LaCasa, Inc.: Helping Residents Plan Economic Recovery

Elkhart County, Indiana’s employment base depends on manufacturing recreational vehicles, icons of a boom economy when gas was cheap and consumers were spending freely. But the combined shocks of skyrocketing gas prices in the summer of 2008, followed immediately by the stock market collapse, put the brakes on Elkhart County’s economy. Within a year unemployment shot up from 5 to 18.3 percent, and soon people started having trouble paying their mortgages.

Elkhart County is in north central Indiana, about 120 miles east of Chicago and in the heart of Amish country. Its real estate market had only modest increases in recent years but predatory lenders were active, peddling so-called “two-year fixed” loans that would re-set to higher rates in the third year. Those loans spelled trouble to LaCasa Executive Director Larry Gautsche, so two years before the market crashed he arranged for three of his staff to become certified as foreclosure counselors through NeighborWorks® America. Where LaCasa had previously seen only a handful of mortgage delinquencies at any one time, the counselors now respond to 60-70 new foreclosure cases a month. Vacant houses are a common sight in neighborhoods throughout Elkhart and surrounding counties.

LaCasa staff enlisted Goshen neighborhood associations in the task of identifying vacant and foreclosed properties that could drive down property values in otherwise stable areas. Residents helped identify 17 bank-owned homes, along with 10 properties that were long time neighborhood eyesores, which became the basis of an application for funding under the Indiana Housing and Community Development Agency’s Round 1 Neighborhood Stabilization Program (NSP-1). The city of Goshen offered a matching loan of $800,000 to cover the cost of redeveloping the non-foreclosed properties, which are not eligible for NSP funds.

LaCasa planned to identify and prepare buyers through its NeighborWorks® HomeOwnership Center (HOC). Approximately 150 families were participating in LaCasa’s Individual Development Account program (a matched savings program), most of whom were saving to purchase their first home. With the help of homebuyer education and counseling through the HOC, LaCasa was confident that qualified buyers could be found to purchase the available homes. City loan funds would be used to acquire uninhabitable properties and NSP funds would be used to renovate them. LaCasa clients would tap the LaCasa loan fund for mortgages and their IDAs for downpayment and closing costs.

Local churches established LaCasa in 1970 to support migrant farm workers and their families. Over the years LaCasa expanded its mission to include other programs, and now supports all low- and moderate-income families, not just farmworkers. It expanded its service area in 1998 to include all of Elkhart County.

LaCasa’s biggest change, however, came when it joined the NeighborWorks® network in 1999. As Gautsche recalls, this event was “transformational in helping us understand the needs of the neighborhood, not just the individual.” LaCasa targeted a neighborhood in Goshen and hired a community outreach worker, who spent time getting to know the residents and their needs. “Nothing visible happened during the first year”, recalls Gautsche, “it was all planning.” Yet the improvements that eventually followed were all driven by the needs residents had identified in that first year, and by the vision they had for their neighborhood. The city made infrastructure improvements such as new sewers, sidewalks, streets and lighting. When a large factory moved out, LaCasa organized a series of planning charettes to obtain resident input into how the site should be redeveloped. Residents ultimately decided they wanted to clean up the site, turn it into a park, and build new single-family homes that matched the existing neighborhood: two stories, with porches out front and garages in the rear. LaCasa secured EPA funds for the cleanup and the park will be built, but the housing construction has been delayed until the economy recovers.

This positive experience helped transform the way the city of Goshen approaches its neighborhood planning. Now the city will not start a community project without involving
residents. This is very different from the way it used to be when neighborhoods were not defined, organized or recognized as stakeholders. LaCasa’s approach to involving residents in guiding neighborhood revitalization transferred seamlessly to planning a recovery from the foreclosure crisis.

While the state elected to focus its NSP-1 funding on multifamily housing, LaCasa was able to re-use many elements of its plan to apply for the second round of NSP funding in the summer of 2009. The planning will also serve as a strong foundation for ongoing community recovery efforts. The City of Goshen faces real challenges in rebounding from the weak economy and the real estate slump, but they will be easier to manage as LaCasa, residents and city officials work together to identify solutions.