Agenda - 03-29-2007- - Laserfiche WebLink

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Orange Community Housing and Land Trust Quarterly Status Report December 2006 In March 2006 the board of directors appointed an Asset Management committee to analyze how our model was working. The committee consisted of 4 board members, including 1 homeowner, and 3 staff members. The committee gathered data on every Land Trust home sold since inception. We placed particular focus on homes that had resold to determine affordability trends. After eight months of analysis, projections and discussions about underlying philosophies, the committee made the following conclusions: 1. The current model was causing homes to become more affordable relative to home prices, but because HUD income limits are not increasing, our homes are becoming less affordable to our buyer population, 2. The current model does not require or encourage homeowners to maintain their homes because homeowners only receive 20% - 25% of appreciation when they sell. Long -term affordability is achieved at the expense of long -term maintenance. The Land Trust board recognizes that for this model to be successful, our homes must remain affordable and well - maintained over time. We believe it would be detrimental to inclusionary housing policies if Land Trust homes were to deteriorate and to be viewed as being responsible for declines in property values. Maintenance of big- ticket items like HVAC systems and roofs pose a significant financial challenge for all low- income homeowners. These challenges are exacerbated for Land Trust homeowners who do not reap the same financial rewards when they sell their homes. Because they forego most of the appreciation, their homes remain affordable to future generations of low - income buyers. The larger community benefits from this equity sharing arrangement. To address the affordability and maintenance challenges, we have drafted a revised model that includes the following components: 1. Our resale formula will be revised such that homeowners are guaranteed a 1.5% annual return on their property. This is slightly lower than the 1.67% that our home - sellers have averaged until now. 2. The Land Trust will begin collecting a monthly stewardship fee from every new homeowner. These funds will be dedicated to replacing five big- ticket items in each home: roofs, HVAC systems, hot water heaters, exterior painting and flooring. This fee will vary depending on the type of unit. 3. We will manage these stewardship fees and be responsible for the maintenance of these five capital items. We will also take on the property management responsibilities of homeowner associations. These additional responsibilities will require additional operating funds that will enable us to hire a property manager. 4. We will revise the lease such that typical maintenance, like cleaning carpets and painting dingy walls is the responsibility of the homeowner.