1282 Calhoun Street in Macon, Georgia. | Credit: Historic Macon Foundation

Ethiel Garlington

Lately around the Historic Macon Foundation (HMF) office we’ve been saying that we’re “standing on the shoulders of giants.” Our talented staff of fresh faces is benefitting from the years (50 to be exact) of hard fought preservation work by our predecessors.

Thanks to the August announcement of additional support from the John S. and James L. Knight Foundation, HMF will continue building on the legacy of those who came before us. The $3 million investment from Knight Foundation will allow us to continue our preservation work in Beall’s Hill and the College Hill Corridor. More importantly the investment gives us the tools we need to continue making the case that historic preservation is successful economic development.

In industry terms, this foundation loan concept is called a program-related investment (PRI). More specifically and less eloquently, in this case it’s deemed a “groan,” since it’s a grant and a loan. This is an important point to make since HMF and our loan fund borrowers will repay approximately half of the total Knight Foundation investment. This concept is new to Knight Foundation and it’s new to HMF. Thankfully, our local Knight Foundation program director, Beverly Blake, and the Knight Foundation trustees are entrepreneurial and recognize the success that HMF has had over the last 50 years.

1282 Calhoun Street before rehabilitation. | Credit: Historic Macon Foundation

Since the 1980s, HMF has built a successful track record for using the revolving fund model to fund our real estate development work. Simply put, this model allows us to use an existing pool of funds to continually build new infill houses and rehabilitate historic houses thus transforming neighborhoods. Proceeds from the sale of these properties “revolve” back into the fund.

The model works and we’ve long been the envy of our colleagues across the country. In fact, in late October we hosted preservationists from Charleston, South Carolina, who want to learn more about how Macon has been so successful. Furthermore, our mayor, Honorable Robert Reichert, spoke to a national audience at the National Preservation Conference in Savannah about how Macon continues to lead Georgia in historic rehabilitation tax credits and continues to lead the country in entrepreneurial solutions to historic preservation.

Knight Foundation’s recent investment is complicated and not easily explained in a short blog post. In essence, the investment will allow HMF to 1) continue our real estate development efforts in Beall’s Hill with grant and loan funds 2) enhance our facade loan fund and allow us to add an energy-efficiency loan fund program with loans of $5,000 and $10,000 in both programs and 3) continue the powerful Down Payment Assistance program with Mercer University and another local partner.

Real Estate Development

HMF currently manages $1.35 million in two separate charitable loan funds, which are used for real estate development activities. These funds require us to repay all funds plus interest at rates of 2.8 to 4.4 percent. Since 2009 the funds have been used to restore 27 historic buildings and build 16 new homes with an aggregate value more than $6 million. For completed projects, $3.6 million has been invested and $3.3 million, or 90 percent, has been returned. For historic homes in particular, 85 percent of funds invested have been returned.

With the additional $985,000 in grant funds and $565,000 in loan funds from Knight we’ll be able to double the size of the overall fund and extend activities such that the number of housing units refurbished per year will grow from 10 units a year to 18 units a year.

Facade and Energy-Efficiency Loan Funds

1211 Ross before rehabilitation. | Credit: Historic Macon Foundation

Since 2010, HMF has managed a $185,000 facade loan fund, which has been financed entirely with grants (including a Knight Neighborhood Challenge grant). To date, 45 loans totaling $350,000 have been made via the fund, 25 loans totaling $185,412 have been returned, and 20 loans totaling $155,083 are currently outstanding. Default rates on these loans have been 0 percent, and average interest paid on principal has been 2 percent.

Again, thanks to the additional $650,000 in loan funds we’ll be able to double the facade fund and increase the amount of facade loans a year from 15 to 30. Going forward, interest rates for loans will need to increase to 3 percent to accommodate our interest rate of 1 percent to Knight Foundation, a reserve for bad debt, and the increased administration required by servicing.

A new initiative will expand our facade loan program and provide an additional $400,000 to make 20 loans annually to improve energy efficiency of homes. The new energy-efficiency loan program will leverage an existing program through Georgia Power, the local utility, who offers rebates of up to $2,200 for energy-efficiency improvements. HMF loan applications require simultaneous application for the Georgia Power rebate program to maximize Knight Foundation’s investment.

In all, the program will enable us to make an additional 36 loans per year over 4.5 years, for a total of 160 loans. Repayment of the $650,000 loan will begin four and a half years into the program and end in year eight.

Down Payment Assistance (DPA)

Since 2007 Mercer University has operated a Down Payment Assistance (DPA) program in partnership with Knight Foundation to encourage faculty and staff to purchase and occupy homes in the College Hill Corridor through forgivable loans of up to $20,000. The program has funded 39 DPA allocations (5-6 per year) in the format of a forgivable loan, 65 percent of which have been directed to the targeted revitalization of the Beall’s Hill neighborhood. On average, these allocations represent 12 percent of the purchase price of the home, and have been critical in driving buyers to the outer edges and new project blocks of Beall’s Hill. Roughly 30 percent of purchasers of the homes developed by HMF have taken advantage of DPA funding. The DPA funds have been depleted over the last seven years and now need to be replenished.

1211 Ross after rehabilitation. | Credit: Historic Macon Foundation

To make this program more efficient and perpetually sustainable, the new generation of DPA will be partially repaid by the homebuyers. HMF received an $800,000 grant from Knight Foundation, which will be matched in the amount of $100,000 a year over four years by Mercer University and another local partner. The DPA funds are targeted exclusively to the revitalization of Beall’s Hill under the terms of the current program. Knight's allocation of $800,000 of grant funds will be used on a revolving basis, similar to the current program, with the exception that funds would be required to be repaid by the homeowner upon title transfer of the property or after a certain length of time, providing an incentive to remain in the neighborhood, as well as a source of funds renewal over the long term.

The objective for the partnership is to complete the revitalization of the Beall's Hill neighborhood and create a national model for other communities. Success will be measured by:

• Moving project activities block-by-block until reaching Telfair Street

• Upgrading the appearance of the neighborhood ensuring that 75 percent or more of the housing in the neighborhood are code-compliant or better

• Achieving a homeownership rate of at least 50 percent for the neighborhood

• Maintaining ethnic, age and economic diversity in the neighborhood

• Creating a national model for neighborhood revitalization partnership

Knight’s latest investment in HMF is a testament to our positive effect on the community and our continued role in transforming Macon to the hip, historic, and progressive community that will continue to attract and retain talent.

Since March, Ethiel Garlington has served as the executive director of Historic Macon Foundation. Before serving in this capacity, he served as director of Preservation Field Services for Knox Heritage and the East Tennessee Preservation Alliance.

This article is a web companion to the Fall 2014 issue of Forum Journal.