Lana Jeter owns dozens of apartments in Northwest Akron as president of Jeter Capital Investments. With the help of the City of Akron, she’s planning to purchase even more.
The city is giving Jeter a $400,000 loan to help her buy 32 apartments on Zahn Drive off Thurmont Road and North Hawkins Avenue. The move — which will help maintain affordable housing in the area — could be the first in what Akron Planning Director Kyle Julien intends to be a revolving loan fund to help improve housing in the city.
The fund, which could be seeded with another $400,000 or $500,000, would allow the city to offer loans to developers to help them upgrade or rehabilitate rental properties that would otherwise be in danger of falling into disrepair.
“This is pretty huge,” said Bruce Bolden, the Ward 8 Akron City Council member who represents the area in Northwest Akron where Jeter is buying. “It’s the area [in my district] that really needs the most help in terms of housing.”
The interest-only loan, to be paid back in two years, is a “great start” for the fund, Bolden said.
Jeter will begin by rehabbing empty apartments and renting them out; she said about half of the apartments are currently vacant. Jeter said she plans to keep the rents below the U.S. Housing and Urban Development’s affordability levels, even after the renovations are complete.
The goal, Julien said, is to help developers like Jeter acquire underperforming apartments like the ones on Zahn Drive so they can invest in them. That will help sustain existing housing and increase stability, as well as values.
“If we can make it easier for quality investors, nonprofit or for [profit], to acquire properties and invest in them, it will help raise the floor in terms of our housing stock,” Julien said. “There will be more tools for investment.”
City money can attract private lenders
The fund will target what’s known as already occurring affordable housing, Julien said — apartments or other multifamily properties that are often older and need upgrades.
Because of the amount of work that needs to be done and the low returns, it can be hard for investors to find financing to help them acquire or develop such properties. That was the case with the Zahn Drive apartments, where Jeter said so much maintenance has been deferred that she had trouble getting bank financing.
But the city’s help gave her lender the confidence to give her a $1.4 million loan for the purchase, she said.
“The city backing up your loan, it just helps to get traditional financing,” she said.
She’ll fund the renovations herself, with private money, at what she expects to be a cost of $400,000.
Jeter said the city’s support will help keep ownership local — she’s based in Richfield — instead of letting an out-of-state landlord buy the property and raise the rent.
“It allows people like us to improve Akron’s property,” she said. “We are not planning to displace anyone. … It is still going to be affordable housing, for sure.”
Pilot program is still in early stages
This is the first time Jeter has used public money across the 13 buildings she owns. Bolden said that the Zahn Drive area of Northwest Akron hasn’t been eligible for federal housing funds, but the city’s proposed loan program is a way to direct new money and attention to that area and others that may need investment but haven’t been able to get it.
The work that Jeter is doing, he said, will be beneficial for the neighborhood and Akron as a whole.
“When you fix these properties up, it creates that neighborhood pride,” he said. “It brings people in that are looking for exactly that, the best bang for your buck.”
Julien said he hopes Jeter’s investment in the neighborhood will lead others to improve their own aging apartments, keeping them from falling into disrepair. The downstream effect, he said, can help to reverse cycles of disinvestment.
And it creates a pathway for groups that might have the desire, but not the money, to invest in their communities.
Julien said the proposal is “very much in the incubation phase” and there’s still work to be done before it’s rolled out more broadly. The city has to determine how to vet potential borrowers, identify any compliance burdens and decide what kind of return it would expect for its initial investment.
In this instance, it was Bolden who connected Jeter with the city. He said he knew the city was considering the pilot, so he arranged the meeting and started the process.
That kind of connection can work sometimes.
But the city can’t drive everything it needs to with its limited capital, Julien said. So he hopes this effort can help attract more private money.
“I think there’s appetite and demand for projects similar to this,” Julien said. “It can move away from being a transaction to being a program.”