Homeownership is Not for Everybody

But MAN! If you or anybody you know has never owned a home but has been thinking about it, saving up, or dreaming about it, this might be the year to make it happen. With interest rates low, deals on every street (since the housing bubble has burst), and the following information about the First Time Homebuyer Tax Credit, it becomes an awfully tempting way to stabilize a family's housing needs AND support our country's economic stabilization.

First Time Homebuyer Tax Credit
Basics

Up to $8,000 is available to first-time homebuyers as part of the American Economic Recovery and Reinvestment Act (HR 1) which was signed into law on February 17. You can claim the credit on your 2008 tax return if you buy a home in 2009. You can request an extension from the IRS or file an amended 2008 tax return.

Homeownership Tax Credit Basics

• First-time homebuyers who have not owned a home in the past three years.
• Purchased a home between January 1, 2009 and November 30, 2009.
• The home must be their primary residence.
• The home can be a new or resale home, a coop, condo or manufactured home.
• Must live in the home for at least three years (if you sell it before three years, you must repay the credit).
• The credit is 10% of the purchase price (or up to $8,000).

(Source: CFED)

Board Challenge

The CMCA board met last night and had some excellent discussion. Thanks to all who attended. The general theme for the evening revolved around our housing responsibilities, most of which fall under our first and third strategic commitments. 1. Engage the community to assure that all people have their basic needs met; and 3. Build community capacity to enhance economic and community assets. Some of the board members expressed some concern over our involvement in tax credit development deals. In a nutshell, the state of Missouri created the Missouri Housing Development Commission to support the development of affordable housing throughout the state. Developers apply for tax credits to fund their development, they sell those credits to syndicators (investors) that turn the credits into cash for the building project. The developers are required to have non-profit partners to keep the playing field level. That's where we come in. As non-profit partner we generally get some small portion of the developer fee (the profit from the development) and have the responsibility of certifying that the new development makes apartment units available to tenants with low-income and that rents constitute less than 30% of their household income. Generally there is a sense that developers are getting rich by taking advantage of these arrangements and that not enough of the tax credit dollars actually make it into the project itself. A couple of things come to mind when I hear that. First, without this arrangement I do not believe that we would see the development or rehabilitation of quality affordable housing in Missouri. If a developer can't make a profit, why would they do it? Also, the developers are the ones taking the risk. Their entire profit comes immediately after the completion of the building phase. Apartment rents are kept so low that there is little or no profit to be made managing them over the life of the structure, unlike market rate developments where the rent provides ongoing profit. Most importantly, the conclusion I have come to (and more importantly, that the board has endorsed), is that as a non-profit with commitments to provide affordable housing, WE should be in the driver's seat on these developments. If CMCA acts as the developer, the "profit" goes back into our programs and services to serve our communities even better. That leads me to the challenge the board presented last night. One of our directors attended the Community Action Capitol Development Enterprise conference with two of our staff and came back fired up about new opportunities and thinking outside of the box. She challenged us to follow through on our Transformation Plan (more to come on that) by generating revenue for the agency in all new ways. Federal funding for our programs has been stagnant or declining for years and we have to think differently about our revenue options if we take our mission seriously. I heard that message loud and clear and am excited to continue moving our organization in that direction.

Houses for Sale!

It's a drag owning empty, never-lived-in homes . . . for four years. But that's what we've got at CMCA. For the record though, one of them is finally under contract. We're working to find a mortgage lender willing to take a little risk with our buyer (and who understands this kind of funding arrangement) but it's looking like we're going to get this one out from under our belt. As a community housing development organization, or CHDO, we get some funds from the City to help finance the construction of these homes and to help provide some down payment assistance. Even with that though, we can't just give them away. Being non-profit doesn't mean we don't worry about money. Generally when we build a home we like to make enough profit (about 10%) that we can start building another one. Non-profit DOES mean that we're not lining our pockets with income generated from home sales. :) That's one way the city supports affordable housing development. Fund one and start a chain reaction of new, affordable home development. Break that chain, though, and you've got a problem. Welcome to CMCA. With the best of intentions, homes were built in neighborhoods that may not support their sale, for a variety of reasons. Then, the agency (formerly known as CMCHDC) goes through massive upheaval to address some management issues and comes out of it with 75% of it's top managers replaced over a three year period. Unfortunately, that meant that those houses were not the top priority, survival and then revival were top on our minds. That's not to say houses elsewhere weren't moving. We sold four houses in Fulton during that time for example (where management did not change, and in an area with little crime and other new houses nearby). Anyway, we're stable again and trying to get back to the high ideals we have for ourselves and our communities. We just completed another new home on Haden drive (in partnership with Youthbuild) on a street just north of Vandiver Dr. that is lined with beautiful Habit for Humanity built homes. This one will go fast, and so will the one we'll start building next to it in the spring. In the meantime, we're listing our other central city house with a realtor and asking just enough to break even. If you know anyone on the market, give them my name.