South of Downtown Residential Rental Rehabilitation Program

The South of Downtown Residential Rental Rehabilitation Program offers $15,000 in financial assistance per dwelling unit to owners of affordable residential rental properties in the area bordered by A, J, South 10th and South 17th streets. Upgrades may include energy efficient windows and doors, additional insulation, roofing and foundation repairs, and other structural improvements.

The program is administered by NeighborWorks Lincoln through a contract with the City of Lincoln Urban Development Department. The goals of the program are to improve the quality of existing affordable housing and extend the life of the building, with outcomes of ensuring tenants are provided with decent, safe, and sanitary housing at an affordable rent, and increased energy efficiency. For full program details, refer to the Policies, Procedures and Program Guidelines(PDF, 170KB). Program details include:

Eligible Property

• Properties must be located in the project area bordered by South 10th, South 17th, A and J streets.
• Properties must be a permanent structure available for rent on a year-round basis.
• Mixed-use properties (commercial and residential) are eligible if the commercial use is compatible with the residential use. Assistance is provided for rehabilitation of the residential portions only.
• Units must be able to be restored to decent, safe and sanitary condition.

Eligible Property Owner Requirements

• Maximum rents may not exceed the U.S. Department of Housing and Urban Development (HUD) Fair Market Rent (FMR). HUD revises maximums annually. Current maximum rent and utility rates are as follows:
  • Efficiency – $766
  • One bedroom –$856
  • Two bedrooms – $1,067
  • Three bedrooms - $1,504
  • Four bedrooms - $1,638
  Effective date: June 1, 2024, and each year thereafter. Updates are available on HUD’s website.
• The property owner must agree to maintain affordability for a period negotiated and approved by the City and agree to limit rent increases throughout the affordability period consistent with, and not exceeding, HUD’s annual maximum FMRs.
• Applicants must agree to report to the City annually by providing rent roles or ledgers during the affordability period.
• The property owner agrees not to income discriminate based on source of income and agrees to accept Housing Choice Vouchers.

Eligible Rehabilitation Costs

• Bringing up to existing housing code standards in older buildings
• Replacement or updating of major systems with emphasis on improving energy efficiency including: roofing, windows, doors, siding, gutters, plumbing, electrical, heating, ventilation, air conditioning, insulation, foundations and exterior masonry
• Other energy efficiency improvements
• Lead-based paint remediation through the City’s Lead Hazard Control Grant Program (Additional requirements apply)
• Environmental hazards, including radon remediation, asbestos abatement, and mold
• Removal of architectural barriers to provide accessibility for persons with disabilities

Ineligible Expenditures

• Luxury items
• Cosmetic upgrades

Financial Assistance

• Financial assistance is provided in the form of a grant subject to prorated claw back if terms of the grant agreement are violated during the affordability period.
• A lien will be recorded on the property until the affordability period has been completed.
• Funds will be provided as a reimbursement for eligible costs. All construction work is inspected by NeighborWorks Lincoln staff prior to payment being approved. Payment will be made directly to the owner.

Application Process

• City opens a pre-application period for 30 days at least annually.
• Interested property owners submit their application electronically by the designated due date. No applications are accepted for a current round after the due date.

Selection Process

1. Urban Development Department staff review applications for preliminary approval based on completeness of the application and confirmation that units are located within the target area.
2. A City-led team comprised of staff from the City, NeighborWorks Lincoln, and partner agencies including Lincoln Electric System (LES), score applications based on the following criteria:
   • Length of affordability
   • Existing or potential partnership with other housing programs
   • The rehabilitation/creation of accessible buildings and/or units
   • Age of the building
   • Current rent
   Projects are selected based on the number of points received, funding availability, and totality of the application.
3. Property owners are notified and informed if they have, or have not, been selected.
4. Additional funding sources may be identified based on the type of work, e.g., electrical, gas.
5. The property owner bids the project(s).
6. The grant agreement is finalized between the City and property owner detailing program requirements. A lien is placed on the building for the affordability period.

Construction Management

• The property owner is responsible for coordinating all construction activities with the contractor with assistance as needed by NeighborWorks Lincoln.
• Invoices are reviewed by the NeighborWorks Lincoln Inspector, approved, and submitted to the Urban Development Department for payment within 30 days.

The primary source of funds for the SoDo Rental Rehab Program is Community Improvement Financing (commonly referred to as Tax Increment Financing or TIF) generated from growth in valuations and the private developments within the project area. The South of Downtown Area was designated a TIF District in August 2021 for 20 years. Short-term debt is expected to be issued to obligate future funds in phases. The City may issue Community Improvement Financing bonds or notes to fund the project. The City will divide the taxes for the project area and will estimate the availability of funds over a three- to four-year period.

The first round of applicants were selected in January 2023, resulting in the rehab of 107 housing units ranging in size from a single family home to a 40 unit apartment building. Round two applicants were selected in June 2024 and the rehab of 109 units is underway. Urban Development’s goal is to continue the program in the South of Downtown area for 10 years and hopes to expand into additional neighborhoods in the future.

The City of Lincoln completed the Affordable Housing Coordinated Action Plan(PDF, 14MB), adopted by the City Council in December 2020. The Action Plan identifies the need for improving existing affordable housing. During the same time, the City and the South of Downtown Community Development Organization completed the South of Downtown Redevelopment and Strategic Plan, adopted by the Lincoln City Council in February 2021. That Plan identified improving the quality of existing affordable housing as its highest priority and identified a project to establish a rental rehab program. The Plan states that improvements and enhancements that support private rehabilitation of existing housing will be identified by Urban Development staff and program guidelines will be established.

Nebraska State Statutes require that an area be designated as Blighted and Substandard prior to the completion of a Redevelopment Plan. the Lincoln City Council designated the South of Downtown Area Extremely Blighted in January 2020. The TIF period can be extended from 15 to 20 years in an Extremely Blighted area.