Rent is not the only factor in making affordable housing truly affordable. There are all sorts of related costs, from monthly bus passes to decent groceries to reliable childcare.
Access Ventures, a Louisville-based nonprofit investment firm, is putting $3 million into finding novel solutions for additional expenses that contribute to housing instability. On Monday, the organization announced the Reconstruct Challenge, a national competition that will award six individuals or groups $300,000 grants to come to the Louisville area and test their idea.
The recipients will have 18 months to experiment and, depending on the progress, they could receive part of an additional $1 million reserve Access Ventures has set aside to help scale those solutions, said Mallory Sanborn, who oversees the program.
With an eviction rate that is nearly double the national average and a dearth of affordable units across the city, Louisville is a great place to test these kinds of solutions, Sanborn said.
“It is a big problem here, so if there’s a solution that works here, it’s possible that it would work in Austin, Texas, or Chicago,” she said.
Sanborn sees the challenge as an opportunity to try out new ideas, rather than trying to implement programs that have worked elsewhere to the Louisville-Southern Indiana region. She described the funding as risk capital, a term often used in venture capital investing.
But while venture capitalists are often interested in high-tech innovations or fast-growing startups, Sanborn said Access Ventures is more concerned with finding ways to lower costs for low income families, no matter how simple.
She offered the example of a principal-first mortgage, through which a person with bad credit could get a character-based mortgage. That person could then pay down the principal and build up credit before applying for a traditional loan from a bank.
While the challenge is open to the whole country, Sanborn acknowledged someone working in another city may not want to uproot themselves to Louisville for a year and a half. That’s where she thinks the funding will come into play.
“If they don’t have the funding to see if it works in Portland, Oregon, then this is [$300,000] that they can use to prove their test or to prove their innovation and then bring it back to where they live,” she said.
Up to a dozen finalists will attend a pitch event at the end of August, from which the six winners will be selected.