LOUISVILLE, Ky. - Six innovators were awarded a combined $2 million in grants by a local organization at Wednesday's Reconstruct Challenge at the Speed Art Museum.
The six recipients of large checks written out for $300,000 didn't start the night off as winners. They first had to compete in a pool of 12 innovators from across the United States and give their best pitches for nontraditional solutions to the affordable housing crisis in Southern Indiana and Louisville.
According to Access Ventures, which hosted the event, an affordable housing gap of 7.2 million units exists within the United States, with Louisville and Southern Indiana having a combined shortage of 24,000 units.
"I was really impressed with how many people were here and how many people care about how entrepreneurship can affect the social impact of things," senior associate Molly Sanborn said. "It was really cool to see the turnout. I think the quality of the pitches show that the entrepreneurs put hard work into presenting, and that to me is an indication that they've put really hard work into these ideas and solutions."
The pitches included ideas ranging from home sharing solutions to the streamlining of application processes. Now, the six winners will use the money to implement their innovative solutions in Jefferson County, Kentucky, and Clark and Floyd counties in Indiana.
"The selection committee was really intentional about their deliberation and how they weighed the different aspects of each program," Sanborn said. "I'm really excited about the six we have selected."
Two of the winners presented solutions that dealt with affordability, both in down payments and in mortgages.
Sarah Strochak of the Urban Institute in Washington, D.C., said it's not uncommon for prospective buyers of cheaper homes to be denied a loan by lenders.
Her team's solution to this was to offer micromortgages for cheaper homes, which could possibly make payments lower than if the same property were being rented.
"Our idea is to create a new loan product that takes out a lot of these components that make it so expensive so that we can make this an actual profitable loan for lenders, and it can help get more people into home ownership," Strochak said. "The payments are going to be extremely affordable. It's often way cheaper than renting the same house."
The lone Louisville local to come away with a check was Kitty McKune. Her organization, New Directions Housing, is partnering with three other groups to take on down payment assistance.
According to McKune, there is a lack of such assistance for first-time homebuyers in the area, noting that it's a problem.
"Our idea is to basically take employers and have them provide the down payment assistance," McKune said. "It's a loan that's forgivable after five years. It's a way for the employers to retain good employees. It's simple, because after five years, the loan is forgiven. If it's sooner and the employee chooses to leave, a portion of the loan is repaid."
McKune noted that Norton Healthcare operates a similar program, and has helped nearly 700 employees purchase homes over the last 15 years in Louisville.
"We want to take that concept and put it in a specific area with this team that we've built to help encourage this," McKune said.
Noelle Marcus of the company Nesterly, put forth an idea that seemed somewhat obvious yet so unique. Her idea involves the fastest growing low-income population in the area - those over the age of 65,
"We help them unlock wealth that exists in their home by creating a safe, easy, legal way for them to rent out a spare bedroom in their home for over-30-day stays," Marcus said. "This creates new affordable housing, and helps people who have been in their homes a long time be able to remain in their homes as they age."
According to Marcus, there are almost 30,000 spare bedrooms in the homes of baby boomers in the Louisville area alone. On top of that, 57% of people in the state of Kentucky who are seniors living alone do not have the financial resources to cover basic living expenses. Lastly, there are 7,000 students who are considered homeless in Louisville.
With all of that information, Marcus' team came up with that solution of having young people rent bedrooms in the homes of older people.
"There's a lot of opportunity to unlock new affordable housing at no cost," Marcus said.
While Marcus' proposal involves rooms within a house, Frank Furman's PadSplit encompasses the entire house.
PadSplit lists units on its website, and homeowners are able to list online as well.
The current affordable housing application process is a tedious one, according to Caroline Caselli of Haven Connect. Her group is already present in seven states, with a footprint of 7,000 units.
"We streamline affordable housing applications for property managers and applicants," Caselli said. "Basically, applicants wait two to 10 years to get into affordable housing. There's a long list of people waiting to get into each property. We help property managers communicate with applicants every year faster and easier than the current paper-based system."
Like Caselli, Zareena Meyn of mRelief is also working to streamlining processes, with Meyn focusing on food stamps. Meyn said that there is $11 billion in unclaimed food stamps nationwide.
"That means that there are 9 million people who are eligible for food stamps, but they aren't receiving them because the processes to apply are really difficult," Meyn said. "They're especially hard for working families and people who are the most vulnerable."
mRelief's mobile app, Meyn said, takes the weeks-long application process and shortens it to just over an hour.
"What mRelief has done is built up a process that's more accessible, because it's available on a mobile-friendly website," Meyn said. "You can call to apply and complete your required interview. You can take a picture of those documents and send them to us. We're trying to make the process more accessible and enroll those 9 million people who are eligible for these benefits from a program that will help them eat."