Never has there been a more appropriate moment'

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Never has there been a more appropriate moment.
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BackgroundHome Ownership on theSouthwest U.S.
Coast Today
Many Californians consider themselvesMiddle
Class, when they are not. This is because they
have neither the income nor the opportunity to
create the meansthat will provide them with the
tools the American Middle Class has historically
had. That would be namely a home that gains
equity for the owners over time. In essence
creating a self-financed retirement plan, or as a
gift for heirs or a legacy to beneficiaries such
as charities.
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How it got this way

• Interesting, when one thinks about it. The same
  homeowners who were dedicated to their home town
  who approved Proposition 13 years ago, to limit
  property taxes so they could afford to stay in
  their homes when they got older and had
  restricted incomes, now find themselves defending
  the values of their existing property as it
  escalates out of the reach of other local young
  families in their own home town.
• Now, the original families who may want to move,
  find that they cannot sell their homes without
  facing a windfall profit that will have to be
  paid in taxes, unless they re-invest the money
  somewhere else, or put it in a trust (if their
  assets are low enough), in order to pass it on to
  their heirs - and the government loses out again.
  
• If they sell, the rich traditions of those
  original inhabitants as well as their profits
  leave the community. At the same time, these
  homeowners don't want their tax dollars being
  allocated to provide "affordable housing" for
  others. That's quite a conundrum. Yet the middle
  class that wants to own a home moves away with
  all their savings, to invest it and their time
  elsewhere.

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The Primary HUM Mission is

• To provide a mechanism for the development of
  homes that the Working Middle Class can afford to
  buy and KEEP. This while assisting the creation
  of a stepladder for lower income families to move
  up to homeownership, without simply government
  assistance - in order that lower income families
  can create equity for their futures, and thereby
  move themselves into the Middle Class.

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CONCEPT and INTENT

• Build Homes the Working Middle Class can Afford
  to Invest in, which in turn will benefit the
  local community, by fostering a viable local
  economic base. By offering these homes both an
  investment vehicle and a residence for the
  upwardly mobile is created. The goal is not to
  create homes to commute from by building homes
  where homes are needed, in the cities.
• Who are the Upwardly Mobile?These are the people
  who are "locked out" of the current
  owner-occupant real estate market, who would
  otherwise be striving to reach or maintain their
  status as a member of the Middle Class, through
  the accumulation of equity by their investment in
  the local real estate market. The term
  "affordable housing" usually applies to these
  people, if they are in the lower percentile of
  prospective buyers. In our case however, our
  primary market is the middle percentile, which we
  offer to solve the problem for, at the rate of
  65 in our business plan. 
• In our estimation, they are also youth that have
  been remanded to group homes or foster home care,
  in the supervision of adults who are not their
  natural parents. These youth, given the
  opportunity will become upstanding citizens and
  residents of our county. Our plan accommodates
  their needs as well, by reserving one home in
  each development as a foster home, since there is
  a dearth of foster homes for tens of thousands of
  California's youth. This is because there are not
  enough group or foster homes for California's
  children.

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What is the need?

• In the last number of years, the cost of housing
  has been rising by great percentages annually,
  out of the reach of the majority of those who
  would like to buy a home.
• During this period, one of the only ways the
  Middle Class has been able to own a home prior to
  our option today is by the government getting
  involved in helping buyers enter the process of
  purchasing.
• Non-profit organizations are also formed to
  assist Middle Class buyers in leveraging their
  assets, income and credit.
• This has allowed homeowners to indebt themselves
  for property that is over-valued, just so buyers
  can get a foothold in the region. We have seen
  what happens when that builds to a unsupportable
  level and what it does to the overall economy, as
  it crashes when homeowners interest rates rise to
  levels they can't pay.

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The Result

• In the meantime, what we have left is a beautiful
  shell to honour the memory of our traditions,
  where low-paid youngsters primarily run the
  retail shops unschooled in the mechanics of
  economics and business practice that enhances
  economic development for the community. Owners
  that usually live elsewhere, some of who rarely
  visit their own stores, manage that staff. Again,
  a disconnected population, not invested in ideas
  and efforts to revitalize the community, but
  still caught up in an emphasis of "keeping things
  the way they are".
• The government seems to be happy to see homes
  turnover for higher prices, even if they are for
  sale to those from out of town, since it allows
  for the only available increase in property
  taxes, so that the cost of running the county and
  cities is covered. Yet, we see recently that the
  government cannot run the business of the people
  without going into further debt, because the
  system doesn't work well enough since the homes
  are not turning over fast enough and retail sales
  taxes are not what they could be since the
  tourist industry is seasonal.

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Success of Plans

• What creates the primary basis of funding for
  privately subsidizing 90 our mixed-income
  development is a willingness of Upper Income home
  buyers to move into our developments, either
  where we have other income levels on the same
  property, or separated. (Some homes will be built
  off-site at other locations). These sales will
  generate the income, which will be used to do the
  other levels of development.
• Our success will also come from our co-operative
  members' joint interest in making a success of
  the projects. We have spoken with a consultant
  that specializes in developing budgets for start
  up co-ops. We would also be developing a plan to
  educate buyers on the purpose of co-ops and what
  makes them work well. We are researching various
  successful co-ops now.
• Finally, the location of the property, its
  landscaping and overall ambience and fit to the
  historical ambience of any neighborhood will
  assure the accomplishment of the above. (Ideally
  enhancing or restoring any original natural
  ecological system on the land purchased).

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Funding Sales, Management Ops

• Self-funding sales, management ops, after
  initial sales occur, by
• Construction oversight will be done by
  Competitively Priced Residences, first on a
  for-profit basis to upper and middle-income
  buyers then afterward, the moderate and
  low/low-low income buyers will receive a subsidy
  from the profit earlier generated and HRU will
  develop those homes.
• Land will be purchased or received in donation,
  and owned by a Community Land Trust
• Overall planning development will be managed by
  Homes for the Rest of Us
• Building will be 90 "affordable", with 10 being
  sold at Market rate to generate income
• 80 of which will be reserved for the Middle
  Working 20 for the lower income classes
• Homes sold to Lower Income earners will be sold
  through subsidies, by re-investing the profits
  from sales of slightly below market rate
  moderately priced homes.
• Initial Sales will occur to those who become
  members of the (PHA), on a first-come,
  first-served basis.
• Memberships in the Co-operatives will be allowed
  for all who become participants in the Buyers'
  Club, called Homes for the Upwardly Mobile.
• At some point down the road, we may even "hold
  our own" mortgage paper, and generate income for
  the organization based on the interest we charge
  for the mortgages for the upper income homes.
• Private equity investment would most likely be
  done by community stakeholders.
• This could occur by sweat equity development or
  qualified social investors
• Housing foreclosures will be purchased to build
  our chain of assets.

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Making Change Happen

• Just like people in the Midwest Tornado Country,
  who for many years prefer to build wooden houses
  that blow down when a big storm comes through,
  the people from LA got to a point where, due to
  cost, they preferred to build their houses
  outside of the city and commute for hours per day
  back and forth from home and work. Instead of
  finding a way to level the playing field, it was
  easier not to make the effort and do it the way
  its always been done.
• Of course moving to the countryside has always
  had its incentives and good points. The problem
  is that the commute never goes away and the city
  folk end up carrying their problems with them.
• What is that driving force within the mind of
  humankind that causes people to go with the
  flow or not try to find a solution to a problem,
  even when the solution is as obvious as
  neighborhood revitalization and re-creation?
• I believe that the drive to maintain the status
  quo, or the same old thing, is as strong in our
  genes as any of our deeply-seated fears. It is
  fears like these that allow us to easily quit or
  to not even try to form a more perfect union.
  We are so afraid that the result of our efforts
  will not turn out to be better than what we have,
  that were not even willing to try. So, we go
  along to get along, letting others make
  decisions for us that affect our most basic
  needs.

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Are there solutions?

• Seems one of the obvious solutions, is to build
  and maintain homes that are affordable, where
  there is a larger base of property taxes, which
  could be generated to run the government. So, is
  it possible?
• This project to create attainable/obtainable
  housing for the Working Middle Class is offering
  buyers a chance to participate in "fair equity",
  to reduce the price of their purchase. What is
  fair equity? It is similar to "sweat equity",
  which usually means to participate in building or
  remodeling your own home, for a reduction in
  sales price. In our case, it requires very
  specific actions on the part of the buyers,
  according to our plans.
• Co-operative housing development and co-housing
  ownership are the two key organizing forces
  behind the concept. There is a huge opportunity
  for this concept nationwide, because around only
  1 of the manufactured home developments are in
  co-operative ownership.
• Our effort is to focus locally in and near
  downtown Los Angeles initially and then
  throughout LA County where the need for higher
  density housing is so people don't have to drive
  too far to get to work. This is why we're also
  focused on mixed use development, which is a
  combination of residential commercial building.
  

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Secondary Mission of HUM

• To improve and enhance the local economy,
  neighborhoods, and quality of life, initially in
  Los Angeles County, by reducing the cost of
  living, commuting to work and improving local
  business and to improve and enhance the native
  natural habitat and environment, while providing
  the opportunity for the Upwardly Mobile to
  maintain homes for themselves.

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BackgroundCooperative Housing

• Cooperative Housing is an apartment building or a
  group of dwellings owned by a corporation, the
  stockholders of which are the residents of the
  dwellings.
• It is operated for their benefit by their elected
  board of directors.
• In a cooperative, the corporation or association
  owns title to the real estate. (An exception is
  when the land is owned by a Community Land
  Trust).
• A resident purchases stock in the corporation
  that entitles him to occupy a unit in the
  building or property owned by the cooperative.
• While the resident does not own his unit, he has
  an absolute right to occupy his unit for as long
  as he owns the stock.

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Low-income First-time Buyers

• Cooperative home ownership is particularly
  accessible to low-income or first-time buyers
  because it often eliminates the need for an
  individual to qualify for a mortgage.
• Historically, mortgage qualification has been
  problematic for low-income homebuyers who are
  more likely to have a limited or incomplete
  credit history. Cooperative homeownership can
  eliminate this problem.
• A co-op is most often financed through a blanket
  mortgage, for which the cooperative corporation
  is liable. Consequently, no single resident is
  liable, and individual residents do not need to
  qualify for outside financing. It is the combined
  value of the shares that creates the asset which
  qualifies for financing.

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Where are Todays Co-ops?

• Today, there are more than a million units of
  cooperative housing in the United States.
• Almost 80 percent are located in New York with
  others scattered around the country, primarily in
  metropolitan areas.

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Cooperative Homeownership
Homes for the Upwardly Mobile
Prospective Homeowners Association is all three
of the following types of organizations
The goals of the organization are
accomplishedthrough Social Entrepreneurism
Public Interest Advocacy
Social Entrepreneurism is a combined effort
ofprivate businesses non-profits towards a
common goal
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Why do this?

• Why are We Doing This? ("if it's broke, fix it")
• Because NO other developer is found that has
  given their business a mandate, no non-profit can
  justify it as their mission, no government agency
  or elected body will take this on directly to
  this degree as their purview.
• Everyone, except for a few exceptions just wants
  to leave the sleeping dog lie. That is too much
  of a challenge for social entrepreneurs to leave
  alone.  
• Therefore, we're doing it to solve this
  region's major problems for businesses,
  individuals and families. (Housing Commuting).
• Our goal is not to do many unique things, but to
  orient many common things in a unique way. 

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What we are not doing

• We are not seeking to help members create a down
  payment for their home purchase as some housing
  purchase facilitation organizations, but to
  create new homes that are less expensive to
  purchase, based upon the individual member's
  income level, lowering the cost of the purchase
  and therefore the down payment, without
  government grants or assistance from private
  foundations.
• To get there from here, we've developed a buyers'
  club to develop membership income which will be
  used to finance the pre-operations start up of
  the co-operative, and assist in paying for the
  work of planners, designers, advisors and
  architects.
• Other ways that we plan to eventually develop
  properties to help first time buyers include some
  unique concepts for getting people from where
  they are as renters, to homeownership (See
  presentation page for our concepts on
  lease-to-own).

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Both Original Ideas Common Practices

• These ideas are made from unique, as well as
  usual methods of creating personal wealth from
  home ownership.
• Concepts for development are similar to all of
  the common concepts of building.
• The plans are designed to take advantage of the
  building codes and regulations regarding housing
  in California.
• But the most complicated part is how it took the
  creation of multiple separate and independent
  corporate entities to complete the total plan.
• Each of these organizations have very specific
  and individual purposes and goals.  

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Difference it makes

• One way of establishing affordable housing in the
  local area is not necessarily better than another
  way.
• However, in our way of thinking, it is important
  that the proper balance is created between the
  classes and maintained in an area of limited
  supply and limited resource.
• Therefore, it is important that there is as much
  housing built for the Middle and Lower Classes
  that is built for the Upper Class. It is the
  results however that in the end count.
• Does each plan create a balance? Do the plans
  when taken as a whole create an overall balance?
  How does the overall balance affect the equity in
  the Quality of Life in this local area?
• We don't want to reduce the effect of squeezing
  out the Working Middle Class, we want to reverse
  it.

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The benefit that results from each affordable
housing plan in this area?

• Every plan save one benefits the Lower Class, and
  the only plan that benefits the Middle Class
  benefits primarily the Developer Class, while the
  Middle Class pays the same price for the homes as
  the Upper Class does.
• In that plan, the benefit that accrues to the
  Middle Class happens only because there is a
  subsidy for the down payment, but the Middle
  Class can only qualify for the purchase if their
  income can cover the cost of the monthly payment
  thereafter.
• On the other hand, our plan benefits primarily
  the Working Middle Class, while benefiting the
  Lower Class as a by-product, and the Upper Class
  only as a means to an end.
• While the best that other plans can offer only
  reserve the natural habitat, while benefiting the
  Upper Class and ignoring the other classes to any
  degree of equity, our plan integrates the natural
  environment and thereby enhances the local
  species of flora and fauna.

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Ready to Spring into Action

• This is a business plan, which is ready to spring
  into action.
• Where the plan refers to organizations,
  companies, members, working committees and boards
  of directors, know that it is only in the
  formation stage.
• The plan was begun in 2003, but the names of the
  organization have not yet been registered with
  any County, nor have any of the individual
  entities, which make up the organizations, been
  legally incorporated in California or any other
  state.
• Therefore none of these organizations have
  requested nor received any designations from HUD
  (Such as CHDO) or the IRS, such as 501(c)(3) or
  subchapter 905.
• So, when any of these entities or issues are
  referred to in this plan, they are only mentioned
  in terms of a future tense, or potential
  relationship or status.
• We have not yet reviewed these plans details with
  legal or financial professionals.
• We have however created these plans by
  interviewing professionals in the housing and
  construction industries, including architects,
  builders, association leaders others.
• We have compiled this plan by researching and
  distilling the information they have shared with
  us.
• This is an honest and forthright attempt to
  consider all of the needs of the people in
  California Coastal Communities for housing.
• It is a plan that causes people to work together
  for the common good.

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To Whom this Matters Most

• What would it take to pull this idea out of a
  working plan and make it a reality?
• It would take at least the self-interest and time
  of the Stakeholders and the experts in housing
  development finance to build the financial models
  while looking at the minute details of the idea.
• It would take many dedicated individuals joining
  the working committees or board of directors to
  foster these developments.

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Who are the Owners of HUM?Homes for the
Upwardly Mobile

• This is a community-basednon-profit organization
• As such it is owned and directedby the
  Community Stakeholders
• This includes those buying shares in the co-ops,
  which are not themselves non-profits, and are
  also owned by other shareholders, such as social
  investors who are concerned about the health and
  well-being of the community.

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Who are the Stakeholders?

• Stakeholders in the effort to build homesthat
  the Working Middle Class can afford
• We could have preferred buyers, and may develop a
  "point system" to qualify buyers at some point,
  based on
• their contribution to the local community and
  this effort, as well as
• the communities' need for them as homeowners in
  the community, (such as emergency workers)
• for now we will work to provide homes to the
  members of Prospective Homeowners Association, on
  a first-come, first-served basis.
• However, when a prospective home buyer's employer
  purchases a corporate membership,
• any employees working for that employer will get
  bumped to the front of the list,
• right behind other employees whose employer also
  purchased a corporate membership before them.

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Stakeholder Benefits (1 of 3)?

• Home Buyer A home they can live in, save money
  for the future, gain equity and increased values,
  a willable piece of property for their heirs.
• Land Donor A donor would receive a tax write-off
  for the land donation, or receive a life
  insurance policy equal to the value of the land
  donation. (check with your tax specialist) This
  policy could be used to benefit your heirs, or if
  you got a certain kind of policy, it could be
  used as "living insurance" where if you ended up
  with a critical illness, your policy could pay
  you cash to live through that illness.
• Existing Home or Land Owner Seller A chance to
  sell their older home, which may exist today on a
  larger piece of property, and use the proceeds to
  buy back into a new unit on the same piece of
  property. They could live in a newer condominium,
  townhouse, or 2-story home, where they feel
  comfortable living! We also reward landowners for
  working with us, if they would like to make their
  properties available to our builders. Landowners
  may share in the profits of the sale (difference
  between cost of building and selling price) of
  the homes, once they are built and sold, on top
  of the profit of the sale of the land itself!
• Existing homeowners - You have an opportunity to
  borrow against the great equity in your home
  (short term loan, or use your home to assist us
  in securing start-up funding), and invest it in
  one or more of our projects. Instead of letting
  your home sit while land values escalate or
  selling it off so you can buy another home in
  Arizona, why not invest in your home town and
  help other young families as well as yourself?
  (This is not an offer for an investment - we're
  still in planning stage)

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Stakeholder Benefits (2 of 3)?

• Builder-Developer or General Contractor A chance
  for certain trades to work on developing an
  additional project that wouldn't have come about
  any other way. Our organization has created a
  financial reward for builders in return for
  making homes accessible to first-time buyers.
  These rewards include sharing the future equity
  of the property, sometimes over the life of the
  home, if the builders work with us to lower the
  cost of building. This helps lower the purchase
  price for first time home buyers. 
• Project Manager An opportunity to create a
  project that defines the Project Manager's
  community-oriented spirit and investment in time,
  to create a whole new lifestyle and benefit for
  the local community. 
• Home Manufacturer A chance to sell products to a
  large group of buyers it Wouldn't have had any
  other way, so they buy into the American Dream.
•  
• Home Buyer's Employer An opportunity to keep
  good employees in the local community, who might
  otherwise leave to where they could afford to
  purchase a home. When a prospective homebuyer's
  employer purchases a membership from HUM, it
  allows that member to go to the front of the list
  (behind other members who are so prioritized by
  their employers' contributions).
• Home Buyer Community An opportunity to have a
  large and economically diverse group of
  individuals and families invested in the future
  of the community, buying additional products for
  a larger home than they may have lived in before.
  These same buyers would keep their earnings
  invested locally. They would not be those who
  purchase the home for a secondary domicile. They
  would purchase all the things a Middle Class
  person purchases. (Ask yourself this "Has the
  Santa Barbara economy improved in the last 5
  years, and the County received more tax dollars
  from product sales from all of the buyers of
  high-priced homes now in the area"?)

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Dear Construction Industry Employers
June 2, 2008  Dear Construction Industry
Employer  If like many workers, your
employees and you yourself are tired of commuting
from somewhere with reasonable rent or affordable
home purchase prices - don't you and they both
want relief? "How long are your employees willing
to wait to own a home of their own"? I'm writing
to ask you to help your employees purchase their
first home.  You may already know
that no one who earns their living working in
Santa Barbara can afford to buy a home. Now, only
2 of buyers in Los Angeles County can afford to
buy a home if they work for a living. Few can
afford the other developers' homes because like
any business, the developers want to sell their
homes at market rates. Why are no housing
developers offering this opportunity? Because in
a market economy, every company is charged with
making as much profit as possible. When existing
owners or new property developers can sell for
market price, why would they sell for less -
what's in it for them? But then why should a
contractor build less homes, because of the lack
of creative developers to work with? If homes can
be built homes for the 98 who are left out of
the loop currently for home purchasing
opportunities, what kind of return would that
provide your company and your employees? 
As members of Prospective Homeowners
Association, a not-for-profit start-up,
contractors can work with their employees to make
non-government sponsored affordable housing
happen, at a price that is affordable! How is
that possible? View the websites and see the
simple equation. The formula created by
Prospective Homeowners Association allows for a
kind of "sweat equity", and other features that
reduce the cost to the buyer and the time to
market. This is not just about affordable
housing for low-income persons. This is truly
attainable housing for the Working Class. These
are true "trickle down" economics due in part to
private subsidizations from the profits of
residential property development sales to upper
income buyers, along with multiple other
established techniques.  If like me,
you would like to make a difference, for yourself
and your business associates, please consider
joining with the Prospective Homeowners
Association. Help produce the results needed in
Southern California for working families earn
income for your company, and help your employees
get their own new homes. You can help by either
becoming a member, or directly sponsor this
effort and donate to assist with predevelopment
funding, or work with us in development of
building and remodeling opportunities we
identify.  Visit www.CooperativeHomeow
ners.com and view the Microsoft PowerPoint or
Adobe PDF presentation, and www.ProspectiveHomeow
ners.com to read our complete business plan. Then
for a discussion of the benefits your
organization can experience, please contact me
for an in-person conference. I am looking for
sponsors with an enlightened self-interest.
Perhaps we can work together. 
Sincerely, Gary R. Cook, Founder Development
Sponsor
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Stakeholder Benefits (3 of 3)?

• Community Supporter A Community Supporter is one
  who believes in the possibilities our mission and
  is willing to work towards seeing the dream come
  to fruition. That person may derive satisfaction
  from offering a great level support that costs
  very little, depending upon their personal age
  and health condition. We are able to offer that
  supporter the opportunity to provide support to
  our ventures in the form of a life insurance
  policy, with our organization listed as the
  beneficiary. Our organization may receive the
  proceeds upon their passing, and if there comes a
  point in their life where they can't afford the
  cost of the premium, they let us know and we'll
  ask another supporter to replace the expense.
• Mortgage Lender A whole new large group of
  customers they would have never had any other
  way. In Nov. 2007, the market is in the doldrums,
  and this offers an opportunity to finance
  existing and new housing stock, as well as build
  additional by giving classes of families the
  opportunity to buy into the American Dream
  through the utilization of the Co-operative
  Corporation, and other building techniques that
  lower the cost of construction and acquisition of
  land.
• Project Financier An opportunity to start a
  project that fulfils a worthy community goal, and
  to profit by the good return on a short term
  investment.

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Natural Environment

• How can housing benefit the naturally preserved
  environment, and enhance it without changing its
  character?
• By fostering a natural environment that is
  different than other built developments, through
  enhancing it with native plants and wildlife and
  natural energy resources (See National Renewable
  Energy Laboratory).
• We seek to work with local environmental groups
  to create a landscape for all of our developments
  that foster the lifestyles of the wild animals,
  birds, and insects that are natural to this local
  area.
• We want to have the least amount of "footprint"
  on the land we use and will only permit
  landscaping that both requires low-water-usage
  and is a natural enhancement (restoration
  ecology) even if this means designing the home
  to be vertical or putting much of the square
  footage of each home underground to increase
  insulating qualities, storing the sun's energy
  and recycling and enhancement of gray water for
  plantings.
• We also want to utilize the sun, wind and rain as
  a component in our developments, so that the
  requirement for electricity may be provided as
  much as possible by processing that can occur and
  be stored on site.
• As far as telephone lines and other cables for
  television in outlying areas, we will utilize
  satellite and cell phones. Any windmill activity
  will be designed in such a way so as not to have
  an impact on bird flight patterns and destruction
  of populations.

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Entities Separately Created in the Process

• The purpose of Prospective Homeowners
  Association, as a Mutual Benefit Society or
  Builders Society, is to act on behalf of members
  as a Home Buyers Club or Union as well as a
  public special interest group
• (This is the non-profit corporate entity which
  incorporates other entities below)It becomes the
  Community Association for later Co-operative
  Developments.
• Non-profit (Homes for the Rest of Us, Inc.),
  Property Development Company
• Its responsibility is to build out properties
  for low-low, low and moderate income buyers (See
  Other non-profit housing cos.) as such it owns
  a for-profit below it.
• For-profit Wholly-owned subsidiary Competitively
  Priced Residences, Inc. (CPR) Builds out
  properties for middle, upper-middle and upper
  income buyers)?
• 2. Housing Co-ops (Non-profits) incorporated
  One a LEC, other a MEC
• Limited Equity Co-op (LEC) (Owns and manages
  properties for low-low, low and moderate income
  buyers)
• Market Equity Co-op (MEC)
• (Owns and manages properties for middle,
  upper-middle and upper income buyers)?
• Community Land Trust (Independent non-profit
  corporation) is formed, and Limited Equity
  Co-ops land is transferred to it, so it remains
  affordable by leasing the land itself back to the
  co-operative for 99 years.

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Other non-profit Housing cos.

• We have considered incorporating as a public
  charity under another non-profit, as a
  subordinate (IRS) Sec. 905 organization to an
  existing 501(c)(3) based in California.
• The purpose of doing this would be to get our
  status rolling quicker as a non-profit, for the
  purpose of receiving donations.
• We have been unable so far to incorporate this
  way, for the fact that Housing Non-profits
  typically have a mission of helping only low-low
  to lower income buyers, and they cannot mix their
  mission with our mission of additionally helping
  moderate and middle income buyers.

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Flowchart of Organizations
34
Difference between Prospective Homeowners, a
Public Interest Advocacy Mutual Benefit
Association Home Buyers Club

• Homes for the Upwardly Mobile (HUM) buyers club
  members are not owners yet, but aspire to be.
• To make that happen, HUM contracts with
  Development Sponsor and other consultants and
  home buyers skilled in development processes and
  functions to lay the groundwork for the further
  development of construction goals.
• There is a cost to hiring consultants to perform
  objective analyses and create plans, therefore
  the necessity to charge memberships.
• This is the staging organization, which is the
  entryway for new members to join the process and
  lend a hand and give funds to sponsor its
  success.
• Prospective Homeowners Association (PHA) members
  are in the process of buying and building upon
  the land.
• This organization formalizes the relationships
  with affiliates, builders and suppliers.
• Once someone becomes a member of the association,
  the members fees for participation are different
  than the rates they've been paying, for different
  services than HUM.
• The above two organizations are quantitatively
  and qualitatively different from the other two
  organizations just below here, which are property
  development companies none of the
  previously-mentioned organizations, until the
  final stages of physical property development,
  have anything to do with a co-operative
• Homes for the Rest of Us (HRU)
• This organization (non-profit) owns CPR and
  through it, as the developer, it builds concepts
  for the creation of homes and communities. It may
  also receive donations, and give receipts which
  may be used for tax write-offs.
• Competitively Priced Residences (CPR)
• This organization (for-profit) is a wholly-owned
  subsidiary of HRU and it negotiates and creates
  contracts with general contractors and
  home-landowner development partners to improve
  land and build homes and structures for living.
• This entity may also take investment dollars by
  selling shares or may co-operate with other
  developers.
• L.E.C or M.E.C. (These two designations - as
  defined on other pages herein - have to do with
  the establishment of a co-operative, of which
  none of the organizations listed on this page
  either are or will be, until the final stage of
  any particular property's development whereupon
  one or more of the properties and its residents
  will form one each of these legal co-operatives
  and manage to own and manage particular
  properties by virtue of their being corporate
  shareholders, the land of which the homes reside
  upon will be owned by a Community Land Trust and
  leased back to that housing co-operative. 
• Therefore, the Process Creates Maintains 6
  Corporate Entities (including the Community Land
  Trust)?

35
2 Different Levels of Co-ops

• Benefits of Housing Co-ops Types
• Market Equity Co-ops
• In a market equity co-op, units are bought and
  sold at market value, similar to family homes and
  condominiums. In practice, a market rate co-op is
  operated in a manner similar to a condominium.
• Limited Equity Co-ops
• One of the unique aspects of a cooperative
  corporation is that the co-op can adopt bylaw
  provisions that limit the maximum resale prices
  of co-op units. Typically, this strategy is
  employed in order to maintain long-term co-op
  housing affordability and retain the value of any
  public subsidy that may have been used in
  financing the creation of the co-op. Since this
  type of co-op limits each units equity
  appreciation, it is called a limited equity
  co-op. Because of their potential for offering
  long-term affordable housing, limited equity
  co-ops are attractive recipients for government
  and non-profit grants and loans.

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Examples of limited equity formulas are listed
below (1)?

• Zero or no equityThe members initial equity to
  buy in to the co-op does not appreciate and is
  simply returned on departure, less any debt owed
  to the co-op.
• Constant dollarThe value of a members share
  increases only by a standard inflation index,
  such as the consumer price index.
• Limited percentageThe maximum resale price is
  allowed to increase by a certain percentage per
  year to reflect some degree of market
  appreciation.
• Limited resaleMaximum resale price is increased
  by a set amount per year, typically based upon
  the underlying mortgage. For example, under a
  30-year mortgage, members might be credited with
  an annual increase in equity equal to 1/30th of
  the value (cost to develop) their unit.

37
Examples of limited equity formulas are listed
below (2)

• Shared equityA non-profit or other such
  organization may own a unit in partnership with a
  resident, allowing the resident to reside in a
  more costly unit than would otherwise be
  possible. When the unit is sold, profit is split
  equitably between the resident and the non-profit
  partner.
• Credit for amortization without
  appreciationMembers equity accounts are
  credited with their initial down payment, plus a
  proportionate share of the principle on the
  blanket debt that has been paid down by the
  members monthly payments.
• HybridIn one housing co-op developed by NCDF,
  bylaws were written so that a members equity
  appreciation was structured in two stages. For
  the first five years, equity growth was limited,
  equaling the sum of one percent (1) per year
  inflation allowance and the members contributed
  share of mortgage principal payments. On the
  first day of the sixth year of residence, the
  member will be allowed to sell his/her share at
  market value. This formula was designed to
  encourage and reward long-term ownership of
  units.

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What is a Community Land Trust?

• A community land trust is a private non-profit
  corporation created to acquire and hold land for
  the benefit of a community and provide secure
  affordable access to land and housing for
  community residents. In particular, CLTs attempt
  to meet the needs of residents least served by
  the prevailing market. Community land trusts help
  communities to
• Gain control over local land use and reduce
  absentee ownership
• Provide affordable housing for lower income
  residents in the community
• Promote resident ownership and control of housing
• Keep housing affordable for future residents
• Capture the value of public investment for
  long-term community benefit
• Build a strong base for community action
• (see our website for more data on Community Land
  Trusts)?

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Making development different

• We would not build as so to drive down the value
  of existing properties, but might stabilize them,
  by 1) building a new tier of property values, by
  setting prices that do not escalate with the
  local market through deed, sales contract and
  membership in the co-operative, and 2) By
  building slightly below market rate homes that
  escalate or de-escalate with the market over
  time.
• Create a village atmosphere, where people are not
  locked away from one another, but they are
  enticed to participate in the common space
  provided by the developed environment. 
• Even when people are in their homes, develop each
  so that part of the inside and the outside share
  commonality.
• Create mixed-use (commercial residential)
  space, in order that people do not have to
  commute to go to work, but can walk to work
  downstairs. 
• Develop Telecommuting (TeleWork) Centers  for the
  outlying areas, or even for inner city areas, so
  people do not have to commute physically to work.
  
• In the effort to create housing for outlying
  "village" areas, foster development of industry,
  in a way that provides opportunities for people
  to have good jobs, in order that the town is not
  dependent upon low skill/wage support positions
  for health and tourism, and
• Develop an incubator for entrepreneurs who live
  in the housing development, providing space,
  supportive services, financial and marketing
  assistance for micro-to-small business owners.

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Initial Questions Answers

• Why are you here today?
• What Stakeholder category do you fit into?

41
Actions Meeting Outcomes
42
Break Time

• This is a moment to take a 10 minute break, to
  get to know the people who are here today in the
  room with you.
• When we re-join the meeting, well start at the
  previous screen.