About Homes for the Upwardly Mobile
Our Mission
To provide a mechanism for the development of homes
that the
Middle Class can afford to buy and own. To assist the creation of a stepladder
for lower income families to move up to homeownership, without simply government
assistance - in order that lower income families can create equity for their
futures, and thereby move themselves into the Middle Class.
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Our preference is to take the route that in the short term, allows us to get a development up and functioning as soon as it can be done. Having stated this, understanding the possible paths to a successful, short term establishment of our first housing development that is affordable by middle, moderate and lower income individuals and families, there are three basics paths (or a mix of any of these), which we could take:
The caveat to utilizing only co-operative development, is that there might not be any "bonus" profit from the development of upper income housing, due to what we've learned about state government preferences for housing co-op formation, and disinterest in mixed income for limited equity co-ops. For now, we will develop all three of the aforementioned concepts at the same time, (as an education process and a hedge), all the while realizing that some of our developments will be more suited to one development method than another. We may see that it's better during one stage to move forward with one of these aspects, and not the other; then later, move forward with another or all. |
Not all of these are exclusive of one another, which is why we've created a plan that utilizes all at the same time:
Concept for Production
A twofold approach to
establishing this plan comes by building properties that house multiple
(mixed) income levels
in one location, using the proceeds from upper income (somewhat-under market rate) sales and
co-operative housing development & co-ownership to finance the balance of the cost-plus and
cost-minus project. Secondly, utilizing home construction techniques
developed both by manufactured housing production companies and green
building enhancement manufacturers. (We
are interested in talking with other builders and general contractors about
alternative building methods, besides pre-fabricated, factory-built manufactured
homes).
The homes we propose to develop are not trailers, nor mobile homes, as there are no wheels, and the home is not sitting on blocks, or piers. It is bolted to the concrete foundation, and for all intents and purposes looks and feels like any other home; especially like any home that has been secured for earthquakes. These are also HUD approved. (Click here for industry definitions). The difference is that it is built "off-site", truck & trailered to the site, lowered off the trailer with a crane and "set up".
Why are We
Doing This? (Or, "if
it's broke, fix it")
Because NO other local developer seems to give themselves the mandate, no
non-profit can justify it as their mission, no government agency or elected
body will take it on directly to this degree as their purview, and so
everyone, except for a few exceptions just wants to leave the sleeping dog
lie. That is too much of a challenge for an entrepreneur to leave
alone.
As to the reason for this, we are not doing it to "make a lot of money"; we are doing it to because of a simple romantic notion that we can take the profit from one style of development and use it for the benefit of another class. (Only we don't have to steal it like Robin Hood in the story, we can do it using the capitalist system that has left out that class, which capitalism itself was supposedly designed to benefit).
It just so happens that this class, the Middle Class, is that class that everyone else expects will "pick itself up by its bootstraps" and handle the problem on its own. (Instead, the Middle Class has been picking itself up and leaving town, because it has had neither the experience, nor the time, nor the apparent organizing skills needed to accomplish this without leadership).
The fact is that the Forces of INERTIA are arrayed against the Middle Class here ...
There has been the proverbial Faustian Deal made between those builders with money here and those who serve other interests, such as protecting the perceived sanctity of a plant, when a plant can be replanted, and instead land purchased by developers is SET ASIDE to assuage a guilt that no one in the paved over sections of the city has done enough to plant foliage that will compensate for stripping it out elsewhere. (All the while the City of Santa Barbara itself has more trees planted - to the warranted fears of the local fire department - whose members cannot afford to own a home here - than most other American cities); although not in native species as we plan to do..
But this is a gold mine for some developers, existing homeowners and others in the real estate industry, who would prefer to let this sleeping dog lie, as there is more money to be made if one develops a piece of property into 10 nice mansions than if it were developed into one nice mansion, 6 middle-income-attainable homes and 4 subsidized homes, 2 for moderate and 2 for lower income workers. It's not the market, it's the system and lack of will to change.
Therefore, we're doing it to solve this region's major problem for businesses, individuals and families. Our goal is not to do many unique things, but to orient many common things in a unique way.
Perhaps no one else cares enough? On a personal note, the founder's family is from Santa Barbara for five generations - and he is aware that the majority of the need for additional housing is caused by young families moving out of their parents' homes with no place of their own to purchase, and the capitalist system breaks families apart, but for some that's okay.
So, because WE CAN, by taking limited experience, but long on vision, and turn that energy (to the loss of personal gain) into a formula to improve things, not on just the level the Forces of Inertia will "allow" and "grant" for change, but on another level, where we hope that no doors can continue to be barred against an idea who's time has come.
Special Population Segment Note: In certain size developments - perhaps at the level of 10 homes or more - we're considering the positive impact we can have in additional way, in all of the communities we build in, by reserving one of the homes as a home for youth and their new foster parents who have been remanded into foster care, as well as youth that are transitioning out of foster care and into their own custodianship. We're contacting Child Welfare Services about this; and looking into a joint effort with other non-profits that assist youth in this manner.
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In the process, because of the demand, we find that we can choose who we want to enter each co-operative we develop. In doing so, the major criteria that will guide this "movement" will be the participation in the development, by those who want to join the first development and then these newly-housed co-op members assist in the creation of the first, as well as the following developments. Therefore, the people we solve housing problems for will go on to become those who solve the housing problems of the next "wave" of buyers. How will they participate? By helping to manage the apparatus for developing the current and (at least the next one) future project properties. Each member will work towards improving the Quality of Life for themselves and the next group(s) of members; in return for the initial reduction in cost of their home/co-op membership purchase.
Our Motto: "We'll help you, if you'll help others" We
would now like to find a certain set of skills in the people we sell homes to (top) |
Our focus is on the middle class, using 65% of our resources to provide a housing solution for this class, by selling that class their units at cost-plus.
Then, using 25% of our remaining resources to privately subsidize the lower and moderate class sales through other somewhat-under market rate sales at the rate of 10% of overall sales.
To help maintain the stock as permanently affordable through the creation of a Community Land Trust and Co-operatively owned development by the shareholder-owner-occupants.
Our willingness to sell mixed income and mixed use (commercial* & residential) to provide business opportunities where people live, ostensibly helping to alleviate the commuting traffic from the new housing location.
* Commercial could include a mix of opportunities for businesses to co-locate, and purchase their own space on the first floor, independently of the housing, which could be wholesale, retail, office or light manufacturing.
Original Ideas along with Common Practice (Possibility Formula)
These ideas are made from unique, as well as usual methods of creating personal wealth from home ownership. The concepts for development are similar to all of the common concepts of building. The most complicated part is how it took the creation of three separate corporate entities to complete the total plan. Each of the three organizations have very specific and individual purposes and goals.
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What creates the funding to be able to privately subsidize 90% our mixed-income development is a willingness of Upper Income home buyers to move into our developments, either where we have other income levels on the same property, or separated. Ten percent of the total of all sales will be from sales to the upper income level of buyer and will generate the income which will be used to do the other levels of development.
Our success will also come from our co-operative members' joint interest in making a success of the projects. We have spoken with a consultant that specializes in developing budgets for start up co-ops. We would also be developing a plan to educate buyers on the purpose of co-ops and what makes them work well. We are researching various successful co-ops now.
Finally, the location of the property, its landscaping and overall ambience and fit to the neighborhood will assure the accomplishment of the above. (Ideally enhancing or restoring any original natural ecological system on the land purchased).
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What
is The Need?
Because of high regional market prices, the only way the Middle
Class has been able to own a home prior to this, is by allowing for government to
get involved in helping buyers enter the process of purchasing. Organizations
are formed to assist Middle Class buyers in leveraging their assets and credit
to indebt themselves for property that is over-valued, due to zoning and the
lack of available property for high-density development, just so buyers can get a foothold
in the region.
In the community of Santa Barbara, the price of homes has already gone "through the roof" (The average home price is over $1.2 million (6/06). It has been escalating at the average rate of 2% per month and for the last couple of years, no one - not doctors, lawyers, teachers or airline pilots - who earns their living working for a company in Santa Barbara can afford to purchase a home here, based on salaries available from Santa Barbara companies or government positions.
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Interesting, when one thinks about it. The same homeowners who were dedicated to their home town who approved Proposition 13 years ago, to limit property taxes so they could afford to stay in their homes when they got older and had restricted incomes, now find themselves defending the values of their existing property as it escalates out of the reach of other local young families in their own home town.
Now, the original families who may want to move, find that they cannot sell their homes without facing a windfall profit that will have to be paid in taxes, unless they re-invest the money somewhere else, or put it in a trust (if their assets are low enough), in order to pass it on to their heirs - and the government loses out again. If they sell, the rich traditions of those original inhabitants as well as their profits leave the community. At the same time, these homeowners don't want their tax dollars being allocated to provide "affordable housing" for others. That's quite a conundrum. Yet the middle class that wants to own a home moves away with all their savings, to invest it and their time elsewhere.
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The
Result
In the meantime, what we have left is a beautiful shell to honor the memory of
our traditions, where the retail
shops are primarily run by low-paid youngsters unschooled in the mechanics
of economics and business practice that enhances economic development for the
community. That staff is managed by owners that usually live elsewhere, some of whom rarely visit their own stores. Again,
a disconnected population, not invested in ideas and efforts to revitalize the
community, but still caught up in an emphasis of "keeping things the way
they are".
The government seems to be happy to see homes turnover for higher prices, even if they are for sale to those from out of town, since it allows for the only available increase in property taxes, so that the cost of running the county and cities is covered. Yet, we see recently that the government cannot run the business of the people without going into further debt, because the system doesn't work well enough since the homes are not turning over fast enough and retail sales taxes are not what they could be since the tourist industry is seasonal.
Now the county is faced with plowing under its agricultural heritage, where the highest income crops are, just to provide 17,000 units of housing that the State has mandated for Santa Barbara County alone by 2009. So, it becomes a cycle of indebtedness that will not end, and inflation will escalate higher and higher, further locking residents who grew up here out of the American dream and a solid economy. Are all of these homes to be sold at Market Rate, except for 10% or so that the County requires to be developed and sold for Low Income families? Just where will the Middle Class end up, Kern County?
In the midst of such a dearth of opportunity, some of the cities are actually buying up the remaining available land that comes onto the market, in order to pull it out of any future production.
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Are
There Solutions?
Seems one of the obvious solutions, is to build and maintain homes that are
affordable, where there is a larger base of property taxes which could be
generated to run the government. So, is it possible?
This project to create attainable/obtainable housing for the Middle Class is offering buyers a chance to participate in "fair equity", to reduce the price of their purchase. What is fair equity? It is similar to "sweat equity", which usually means to participate in building or remodeling your own home, for a reduction in sales price. In our case, it requires very specific actions on the part of the buyers, according to our plans.
Co-operative housing development and condominium ownership are the two key organizing forces behind the concept. We have a huge opportunity nationwide, because around only 1% of the manufactured home developments are in co-operative ownership.
We are not seeking to help members create a down payment for their home purchase as some housing purchase facilitation organizations, but to create new homes that are less expensive to purchase, based upon the individual member's income level, lowering the cost of the purchase and therefore the down payment, without government grants or assistance from private foundations.
Other ways that we plan to eventually develop properties to help first time buyers include some unique concepts for getting people from where they are as renters, to homeownership (click here for our concepts on lease-to-own).
Within these pages are the answers which provide
a solution.
Please join with us and assist this effort.
Doing anything else is not going to produce the same results.
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What Would It Take?
What would it take to pull this idea out of a working plan and make it a reality? It would take
at least the self-interest and time of
the Stakeholders and the experts in housing development finance to
prove
the numbers in the
minute details of the idea, and then joining the working committees or
board of
directors to foster.
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Why Aren't Other Developers Doing This Now?
To be frank, why should they? They have no interest in doing something
like this, when like any other company, one goal is to create as much profit for
their own business, as they can. Secondly, when the City of Santa Barbara's
Planning and Architectural Review Department and Commission take from 2-4 years
to approve a project, after the land has been purchased, and the money invested
in a plan to develop something, it's costly to let the land sit and pay taxes on
it, without being able to move forward. As well, the volume of construction is so low
in the local area that builders can't afford to have the lifestyle they want,
based on so small a number of sales that each one has. When one does a search
for general contractors, one usually finds only high-end private home builders.
As a matter of fact, in two years networking, I have yet to find more than two developers who have been willing to do more than make a couple of suggestions, mentor, support, invest or participate by partnering in any part of the project, because this is not about great profits, or many industry professionals just do not have the time. This is why we're organizing directly with consulting general contractors, as a developer of our own. The other aspect to our effort is to partner with one developer we are familiar with and with landowners, so that we can avoid the overhead of owning the land before we can develop it.
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The
Difference between PHA & other Developers
The local governments require developers to build at least 15% of their
individual developments to include affordable units, or create the affordable
units elsewhere. We've turned that equation upside down basically, by putting in
our charter that we will build 90% affordable to the Middle and Lower Classes.
This will include 25% of our developments as set-aside for the Lower Class and 65% set
aside for the Middle Class, leaving only 10% for the wealthy from out-of-town. (See
link to other organizations below)
We need to distinguish between the individual entities, which make up this concept. PHA is not the developer of housing, but is a marketing, public relations and (unincorporated as yet) member-owned Mutual Benefit Association. (See organizational descriptions here). Our two sister organizations are the housing developers (HRU & CPR).
Profit would be used for overhead for the organization, and to re-invest to build additional properties. Obviously, the largest cost factor is the land. The more units we could build on one piece of land, the more gross profit there would be to reinvest from each project, into additional projects.
Another difference is that, to our knowledge, we are the only developer that is proposing to utilize manufactured housing not in a mobile home lot, and not on an individual's private property, but in a common ownership land development.
Plus our other methods in the Possibility Formula, are what makes the difference.
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Additional
Member Benefits
Also, we are looking into the cost to develop an additional member benefit,
which would allow members to optionally buy into a group health plan. It will
depend upon our cost of time to administer such a plan. While most employees who can qualify to purchase a home, based on
their credit and income, there will be many other members of this association
who will apply to purchase, who do not have health benefits with their
employment. This can also
be an added reason why employers would support our organization, if they don't
offer their employees a group health benefit. A membership in our organization
may provide that link to a good
plan, including a PPO or HMO.
View photo of a Sample Model Home
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