California’s Commonwealth
Local new housing development that enhances the eco-system & provides homes the middle class can afford

CONCEPT BACKGROUND
Build homes that the middle class can afford to invest in, for the benefit of the community. The purpose of the homes is to create both an investment vehicle and a domicile for the upwardly mobile.

Who are the Upwardly Mobile?
These are the people who are "locked out" of the current owner-occupant real estate market, who would otherwise be striving to reach or maintain their status as a member of the Middle Class, through the accumulation of equity by their investment in the local real estate market. The term "affordable housing" usually applies to these people, if they are in the lower percentile of prospective buyers. In our case however, our primary market is the middle percentile, which we offer to solve the problem for, at the rate of 65% in our business plan. 

In our estimation, they are also youth that have been remanded to group homes or foster home care, in the supervision of adults who are not their natural parents. These youth, given the opportunity will become upstanding citizens and residents of our county. Our plan accommodates their needs as well, by reserving one home in each development as a foster home, since there is a dearth of foster homes for tens of thousands of California's youth. 

An Analysis of Our Plan Includes the Following Points

Our primary clientele is the Middle Class person. Side benefits will accrue to the moderate and lower income persons; the ability to make this happen in our formula comes from sales to upper income persons. Sales to upper income persons will produce the profit whereby the balance of the development may be sponsored. As well, sales to upper income persons will be accomplished at somewhat less than market rate. 

• Create an alternative style of development suiting the local environment, culture and history.

  • Incorporating concepts of sustainability and co-existing with natural areas.

• Create an environment different from others, by enhancing it with native plants for wildlife, to ensure as best we can there is no net loss of flora and fauna - and actually improving it wherever we are able.

• Utilize features that bring into play wind, rain and sun to provide self-sufficiency in utilities.

• We would not build as so to drive down the value of existing properties, but might stabilize them, by building a new tier of property values, by setting prices that do not escalate with the local market; through deed, sales contract and membership in the co-operative.

• Create a village atmosphere, where people are not locked away from one another, but they are enticed to participate in the common space provided by the developed environment. 

  • Even when people are in their homes, develop each so that part of the inside and the outside share commonality.

• Create mixed-use (commercial & residential) space, in order that people do not have to commute to “go to work”, but can walk to work downstairs. 

  • Develop Telecommuting (Tele-work) Centers  for the outlying areas, or even in areas of the cities where there are not a lot of jobs.

• In the effort to create housing for outlying "village" areas, foster development of industry, in a way that provides opportunities for people to have good jobs, in order that the town is not dependent upon low skill/wage support positions for health and tourism, and

• Develop an incubator for entrepreneurs who live in the housing development, providing space, supportive services, financial and marketing assistance for micro-to-small business owners.

Miscellaneous

• We all know the benefits that accrue to a community when the middle class owns homes.

• The materials, land, financing and labor are available. The community just needs to organize resources so that these will be built. This requires the skills of a great general contractor.

• The land itself would be titled to a Community Land Trust, to keep in holding with the affordable charter in the future.

• The lower the original purchase price, the more "profit-sharing" on the other end, when the home (share) is resold by the first owners to the next owners. 

Organizational Structure 

Why Three Organizations - Plus the Home Buyers Club?  
(Click title for HUM/PHA differences)

One organization (PHA) is a marketing entity, public interest group and membership association; another entity (CPR) is a somewhat-under market rate housing development company; the third organization (HRU) is a development company for the upwardly mobile. 

As development companies, these organizations would either organize to build-develop on their own, or contract out these activities with other builder-developers and/or general contractors.

HRU may seek grants from the government, which would necessitate it functioning as a non-profit. It will also allow us to manage an entity (public non-profit) for the benefit of the community, which would in fact own the for-profit housing (CPR) development entity, as its subsidiary corporation. 

PHA, as a marketing organization, would exist for the purpose of educating the public and government to allow us to do the right thing, and therefore would necessarily have to be a separate IRS tax-code organization, with a different set of books. It would also function as a California corporation, with all members being owners by virtue of being shareholders. This non-profit membership organization would also mandate to members that they agree not to sell their membership to the public, without a first right of refusal to repurchase being exercised by the organization; and the members agree to not resell for more than a set percentage of increase in their own net values per year. (Since such shares would not be traded over the counter, on the market as it were, there may be leaning towards the development of a secondary market, but that would be restricted by the fact of registered share ownership).

Members of PHA become eligible to purchase homes from either of two housing development companies, depending upon members' income level, either: Competitively Priced Residences (CPR), or Homes for the Rest of Us (HRU). CPR builds housing for middle to upper middle-income persons and HRU builds housing for lower to lower-middle (or moderate) income persons.

We propose self-funding sales, management & operations, after initial sales occur, by:

• Construction will be done by Competitively Priced Residences, first on a for-profit basis to upper and middle income buyers; then afterward, the moderate and low/low-low income buyers will receive a subsidy from the profit earlier generated.

• Land will be purchased or received in donation, and owned by a Community Land Trust

• Development will be managed by Homes for the Rest of Us

• Building will be 90% "affordable", with 10% being sold at somewhat under market rate to generate income

  • 80% of which will be reserved for the middle & 20% for the lower income classes.

• Homes sold to Lower Income earners will be sold through subsidies, by re-investing the profits from sales of slightly below market rate & moderately priced homes.

• Initial Sales will occur to those who become members of the (PHA) Co-operative, on a first-come, first-served basis. 

• Memberships in the Co-operative will be allowed for all who become participants in the Buyers' Club, called Homes for the Upwardly Mobile. 

• At some point down the road, we may even "hold our own" mortgage paper, and generate income for the organization based on the interest we charge for the mortgages.

10% Market Priced Sales Non-subsidized (positive cash flow)                            65% Moderate Priced for a  Partial subsidy Cost-Plus Sales at  Less-than-Market (still a positive cash flow)                        25% Low Income  Priced Mostly  subsidized (negative cash flow to the Organization)

Click for another more detailed chart (download in Word format)

Prospective Homeowners Association Turns
Home Builders Equation Upside Down

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, including 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.

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 interest ownership land development. 

Plus our other methods in the Possibility Formula, are what makes the difference.

Click here for a breakeven analysis on 6 or 20 units - and - Planned development estimated costs

A prospective layout for a 10,000 SF (#10-unit) Residential and Telework center development

Potential Builder-Developer Partners & General Contractors, Click Here

Land Criteria we're looking for in the cities