A Collaborative Effort to Transition Low-Income Rentals to Homeownership
In the late 1990’s and early 2000’s, Oti Kaga, a nonprofit housing developer, built over 100 housing units for low-income families on the Cheyenne River Reservation in South Dakota. The Elk View Development, comprised of 10 single-family units on the edge of town in Eagle Butte, was financed with the Low-Income Housing Tax Credit (LIHTC) program. A federal tax incentive, the LIHTC program not only encourages investment in affordable rental housing, but it also provides opportunities for homeownership after a 15-year compliance period. Often times, LIHTC developers offer housing units to long-term tenants at below market rates to increase homeownership opportunities.
Bernard Uses The Knife, one of the original tenants in the Elk View Development, moved into his home in 1998 excited about the potential of one day becoming a homeowner. At the time, his four children were in grade school, and he was working for the Cheyenne River Sioux Tribe Game, Fish, and Parks Department.
He remembers, “It was our dream to rent and then own our own home. Everything was new, and it was warmer in winter than we thought. The windows and roof were good.”
According to the original plan, the Elk View rental units would have transitioned to homeownership in 2013. However, converting LIHTC units to homeownership can be a complex process, and Oti Kaga began experiencing some challenges with staff turnover and changing leadership. The organization ended up dissolving in 2018, ushering in a period of uncertainty for the tenants of Elk View.
“At one point, they just locked the doors and the phone was disconnected. We didn’t know what was going to happen or if we were even going to have a home,” explains Bernard.
Because of the severe housing shortage on Cheyenne River, the stress surrounding these circumstances was intensified. If the tenants’ leases weren’t renewed, they would have few, if any, alternative options for housing. For someone like Bernard, who was now living on a fixed income after having a heart attack, the situation could be dire.
Although there were attempts at converting the LIHTC units to homeownership, it never happened for various reasons. Then, sometime after 2020, the tenants of Elk View mobilized and started building momentum around the issue. They raised awareness to the Cheyenne River Sioux Tribe, and the Cheyenne River Housing Authority and Four Bands Community Fund were brought into the picture. Now, multiple community partners were engaged and working to create a pathway to homeownership for the tenants of Elk View.
“The tenants really deserve recognition for their advocacy. They were having meetings and discussion – they were the ones pushing it and bringing the issue to Tribal Council,” says April Anderson, Loan Officer at Four Bands who worked on the Elk View conversion project.
In 2022, Oti Kaga’s Board of Directors was re-established, allowing the nonprofit to once again make critical decisions regarding its properties. By July 2023, the Cheyenne River Housing Authority with support from the Tribe was contracted by Oti Kaga as a third-party manager, which provided the staffing necessary to fully transition Elk View’s rental homes to homeownership.
Sharon Vogel, Executive Director of Cheyenne River Housing Authority, explains, “Once there was a functioning board and the administrative paperwork was done, then transactions could take place.”
These essential steps led to purchase agreements between Oti Kaga and the multiple tenants. Each tenant was able to negotiate a purchase price that honored the original intention of the development project, which was to create affordable homeownership options for low-income families.
“We finally got some direction. It was a relief to know what we needed to do,” reflects Bernard.
Adding to the complexity of the situation was the trust status of the land upon which the Elk View homes sit. Fortunately, Four Bands has spent years developing and enhancing their homeownership programming to adapt to the specific requirements necessary for mortgage lending on trust land. Their staff has experience navigating the legal and administrative processes with the Tribe and Bureau of Indian Affairs and is knowledgeable on the few specialized loan products that can be utilized on trust land.
“We sat down with the tenants and [Cheyenne River] Housing [Authority] and discussed different financing scenarios. From a lending perspective, we treated the Elk View properties like acquisition/rehabs. It was really a two-year process,” says April.
With a mix of homeownership readiness levels and tenants in various life situations – some on fixed incomes, some working single mothers, others multigenerational homes – Four Bands worked with each tenant to create a homeownership plan based on their individual affordability level. Each of the tenants was paired with a coach to help guide them through decisions regarding renovations, energy efficiency, loan products, homeowners insurance, and their overall financial health.
April says, “In addition to homebuyer education, our coaching and assistance was all about helping tenants understand the value of potential home improvements, increasing their assets, and how they can build generational wealth with their homes. We worked really hard to ensure affordability by connecting the tenants with downpayment assistance or grants to cover appraisals, inspections, and closing costs.”
Bernard completed an online homebuyer readiness class to support a successful transition to homeownership. The appraisal and home inspection led his decisions to update some appliances and complete some electrical and roofing improvements to his home. He then chose to finance the home purchase and renovations with a shorter-term loan so that his children wouldn’t be left with debt.
“My son will probably take it over when I can’t do it anymore. He is already looking out for the house and me,” affirms Bernard.
Bernard and all of the other Elk View tenants closed on their homes in December 2024, finally bringing the LIHTC conversion to a close. Bernard says the main thing is feeling secure in his home now and that he can “kind of relax.” He is enjoying his blooming flowers and chickens in his yard while a few of his grandchildren spend the summer with him.
“Homeownership is really the only way. I just hung onto this house and stayed with it. I can say that everyone we worked with wanted us to have our own home. All in all, it’s been a good experience,” says Bernard as he thinks back over the last several years.
“This really was a collaborative effort,” says Sharon. “It wouldn’t have happened without the great support from the Tribe and the other partners involved.”