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Habitat for Humanity of South Palm Beach County

Habitat for Humanity of South Palm Beach County
101 E. Linton Blvd., Suite 203A
Delray Beach, 33483
Fax: 561-819-0173
Constructs simple decent homes for first-time homeowners in need using volunteer labor and sweat equity.

March 21, 2007, Palm Beach Post, Rising costs hamper Habitat for Humanity, By Susan R. Miller.

BOYNTON BEACH — — Henry and Thomasina Thompson have lived in their Habitat for Humanity home for almost two years, but already their initial $500 monthly mortgage payment has gone up nearly $125.

Like all homeowners, the Thompsons have felt the squeeze of higher property taxes and skyrocketing insurance costs. But when you're just eking out a living, an extra $125 can sting.

The Thompson family – Thomasina (from right), Henry, Ardarius Williams and Arnedra – has felt the squeeze of higher taxes and insurance costs. In almost two years, the Boynton Beach family's initial $500 mortgage payment has risen nearly $125.

Michael Campbell is the executive director of Habitat for Humanity of South Palm Beach.

"I just don't want it to get to the point where it becomes a struggle," said Thomasina Thompson. "If it continues to go up, it will be a struggle."

The Boynton Beach family's situation is a microcosm of the problems facing the 31-year-old international organization, whose mission is to provide affordable housing for the working poor.

Economic pressures, including rising land prices, increasing costs for building materials, higher taxes and soaring insurance, have combined to force Habitat to change its approach to doing business.

In south Palm Beach County, the price of a Habitat home has gone from $60,000 to $85,000 in the last five years. That doesn't include land costs, said Executive Director Mike Campbell, whose affiliate has its 69th home under construction and a 70th in permitting. The agency serves families whose income is between $25,000 and $40,000 a year.

Habitat International has 1,650 affiliates in the United States and builds about 5,000 houses each year.

To give you an idea of the demand, the last application process for Campbell's affiliate brought in 500 wannabee homeowners. The list was narrowed to 28 but the group had only 18 parcels on which to build. Campbell is looking for more land to build homes for those remaining on the list. That could take up to five years.

"Some homeowners who qualified in 2004 don't qualify for a home now because of the increases in taxes and insurance," he said.

Turning to land trusts

To keep homes affordable and available, Habitat affiliates are looking at new ways to do business. In a major departure, some are turning to land trusts, allowing homeowners to buy the house, but not the land beneath it, thus taking skyrocketing property taxes out of the equation. The Palm Beach County affiliate recently started looking at the idea.

"Since we hold the mortgages on our homes, it would help our families if they didn't have to pay property taxes," said Carolyn Vickey, executive director of Habitat for Humanity of Palm Beach County. "It would be one less bill they have."

The concept is fairly simple. The trust purchases the land and then provides buyers with a 99-year lease on the house. The buyer has to qualify only for the cost of the home, not the land, which remains in the trust. Because the trust is a nonprofit, it does not have to pay property taxes, although the deferment often requires special approval by the local tax assessor. With property taxes taken out of the equation, the price is significantly reduced.

"In locations where land costs are rising or have risen dramatically, the land trust is proving to be a useful device to separate the cost of the land from the price of the home," said Stephen Seidel, urban programs director for Habitat for Humanity International.

The Key West and Lower Keys affiliate operates exclusively through land trusts. "Our intent is to have not just affordability for today's buyers, but for the next generation of buyers," said Keys Executive Director Bob Calhoun.

There is a downside to a key benefit of Habitat home ownership — earning equity through rising property values.

"When our clientele hear their equity is being restricted in the sale of their home, they become a little hesitant about purchasing a home in the land trust," said Campbell.

Habitat affiliates in St. Lucie and Indian River counties haven't moved toward the land-trust model yet, but "see it as a potential opportunity," said Al Rivett, executive director of the St. Lucie Habitat affiliate.

When Rivett started three years ago, the average monthly payment was $350. Now, it's $450.

It's not the availability of land that's the issue in St. Lucie County, but the cost, said Rivett, whose affiliate has built 24 houses in the last 11 years and has four more under construction.

A new approach to building

Habitat also is starting to move away from the one-story, single-family home on a single lot. The new blueprint includes townhomes, condos and even entire developments.

"Many affiliates are coming to the conclusion that doing multifamily housing is an important strategy," said Seidel.

Among them is the Indian River affiliate, which has been constructing entire Habitat developments.

"That's something that came about as a result of our cranking up production," said President Andrew Bowler, whose affiliate started building in 1991 and has 160 homes with 15 more in the works.

Indian River Habitat has four developments with as few as 28 homes and as many as 81. While there are economies of scale, there is the added cost of having to put in roads, water, sewer and electric. "We have to contract that out, so it more than doubles the land price," he said.

Lot prices then go from $20,000 to $40,000 when all of the other infrastructure costs are added in, then another $55,000 to $60,000 for "sticks and bricks," he said.

The Indian River Habitat recently received a $500,000 donation from Mel and Nancy Goodes, which it plans to use to buy more land and build more projects.

"The money represents enough to buy half the amount of land we need for a year," said Bowler.

They build on average 35 homes each year. The goal is to build 50 per year. As Habitat strives to serve more families and the costs increase, Habitats around the country are having to look for new and innovative ways to provide affordable housing.

But, noted Bowler: "The solution doesn't lie with Habitat alone. It's got to be local government and private involvement."

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