Related Links

• Community Conversations
• Rural Investment Collaborative

Transcript

Tim Sablik: My guests today are Suzanne Holland and Kate Keller. Suzanne is a senior regional outreach specialist at the Richmond Fed and Kate is the president of the Harvest Foundation, a nonprofit serving Martinsville and Henry County, Virginia. Suzanne and Kate, welcome to the show.

Suzanne Holland: Hi, Tim. Thanks.

Kate Keller: Thanks, nice to be here.

Sablik: Today, we're going to be talking about affordable housing development in and around Martinsville and how it connects to the Richmond Fed's mission to better understand the economy of the region we serve. As part of that mission, the Richmond Fed's outreach team travels to different parts of our district each year to meet with business and community leaders and learn about their challenges and successes.

To start the discussion, Suzanne, could you tell us more about the Richmond Fed's Community Conversations program that you're involved in? What communities do you visit and what sort of things are you hoping to learn?

Holland: We aim to visit all corners of the Fifth District, which, of course, includes Maryland, West Virginia, Virginia, and the Carolinas [and the District of Columbia]. We have a strong strategic focus on rural communities and small towns. President Barkin is very intentional about getting out on the road and meeting with people, sensing on the economy, and so is our team.

Talking to people who know their communities best is how we ground truth what we think we're seeing in data. Those insights are especially important when data is unavailable or the economy is evolving faster than the cadence of data releases.

Each year, we identify about a dozen counties or regions to visit as part of the Community Conversations program, where President Barkin and a couple of us spend full days on the ground, learning and connecting. Ultimately, we want to gain a deeper understanding of the unique economic drivers in the community, we want to contribute our expertise where it's useful and, most of all, we want to be a conduit of innovative ideas and amplify what communities might benefit from or replicate.

Sablik: In early January, you traveled to Martinsville in southern Virginia for a Community Conversation. Martinsville sits near the border with North Carolina, about halfway between Greensboro and Roanoke. What brought you there?

Holland: We spent last year looking deeply at population flows in the Fifth District, and interesting things have been happening over the last few years. A number of rural communities that had been losing population for decades are now growing. We really wanted to figure out why, and Martinsville was a call out example. Not only is the city growing after decades of decline, it's gaining prime working age population and getting younger, where many rural places are struggling to attract or retain younger residents. So, we wanted to visit and suss out their story.

On top of that, we see time and time again how lack of affordable housing is a huge barrier to growth, and rural communities have significant challenges increasing their lower-cost housing stock. We learned that Martinsville, however, has been developing affordable housing, so we wanted to find out how they've been successful and what they might advise other communities.

Sablik: Yeah, we're definitely going to dig into that housing topic some more. But first, could you walk us through some of the things you did during your visit and what you saw?

Holland: We met with a wide range of regional business leaders. Through industry roundtables and individual meetings at manufacturing plants, we saw a region moving toward diversification from its roots as a textile and furniture manufacturing town — which is still there, of course — to advanced manufacturing and segments that are shifting the skill demand in the region.

Tom had an opportunity to provide an economic overview and engage in a really dynamic Q&A with a large group of nonprofit and small business proprietors at an event hosted by the Chamber of Commerce. We really saw how passionate the community is about nurturing their entrepreneurial ecosystem. We sat down with community leaders, where we learned that the sector diversification, the strategic investments, they're all part of their long-term plan. The growth in Martinsville is not coincidental.

As other places in the region like Danville grow and the Greensboro radii increases, Martinsville is stalwart in maintaining its own identity, but not without evolution. Like Danville, they've been building for decades what we're now starting to see show up in the demographic data.

Sablik: Talking about some of the people that you met with, how did you end up connecting with Kate and the Harvest Foundation?

Holland: We've had the privilege of working with Kate for quite a while as a partner in Martinsville and in our community development programming at the Richmond Fed. Among many things, Kate is a part of our Rural Investment Collaborative capital development workgroup.

Harvest Foundation is a unique, successful community development model. They turned an asset loss — the sale of the local hospital — into a vehicle for community capital injection. Kate's leadership has been a real catalyst for the regional cooperation. Harvest, and the role that Kate plays as a convener and consensus builder, is another reason we wanted to spend more time in the region.

Sablik: Kate, let's hear from you. Can you tell us a bit more about Martinsville and the surrounding community?

Keller: Martinsville, as Suzanne said, sits in the original textile/furniture industry belt, so our history is very similar to many other parts of this region of the country. A significant part of our industry left in the late, mid '90s to early 2000s, which put our region into an economic decline. Our community had to sort of come back from that and figure out what our new future would be.

We are seeing the fruits of a lot of labor that has gone into how do we rethink our future. How do we bring advanced manufacturing to this community? How do we train our workforce to be prepared for the future that's coming here? And then, how do we bring businesses? So, it has been a lot of work by a lot of partners in this community over the last two decades.

We've started to see the fruits of those efforts, which then causes other challenges. When you start to have a population return and you have business and industry come back, you start to see other parts of your community that need to be worked on other than just bringing back the jobs.

Sablik: Suzanne touched on this a little bit, but could you tell us a bit more about how the Harvest Foundation started and what your approach to community development is?

Keller: Sure. The Harvest Foundation came out of the sale of a local non-profit hospital. The hospital was sold in 2002 to a for-profit hospital system. The proceeds of that created the Harvest Foundation, so we basically have an investment portfolio that the foundation lives off of.

We serve the communities of the city of Martinsville and the county of Henry. Our footprint is about 63-65,000 lives that we're here to serve. We do that in a variety of ways, both through grant making and local investments. We do lots of capacity building and partnerships and convening, as you mentioned earlier. We try to use all the tools in our tool belt and invest in projects that can offer generational change for our community.

While we do come out of the healthcare system, our lens is much broader and incorporates all of community development. We do investments in the different aspects of that infrastructure — housing, community vitality and revitalization, education, workforce development. So, we have a larger lens of what we invest in in our community than strictly one particular sector. We have the whole community under what we're hoping to help and move forward and think about that generationally in the long term. That's how we address community development in our area.

Sablik: On that topic of infrastructure, Suzanne already mentioned housing and you talked about how when communities start to grow, new problems may emerge. Walk us through the affordable housing challenge in Martinsville.

Keller: We haven't had new construction in housing in this community in probably over 30 years. We have a lot of houses that need a lot of work and with an economy in decline, there's not a lot of local investment in their own houses. So, as we have started to turn our economy towards growth, housing has been highlighted as definitely a need.

We did a study in 2019 that looked at the housing stock and looked at the housing demand, and found that we were in desperate need of housing at all levels — affordable housing, workforce housing, market-rate housing, high-end housing. So, we kicked off with our area of trying to figure out how to create more workforce housing. As our workforce is starting to change and starting to grow, we really needed to look at that gap in our community.

Sablik: What role does the Harvest Foundation play in these housing developments and general revitalization in Martinsville?

Keller: We obviously are not a property developer. We don't build homes. So, how do you go about bringing more homes into our community? There are a couple tools in the foundation's toolbox we can use, both through grant making and through investing.

But in order to really tackle it, you have to build the partnerships to get it done. We're not structured to go out and buy a land, build a bunch of properties, and rent them and sell them. So, we have a couple different projects that we've done in partnership with the city of Martinsville, with Henry County, local home builders and Virginia Housing. We've engaged with the United Way.

Sablik: Can you share some examples of successful projects that you've worked on?

Keller: [There are] two projects that I can give examples of where we have built single family homes.

The first one we did in partnership with the City of Martinsville, our United Way, our PDC [Planning District Commission] and a local home builder. We built these cottage-style homes, and they're meant to be workforce housing. They're two-bedroom, two-bath homes. They're in the downtown footprint of Martinsville. They had to be owner-occupied. They can't be purchased and then rented out. We had funding from Virginia Housing. It was a whole partnership to try to figure out how to get the land prepped and ready, how to build it, and how to sell these homes at a rate that someone could afford in our community. We built 10 of them, and all 10 of them are occupied with people. And we found that to be a great success.

There are other ways to replicate that. We started a project in a community called Villa Heights in [Henry County]. The county tore down some dilapidated buildings that were there and repossessed some of the land. Then we are again building smaller, single-family homes that are two- to three-bedroom homes that can be used as starter homes or end-of-career homes if people want to do that. We are now building them and offering the community land trust model — the land that the house sits on is held in a trust and the home itself is owned by the homeowner. As the home increases in value over time and the homeowner then sells the home, the value in the land stays with the home but then a share of the profitability goes with the homeowner. Therefore, it keeps the home at an affordable rate for the next purchaser.

Sablik: That's an interesting approach to making single-family housing more affordable. Have you done any work in the multifamily rental housing market as well?

Keller: We also have strategies we do with apartment buildings. We have a Roanoke-based developer who has helped redevelop multiple properties across Martinsville. We have two school buildings, an old grocery store, [and] an old bank building where they have renovated and turned them into apartment buildings. We have a housing fund that provides grant funding through the municipality to the developer to keep a certain percentage of those units at affordable rates, Most of the units in the building, 85 percent, will be at market rate and then the other 15 percent will be kept at an affordable housing rate and rented to people who fit those qualifications.

We also do program-related investments. On the financial side of it, we have offered a low-interest-rate loan to help build apartments in our community. So, we can use both sets of tools depending on the project.

Sablik: That's all really interesting, fascinating stuff.

You mentioned all the great partnerships that you worked with, and that's certainly something that we've heard from other guests on the show that have talked about rural projects and capital development. They often emphasize the importance of partnerships. How do you go about working with local and regional partners and building those relationships?

Keller: The nice thing about a small town is everybody already has those relationships. When you're thinking about rural communities, a lot of the same people wear lots of hats and do a lot of the work together. If you're lucky, the relationships are positive and they're already in place.

I would say one of the things that we had to address was the capacity and the knowledge and expertise in our community to do the work. That is something we didn't have, and so we sought it. We hired a consultant — somebody who knew housing, who knew how to do developments, who knew how to build a project — to come and lead our work for us. So, [the consultant] managed, facilitated, brought the partners together, and then worked with all the different partners. Having somebody who knew how to do the work and had done it elsewhere and then build that expertise on the local ground, we now have capacity in the community to do it ourselves.

And I would say that's one of the reasons we're involved with the Rural investment Collaborative with the Federal Reserve. A lot of communities don't have the expertise on how to take these projects from thought all the way to fruition, how to build the capital stack, how to do all of that. Bringing in and building the capacity in your community is really, really critical.

Sablik: Do you have any advice for other communities that are facing similar challenges around housing, based on what you've learned working on these projects?

Keller: These projects take a lot of time. I think they say, on average, these projects take seven years. We did the one neighborhood, the first neighborhood — it's called the Five Points neighborhood — in five [years] and we thought that was a huge success. That project had all kinds of hurdles. COVID hit, the cost of construction skyrocketed, and it became a much smaller project than what was initially planned. Because of all of those factors, [it] just was not affordable to build anymore what we were planning on to build.

And so, you go into it with your eyes wide open, knowing that there'll be challenges and bumps along the way. Patience is one of the things I would advise. And, again, look for the expertise to bring in as much as you can.

Sablik: Suzanne, what lessons did your team take away from the visit to Martinsville?

Holland: Number one, I think we left feeling like we have really strong partners in the region — even more than before — with both businesses who want to continue sharing their insights about how they're experiencing the economy, how tariffs have been impacting them, how they're responding with pricing and labor decisions, and then even more so with our community leaders from nonprofits and regional orgs who engage with our programming and utilize our resources.

I will say it was very interesting being on the ground because we got the sense that in most spaces, Martinsville doesn't necessarily feel like it's getting younger yet. While the numbers are meaningful, they are quite small. But we could see the long game leaders have been playing.

After our meetings, I popped into The Ground Floor, a local coffee shop downtown. It was filled to the brim with people under 25 years old. A young barista was wonderfully open with me, and they said the reason they stay in Martinsville is because they can afford to live on their own. [With] affordable housing, especially rental multifamily options, they don't have to work in manufacturing like their parents if they don't want to. So diverse economy, job opportunities. They also said there's enough proximity to bigger cities like Raleigh and Greensboro and even Richmond for entertainment. They don't want to move there because the cost of living is too severe.

I think local leaders have really honed in on a unique and accessible value offering in Martinsville as a small town with modern amenities, and that was something we heard from local leaders on the ground. We're very excited to see how Martinsville continues to grow.

Sablik: Suzanne and Kate, thank you so much for joining me today to talk about this.