Housing as a Business (HaaB)

Transcription

1 Housing as a Business (HaaB) By Ken Jacobs Senior Issues Management Advisor Aboriginal Affairs and Northern Development Canada Ken.Jacobs@aandc-aadnc.gc.ca

2 God teaches the birds to make nests, yet the nests of all birds are not alike. Source: Native American Quotes- Duwamish 2

3 Five objectives of this presentation 1. Explain Housing as a Business (Haab); 2. Overview on-reserve housing needs; 3. Review a plan to build more houses on a First Nation; 4. Identify the major components of a 4 phase approach to HaaB, and; 5. Outline the components of a strategic business plan for a First Nation Community to build, renovate and sell more houses. 3

4 What is Housing as a Business (Haab)? 4

5 Housing as a Business (HaaB) principles Community decision making and control will be maintained; Quality and fair price (including a reasonable profit) are required; and, Needs-based and affordability-based housing are both required, ie: larger, more expensive homes should be available to members that qualify for large mortgages. 5

6 Housing as a Business (HaaB) principles continued The legal title to land and home ownership must be clear, i.e. Certificate of Possession, First Nation Allocation, etc.; and, Traditional housing construction and financing methods will be practiced and modified where appropriate; however, new and innovative practices will be promoted. 6

7 What are the characteristics of Housing as a Business (HaaB)? Profitable; Self sustaining; Supports job creation; Promotes skills development; Part of a growing market; Identified revenue sources, and Practical debt to equity ratios. 7

8 What is Housing as a Business (HaaB)? Very simply stated: The production of goods or services for profit. Seller: Honest Established Reputable Product: Quality Demand Fair price Buyer: Ready Willing Able 8

9 What are the revenue opportunities for Housing as a Business (HaaB)? Money generated from the construction of a house Based on a $200,000 house $ per house X 10 houses Finance and interest (25 year amortization 4% interest spread - $180,000) Labour Component (labour ratio is 50% of the house cost) $104,050 $1,040,500 $100,000 $1,000,000 Materials (37 % - 45%) $74,000 $740,000 Developer Profit (10% of cost - Stats Canada - performance plus) $20,000 $200,000 Professional (3%) $ 6,000 $ 60,000 TOTAL $304,050 $3,040,500 9

10 Secondary revenue sources from Housing as a Business (HaaB) Financing, mortgages; Materials, infrastructure, construction; Maintenance, housing inspections; Furnishings, repairs, and a host of other opportunities. 10

11 More secondary revenue opportunities from Housing as a Business (HaaB) Landscaping Snow removal Deck building Additions Renovations Furniture Interior Decorating Appliances Insurance Maintenance Repair Bulk purchases Refinancing Foreclosure Commissions Utilities (fuel) Other 11

12 Housing as a Business (HaaB) potential to meet on-reserve housing needs 12

13 Housing as a Business (HaaB) potential to meet on-reserve housing needs Currently, there are 615 First Nation communities, which represent more than 50 nations. Source: (2012, August). First Nations. Retrieved from: 13

14 Housing as a Business (HaaB) potential to meet on-reserve housing needs The Assembly of First Nations estimates a current housing shortage of 85,000 units nationally and about 44,000 requiring major repairs. Source: (August 10, 2012). CMHC reductions concerning, Assembly of First Nations National Chief. Retrieved from: 14

15 Housing as a Business (HaaB) potential to meet on-reserve housing needs The shortfall is growing by an estimated 2,200 units a year. The limited supply of housing not only leads to unhealthy, overcrowded conditions but it also accelerates the depreciation of the housing stock. It affects the health and well-being of Aboriginal people living on-reserve. Source: (October, Modified September 15, 2010). Aboriginal Housing. Retrieved from: 15

16 Housing as a Business (HaaB) potential to meet on-reserve housing needs National market 60,000 units in backlog $200,000 cost per house $12 billion housing market Ontario First Nation 20% Ontario backlog market $2.4 billion housing market $19 million per community The housing market examples above are provided for discussion purposes only. They are not accurate and users should verify information before acting on it. 16

17 Housing as a Business (HaaB) as a plan to build more houses on-reserve 17

18 Housing as a Business (HaaB) as a plan to build more houses on-reserve Assumptions and realities First Nation members knowledge of housing concepts and mortgage concepts is limited; Housing on-reserve is sometimes viewed as a social and political right; The climate to access financing for housing on-reserve is improving; The market for residential on-reserve housing is vast and increasing. 18

19 Housing as a Business (HaaB) as a plan to build more houses on-reserve Assumptions and realities The young population and members returning from off-reserve add to this market; and, Brain drain (bringing the talent home to stay). 19

20 Housing as a Business (HaaB) as a plan to build more houses on-reserve Assumptions and realities There is an untapped market of gainfully employed middle to upper class that require suitable housing; Existing housing policies favour high-need and low-income community members; and, Existing policies have restrictive limits on loan ceilings and conditions. 20

21 Determining community readiness for Housing as a Business (HaaB) First Nation characteristics Reasonable employment levels; Willingness to take on debt; Lands Department; Land base (Infrastructure); Serviced land; Security of Land Tenure; and, Willingness to separate politics from business. 21

22 The Four Phase Approach to establishing Housing as a Business (HaaB) 22

23 Research & Training Business Model 1 2 The Four Phases 4 3 Implementation Delivery of Housing Resource Establishment 23

24 Phase One Research & Training Collect data on the housing needs, types of homes required, client profiles and existing housing programs; Arrange and deliver a series of information sessions to familiarize stakeholders with the concept of mortgages and the economic opportunities with housing; and, Develop policies, best practices, procedures, and other agreement documentation. 24

25 Phase Two Business Model A five-year business projection and business plan will be developed; and, Mandate will be required from Chief and Council to establish the structure of a separate entity to operate housing as a business. 25

26 Phase Three Establishing Housing as a Business (HaaB) Resource Establishment The entity will be resourced with proper staff, equipment and facilities needed to deliver on the five-year business plan; and, Agreements will be negotiated with various agencies, such as: contractors, suppliers, financial institutions, government agencies, technical service groups etc. 26

27 Phase Four Implementation delivery of housing Delivery of housing construction; Selling of the houses; and, Management of the business. 27

28 Housing as a Business (HaaB) strategic business plan 28

29 Contracting and Purchasing HaaB Policy/Program Management 7 1 Quality Control Inspection Unit 6 Housing Business Entity 2 Government Relations 5 3 Land Issues 4 Applicant Inventory Data Base Financial Management (Sources & Uses of Funding) 29

30 Policy and Program Management Client criteria for eligibility; Selection process methodology and criteria; Special subsidy eligibility, incentives and bonuses; Housing options; Landlord Tenant Act equivalent (guarantee, warranties and appeal rights); and, Enforcement and collections. 30

31 Government relations Between First Nation communities; Federal government: AANDC, CMHC, Environment Canada, Revenue Canada, etc.; Provincial government; and, Neighboring municipalities. 31

32 Financial management CMHC section 10 and section 95 housing, direct lending programs; Community mortgage funds (revolving loan); First Nation guarantees with banks; Client equity; Provincial subsidies; Federal government capital funds; Major Capital Plan; AANDC First Nation Market Housing Fund; and, Other sources. 32

33 Applicant Inventory and Database Detailed community profiles of existing housing; Developed client profiles and applicant inventory for new housing requirements; and, Linking client purchasing power with existing housing resources. 33

34 Land Issues Community property (band owned); Certificate of Possession (private); Other First Nation Land Management Systems; Environmental Management; and, Zoning or bylaw considerations. 34

35 Quality Control Inspections Building Code Standards; Health and Safety Standards; and, Inspection Services. 35

36 Contracting and purchasing Issuing tender documents; Negotiating purchase agreements; Contracting documents; and, Mortgage documents. 36

37 Why Housing as a Business (HaaB) today? 37

38 Why Housing as a Business (HaaB) today? Large and growing market; Low interest rates; Proven profitable business; Proof of low-loan delinquency of housing in First Nation communities; Bank and other institutions are eager to finance housing deals; and, Profitable venture based on non-social housing concepts. 38

39 Why Housing as a Business (HaaB) today? Proven best practice business models e.g., First Nation Revolving Loan Funds: Six Nations: $17 million portfolio MBQ: $13 million Wendake: $22.8 million Kahnawake: $15 million Piikani: New Nipissing: $421.6 K Namgis: $3.5 million Plus others ** Data Source Michael Rice. 39

40 Why Housing as a Business (HaaB) today? Profits can be allocated to social housing or other community needs; Step towards having control of our own housing; Government housing initiatives; First Nation readiness; Many factors are finally in place to support on-reserve housing; Housing Opportunity Management Expertise (HOME)Team. 40

41 Need more information on Housing as a Business (HaaB) The Housing as a Business (HaaB) initiative is guided by a volunteer advisory board of professionals from the private and public sector. For more information: Housing Opportunity Management Expertise (HOME) Team Web site: 41