Habitat for Humanity’s bold plan to redevelop a mobile home park

Housing-focused nonprofit Habitat for Humanity has a bold plan for a mobile home park in Charlottesville, Virginia, one the organization hopes will serve as a nationwide blueprint for redevelopment without displacing current residents.

Southwood Mobile Home Park, currently home to about 1,500 people in 341 trailers spread over 120 acres, was purchased by Habitat for Humanity of Greater Charlottesville in 2007. Now, it’s on track to be turned into a mixed-income neighborhood that will give low-income mobile home park residents affordable homeownership options and small business opportunities.

The planned redevelopment will have 800 residential units—more than half of which will be affordable—and as much as 200,000 square feet of commercial space. The affordable units will be built by Habitat directly or provided by private developers through the Low Income Housing Tax Credit program.

Habitat is close to finalizing the first two contracts with private developers with the hope of breaking ground sometime in 2020.

“It’s really exciting,” said Dan Rosensweig, president and CEO at Habitat for Humanity of Greater Charlottesville. “We at Habitat are going to be building the vast majority of low-income housing. In order to help fund it, and in order to create a more diverse community ...we’ll sell land to private builders to build the market-rate component.”

When Habitat for Humanity bought Southwood in 2007, the site had raw sewage coming out of the ground, and hot-wired trailers were regularly catching on fire. Habitat invested more than $19 million into the park just to stabilize the operations before planning the redevelopment.

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In the process of designing the new neighborhood, Habitat made current residents equal partners, working together to create what Rosensweig calls a “new type of multifamily rental product.” Many new-build apartments are simply big blocky buildings surrounded by parking. But in the Southwood redevelopment, townhomes will separate the streets and the apartment building for a more intimate feel.

Current residents will receive right of first refusal on affordable residential units, and will be offered mortgages on affordable terms, which has been a staple of Habitat’s work.

Habitat is also in the process of negotiating five years of free rent in the commercial space for mobile home park residents who want to start a business, such as a restaurant or beauty salon. Residents will have access to a business development consultant who can help them get the business off the ground.

The site of the redevelopment is designated an Opportunity Zone under a provision in the 2017 tax overhaul, which allows investors to get preferential tax treatment if they invest in unserved or underserved areas of the country. Habitat will sell some of the land to private developers for market-rate commercial and residential space, which will ultimately be used to subsidize the affordable component of the redevelopment.

Rosensweig says the Opportunity Zones program has made it easier for Habitat to raise the initial capital for the project. For investors, the development comes with some added risk given Habitat’s vision of a mixed-income neighborhood, but the preferential tax treatment of Opportunity Zones makes the financials more attractive.

But Rosensweig believes the program just happens to be the right fit the Southwood redevelopment and says he isn’t making a full-throated endorsement of Opportunity Zones. He believes, like many critics of the program, that Opportunity Zones in some cases will spur gentrification.

Charlottesville is in some ways the perfect setting for Habitat’s experiment. Described by Rosensweig as a “tale of two cities,” Charlottesville has residents with both immense wealth and deep poverty, and the divide falls heavily along racial lines.

If Southwood, currently largely populated by Latinos, can evolve into a racially and economically diverse neighborhood after Habitat’s redevelopment, the impact could travel much farther than its boundaries.