Habitat is built on solid foundation

Eighteen years ago this month, Carol Howell accepted the keys to the first home built by the Spokane affiliate of Habitat for Humanity. Howell is still in that home, and Habitat is still in Spokane.

But the housing business has changed at least as much for Habitat as it has for every other builder that has endured since 1988, when only 1,007 permits for all kinds of residential housing were issued in Spokane County, compared with 3,523 last year. Since 1970, only 1982 was worse.

Habitat cannot buy a lot today for the money it took to build Howell’s home 18 years ago. Post-Katrina material costs are soaring. Reconstruction along the Gulf Coast has brought renewed attention to Habitat’s work, but those efforts are going to absorb a lot of the national leadership’s attention, and a lot of resources.

Still, Howell’s home was the first of what will become 159 by the time current projects are completed. The nonprofit tries to have 10 projects completed or under construction during the year, and wants to boost that total to 20. Executive Director Michone Preston now manages a $4 million budget and nine office positions, plus the organization’s store at the corner of Trent and Hamilton.

Store? More like a gold mine.

Preston says the outlet for used and semi-used construction and home improvement materials, opened in 2000, did $66,602 in business in September alone. Habitat will put more than $34,000 of that revenue to work in its construction program. Although only a small part of Habitat’s budget, Preston says that income has helped stabilize cash flow vulnerable to the ups and downs of charitable giving.

The dropoff in contributions after 9/11, for example, was a “huge challenge” that forced Habitat to cut back on its construction plans. Preston says she has expected another hit because natural disaster relief efforts distract givers but, so far, contributions have not fallen off. A five-year, $5 million fund-raising campaign has gone well in its first two years.

Meanwhile, Habitat homeowners continue to make mortgage payments that average just $325 per month, including set-asides for taxes and insurance. Each home carries two mortgages; the no-interest, 20-year first mortgage, and a second, “invisible” mortgage intended to discourage new Habitat homeowners from flipping a home that may well be worth considerably more at purchase than they paid for it. If sold within the first year, the owner would get none of the profit. Their share increases 5 percent each year until, after 20 years, the first mortgage is paid off and all proceeds from a sale go to the owner.

So far, Preston says, owners have sold 20 Habitat homes. Two have been repossessed from families ravaged by alcohol and drug problems.

“I’ve learned in this job addiction is more powerful than I ever imagined,” says Preston, who took over as executive director six years ago. She started with the organization in 1995 as development director.

Habitat has a family support director on staff, as well as a homeowner’s association to help owners who may not have anyone else to turn to, particularly during the holidays. Many owners are single parents, although Preston says Habitat is working more now with two-parent families. Many, more than half, are immigrants, a population overweighted because the poverty rate is higher.

Eligibility for a Habitat home is determined using four criteria: household income, which must be below 50 percent of the median; need, assessed by inspecting the families’ existing living conditions; amount of debt; and family stability, also gauged using financial measures, as well as time in Spokane.

“Families with credit card debt of significant amount are not going to qualify for our program,” she says, adding that credit problems are the factor that most often disqualifies applicants. “They do not even know how much debt they have.”

Once a home is built — with the owners contributing 500 hours of sweat equity — the mortgage payment must be less than 30 percent of household income. Cost of a Habitat home today is about $73,000.

Preston says Habitat itself has been cautious about taking on debt, but is working with other Habitat affiliates in Washington to create a revolving loan fund that will allow participants to leverage their own funds and substantially increase the pace of building.

Habitat has been asked to look at converting single-family homes in the West Central area into duplexes, but Preston says most are so large, and would be so expensive to rehabilitate, that it would be cheaper to tear them down and build new. She would rather see them preserved.

To increase the number of units built, and maximize use of the available lots, Habitat has shifted almost exclusively to duplexes, and will probably move to triplexes for future projects.

“We can’t build 20 homes a year if they’re single-family,” Preston says.

The need never seems to go away.