to access traditional financing. The units constructed by Delta Housing are standard wood-frame units with brick veneer, and are nearly 1,100 square feet in area.

Delta Housing began with the construction of 12 houses to accommodate some of the tornado victims. Since then it has never looked back. Delta Housing has successfully facilitated the construction of a number of self-help housing subdivisions in Sunflower County. Delta Housing has overcome a number of obstacles along the way, forged key relationships with the county government, and become one of the most prolific and reliable producers of affordable housing in the region. The Housing Assistance Council has often been a partner in helping build affordable housing, including for the first project the organization worked on, through low interest pre-development loans. Other partners include local banks such as Planters Bank.

The typical new, single-family, three-bedroom self-help house in Sunflower County costs $55,000. This housing cost is best appreciated when placed in the context of the prevalent local housing market. Local realtors report that the lowest priced home of comparable quality sold in a comparable location typically costs $68,000. This would be unaffordable to families with annual incomes between $12,000 and $15,000. Consequently, participating in the self-help construction program with Delta Housing offers these families a unique opportunity to own their homes. As part of the project, Delta Housing combines administration of the self-help program with family credit counseling, preconstruction training, and homeownership counseling. The training and counseling efforts are a crucial ingredient to the success of the housing developments completed by Delta Housing over the years.

Counseling ensures that the families participating in the program are truly committed and ready for the hard labor they are required to contribute. Counseling also helps prevent families from becoming delinquent and losing their homes. In addition, the construction training provides families with the skills necessary to maintain their homes in good condition. The total package offered by Delta Housing promotes real self-sufficiency for low-income families that is beyond the mere dollar value.

At the time this study was conducted, Delta Housing's counseling was offered only to self-help housing beneficiaries as part of the required training for participation in this program. Expenses related to this training were covered by the Section 523 Technical Assistance grant received by the organization from RHS. Delta Housing is in the process of establishing a more comprehensive counseling program because it believes counseling can play a pivotal role in the success of its housing programs.

The SHOP Program

One of Delta Housing's more recent projects, is the 58-lot Henry Rosser subdivision in Indianola. This subdivision will be completed in two phases. The first phase involves the construction of 26 units and work on this phase was underway at the time of this study. Delta Housing was in the process of developing the site for the next phase of 32 lots. It had requested a loan of $241,500 from the Housing Assistance Council's SHOP funds to cover the cost of site development. It had simultaneously identified 16 families that were interested in participating in the self-help program. These families were in the process of obtaining Section 502 loan approvals from RHS through their local Rural Development offices to provide the permanent mortgages for the units. It is important for these different aspects of a project to proceed simultaneously in order to avoid cost overruns associated with delays in construction and final closing of loans to the families. The 16 families will work in two groups of eight each to build their homes through the mutual self-help program. Each completed three-bedroom house will cost approximately $62,000. This project is expected to proceed like all the other projects previously undertaken by Delta Housing. The only difference is the potential SHOP loan through HAC.

HAC's SHOP fund, established with funding of $4,822,125 from the Department of Housing and Urban Development (HUD), provides capital to nonprofit housing developers for land and infrastructure costs to a maximum amount of $10,000 per unit. The funds are to be used to develop decent housing for low-income households, using the self-help and/or volunteer labor approach. The SHOP loans are at zero percent interest with a 1 percent service fee charged to cover closing costs. Where the loan amount does not exceed $200,000, only 25 percent of the loan must be repaid if production goals are met. The remaining 75 percent may be forgiven and be used by the group to establish its own revolving loan fund for future site acquisition and development or as a grant to subsidize the site cost to participating families.

Delta Housing is excited at the prospect of keeping 75 percent of the SHOP loan for future use. It plans to set up its own revolving loan fund with this money and will use the funds to cover costs of obtaining and developing land for other subdivisions. Having ready money will help the organization to move rapidly when it identifies a suitable tract of land for development and will help reduce the cost of future developments. Delta Housing plans to pass this reduction on to homebuyers.

Lessons Learned and Replicability

When Delta Housing first began, it had to overcome entrenched prejudice on many fronts as it attempted to provide decent housing for the poor, most of whom were African-American. At that time it was very difficult to get an all white city or county government to support housing development for the predominantly black low-income population. Then things changed. Clanton Beamon, the executive director of Delta Housing, ran for and got elected to the County Commission in 1988. He was the first African American on the county board. Another staff member then got a seat on the City Council, after contesting the seat three times. Having African-American representation in these key decision-making bodies helped tip the balance in favor of Delta Housing and the population it served. When interviewed for this study, Clanton Beamon acknowledges that his elected post does assist in the work of the organization he heads. As County Supervisor he has been able to encourage the construction of critically needed water systems in the rural parts of his county. However, he adds that it was this very work that served as a springboard to help him get elected in the first place. This illustrates how closely intertwined politics can be with addressing the needs of the poor. Sometimes it takes more than identifying financing sources to get a project built in remote parts of the Delta. Beamon also serves as an example to encourage other locally elected black officials to engage the resources of their office more actively in alleviating the problems of their community.

Delta Housing claims it also often had to dig in its heels to fight racial prejudice within RHS. After years of establishing a stellar track record and building strong relationships within the agency, Delta Housing was able to overcome this barrier. It enjoyed many years of a good working relationship with Rural Development. However, at the time this study was conducted, matters seemed to have come full circle. The agency had undergone some staff changes. Delta Housing was once again experiencing problems with getting the local Rural Development office to approve the loans it had packaged, and according to the nonprofit, racial bias seemed to be at the root of these problems. At the time of this study, the group had submitted 16 applications to the local Rural Development office but only three had been approved. The housing group has filed a formal complaint with the agency to address its grievance.¹⁹  The lesson here is to keep fighting.

Similarly, even on the latest project undertaken by Delta Housing, the Henry Rosser subdivision, the organization has had to resolve disputes with the city on zoning issues. It has been battling with a seller for over three years about title issues on another piece of property purchased for affordable housing development. Delta Housing's experiences demonstrate that there is never room for complacency. There are always new challenges to overcome with each new project. However, an organization that has developed experience and capacity is able to weather these challenges with relative ease. Unfortunately, a smaller, less experienced group may find not have the resources to survive the developmental delays each new obstacle can pose.

In the years since Delta Housing first began working in the field of affordable housing, it has added the development of rental housing (using RHS's Section 515 program) and the rehabilitation of existing housing to its portfolio of achievements. This range of programs helps Delta Housing serve the needs of a broad spectrum of clientele, including those who are not yet ready for homeownership.

Finally, Delta Housing's housing development efforts effectively demonstrate how sweat equity can contribute towards lowering the cost of housing to make it affordable to low-income families. Sweat equity is a creative form of financing for developing affordable housing in the Delta where alternate sources of credit are hard to obtain. Rural Development's self-help housing program is used effectively all over rural America. Its replicability is well documented. Despite this, only a few groups in the Delta have developed a self-help housing program to serve their target area. More groups could explore the feasibility of utilizing the concepts embodied in this program to meet the Delta’s affordable housing needs.

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