Johnson County explores creating $2 million fund to address affordable housing

IOWA CITY — Johnson County is continuing to explore ways to address affordable housing needs with a new proposal that would use $2 million of reserve funds to provide loans for affordable housing projects.

The county would look to find an area nonprofit or other entity that would borrow money from the county to undertake affordable housing efforts at a rate lower than commercial lenders but higher than the county’s depository interest rates.

An initial analysis by the Johnson County treasurer indicates local commercial lending rates at around 6 to 6.75 percent and around a 4.34 percent rate of return, on the high end, in county accounts.

“The idea would be, hopefully, this is a win-win for Johnson County as a kind of a lender and affordable housing providers,” said Johnson County Supervisor Rod Sullivan. “The win for affordable housing is the provider gets a much lower rate. The win for us is we're getting the same or maybe even a little bit better return on that loop.”

The proposal is far from final with details such as affordability requirements for the housing projects, length of loan repayment period, borrowing rate, and amount of county reserves put toward the effort all still up in the air.

A working group comprised of members of the board of supervisors and county staff is being created. The goal is to have a plan finalized by the start of the next fiscal year, July 1, 2026, and to begin lending money that fall.

Proposal modeled after FilmScene and RSFIC deal

Sullivan, who brought the proposal to the board, said it was modeled after an existing Iowa City partnership.

FilmScene, Iowa City’s nonprofit cinema, purchased its Ped Mall location for $2.3 million earlier this year in partnership with Resilient Sustainable Future for Iowa City (RSFIC), a private nonprofit foundation.

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The purchase agreement gives FilmScene two years to raise a $230,000 down payment, and will finance its purchase with a favorable 5 percent interest rate — lower than the current market rate, but higher than the rate of inflation. FilmScene will make mortgage payments to RSFIC over the next 20 years.

FilmScene leaders have said that the purchase would not have been possible had the nonprofit theater used more traditional financing.

“This is basically just one of those ideas that's blatantly stolen from somebody else,” Sullivan said of the affordable housing proposal. “When I learned about it, I just thought we can do the same kind of thing here.”

Other county affordable housing efforts

Johnson County is no stranger to exploring different ways to address affordable housing needs.

The county purchased a 15-unit property, at 1102 Hollywood Blvd. in Iowa City, in 2024 for $1.7 million, marking the first time the county has directly owned housing stock. County staff have said a county owning housing stock in uncommon in Iowa.

While the county found a suitable use for the property, the road there wasn’t necessarily smooth. When the county purchased the property its long term future was not planned, and staff soon determined the county did not have the resources needed to manage the property.

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Eventually a collaboration between Johnson County, the City of Iowa City and Veterans Affairs brought about the first project-based HUD Veterans Assisted Supportive Housing development in Iowa.

“Managing a loan is much easier than managing property, as we have seen through our investment in Hollywood property,” Sullivan wrote in an executive summary to the board. “This lets the County do something they are good at — investing money — while leaving the affordable housing development to people in that field.”

Elijah Decious of The Gazette contributed to this report.

Comments: megan.woolard@thegazette.com

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