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OVERVIEW

The Institute For Building Affordable Housing, Inc. has been founded to fill an infinitely expanding need to help solve the affordable housing crisis by offering plans, specifications and methodology for quality stock housing that can be constructed substantially below market prices. The current trend in housing costs of both newly constructed as well as existing homes has significantly outpaced the affordability of moderate and lower income families, especially younger families with a significant number of children still living at home. A plethora of resources are readily available to substantiate the need and dire prospects for current and future solutions to this problem. (See insets throughout.) The Institute has been established to address this problem with a practical approach involving members of the real estate, finance and building communities. Funding for operations of The Institute is expected to be provided by grants from federal, state and local government; corporations as well as philanthropic individuals sensing the need to lend a hand in mitigating this crisis.

Adequate funding will allow The Institute to employ successful members of the various professions required to develop strategies, plans and practical “means and methods“ for local builders to succeed and profit while engaged in the business of building affordable home stock. Additional professionals will help in marketing these strategies to companies currently involved in building homes as well as new companies expressing a desire to be involved in building affordable housing.

Government has addressed this problem with creation of various agencies, committees, workshops, conferences, organizations, and studies resulting in an endless number of reports having been generated and less than desirable intricate homeowner tax and financing schemes. (See insets throughout.) Our approach is more straightforward in our intent is to engineer a product (the affordable home) in such a manner that minimizes government from the equation and simultaneously entices builders that currently tend to shy away from building stock in the affordable housing market. We believe affordable is more a function of the product than the financing. The Institute will go a step further and certify real estate companies, builders and finance companies that adhere to the Institute’s ideologies, thereby offering an easily identifiable Brand for potential buyers.

Even though this is a Florida based Non-Profit Corporation, these ideals have universal appeal and will spread to neighboring regions and further as time and funding permits.

STRUCTURE

The Institute For Building Affordable Housing has been structured in such a manner to afford its continued existence to serve the community beyond the tenure of any one individual. Compensation packages for the employees are generous so that dedicated and talented individuals may be retained. A diverse board of directors, annually elected and/or selected from key individuals in the community representing the real estate, finance and building communities will oversee the general direction of the Institute. The President of the Institute will supervise daily operations and professionals dedicated to the cause will head key departments.

The Key Departments will include:

• Finance and Real Estate

• Design and Building

• Education

The Finance and Real Estate department will primarily be responsible for staying abreast of current market trends and identifying opportunities in the market that are desirable for investment for stock home builders. This department will stay abreast of government and private sector financing schemes as related to mortgages for affordable housing. Additionally, this department will be responsible for maintaining statistical data regarding income trends and advise other departments of these trends.

The Design and Building department’s primary function will be to create plans and specifications as well as means and methods for the ultimate affordable homes in various sizes and building methods to allow for localized builders to adapt. The department will utilize computerized drafting and modeling methods to aid in these designs. Additionally, this department will construct miniature and full-scale models, define opportunities for prefabrication components and methods, and interface with local builders and trade subcontractors to perfect the Institutes methodology.

The Education department will be responsible for gathering pertinent information from the other departments and transforming this information into various medias suitable for presentation and educational purposes. Prepared medias will include but not be limited to DVD, CD and written documents. Ultimately the department will educate individuals and companies with the principles of The Institute’s methodology and certify these individuals and companies.

The Board of Directors is comprised of 5 individuals, consisting of The Institute’s President/CEO and one member selected from each of the key industries - Real Estate, Building and Finance. The fifth Board member will be an annually rotating member of the Institute’s staff. The Board will be responsible for the overall general direction of the Institute. Additionally, the Board will be responsible for securing funding grants for the continued operation of the Institute.

IDEOLOGY

• The Institute For Building Affordable Housing will achieve its results based on the following ideological principles.

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• Minimize Wasted Materials
• Minimize Field Measurements and Cuts
• Minimize Idle Times in Construction
• Utilize Cost Effective Materials and Components
• Identify and certify GOOD Financing Solutions

In general, imagine a group of construction workers spending their entire days simply constructing a home without having to measure or cut materials and thereby generating waste. Further imagine, no down time waiting on various trades to perform their work. The Institute will continually work towards developing construction plans and means and methods where these ideals can become reality.

Often bidding contractors and builders will bid on certain sets of materials based on what the architect and engineers have included as acceptable in the construction documents. After award of a contract and prior to construction, the contractor and builder will attempt to use substitute materials, which they can obtain at a lesser cost than the aforementioned specified materials. These substitute materials may be inferior to the intent of the design and have detrimental consequences to the desired end result. This is common practice, yet the cost saving is not passed on to the consumer. The institute will spend countless hours researching the suitability of materials and costs and maintaining a database of quality cost effective materials, because some substitutions are good and others are not, and during or after the warranty period is not the best time to determine the difference.

The Institute will identify “Good” financing solutions that are a superior long term fit for low and moderate-income households. For the most part, these will be conventional fixed-rate mortgages that are affordable because the cost of the home is affordable. Too often, conventional financing sources disguise a low monthly mortgage payment using variable rate instruments. Though initially, these payments may appear to be affordable, many factors beyond the scope of the homeowner can have an adverse affect on keeping these payments affordable. The Institute will identify and flag these and other detrimental financing schemes geared toward families of the low and moderate-income scale.

The following is excerpted from the HUD website

Who needs affordable housing?  More people than you might realize. The economic expansion of the 1990s obscured certain trends and statistics that point to an increased, not decreased, need for affordable housing. The generally accepted definition of affordability is for a household to pay no more than 30 percent of its annual income on housing. Families who pay more than 30 percent of their income for housing are considered cost burdened and may have difficulty affording necessities such as food, clothing, transportation and medical care. An estimated 12 million renter and homeowner households now pay more then 50 percent of their annual incomes for housing, and a family with one full-time worker earning the minimum wage cannot afford the local fair-market rent for a two-bedroom apartment anywhere in the United States. The lack of affordable housing is a significant hardship for low-income households preventing them from meeting their other basic needs, such as nutrition and healthcare, or saving for their future and that of their families.

Recent statistics show that over the past several years, home sales prices and the costs associated with construction have increased dramatically. For some counties, these increases have lowered the availability of affordable housing stock. Removing the $200,000 cap will allow Florida Housing to accommodate the increasing cost of construction and home purchase prices in high cost areas; serve a broader range of people with various income levels; leverage its resources; and encourage mixed income communities.

Florida Housing’s Board of Directors sets limits on the maximum purchase price of homes that may be financed through the First Time Homebuyer program. These average purchase prices are determined by utilizing the U.S. Treasury Safe Harbor Limits or most recent statistical information obtained through a market study.

Borrowing Trouble VI: High-Cost Mortgage Lending in Greater Boston, 2004 provides information on 2004 high-cost sub-prime home purchase and refinance loans in the city of Boston; in the Metropolitan Area Planning Council (MAPC) Region, which includes Boston and 100 surrounding cities and towns; and in the seven largest Massachusetts cities outside this region. This year's report includes, for the first time, limited information on the pricing of some higher-cost loans, which lenders were required to provide beginning in 2004.

Borrowing Trouble VI was prepared for MCBC by Jim Campen, professor emeritus of economics and research associate of the Gaston Institute at UMass Boston. It documents that the share of high-cost loans for middle- and upper-income blacks and Latinos is more than five times greater than that for upper-income whites and more than ten times greater than the sub-prime loan share for low-income whites. At the same time, there is significantly more sub-prime loan activity in neighborhoods of color.