NMTC Funding Unlocks Habitat Home Doors in Portland, OR
August 1, 2012 --ST. LOUIS, MO: Habitat for Humanity Portland/Metro East and 10 other Habitat affiliates across the country - in West Virginia, Texas, Tennessee, Oregon, Arizona, Wisconsin, Florida, Ohio, North Carolina and California - will share $22 million of New Markets Tax Credits (NMTC) funding to help build 198 homes nationally.
In Oregon, the Portland Habitat affiliate will use its $1,880,000 Qualified Low Income Community Investment (QLICI) from CEI Capital Management LLC (CCML) of Portland, ME to help build 23 homes ranging in size from 962 – 1150 square feet. The homes will be built in east Portland, a fast growing designated economic opportunity area that has received renewed investment and attention for needed infrastructure, services and other amenities. Construction will be completed between May 30, 2012 and February 1, 2013.
The NMTC program is administered by the U.S. Treasury and is designed to spur new investments or increase investment into operating businesses and real estate projects located in low-income communities. The program provides tax credits as an incentive for private investment and leverages public and private funding to provide borrowers like these Habitat affiliates with financing that comes in the form of very favorable rates and below market, flexible terms.
Partnerships like this one orchestrated by Smith NMTC Associates, LLC (Smith NMTC) with CCML and Habitat for Humanity Portland/Metro East, and invested in by U.S. Bank, help Habitat affiliates stretch their fundraising and development dollars, increasing the nonprofit’s ability to meet its mission of building decent, affordable housing for hardworking families in need.
This funding comes on the heels of a Habitat for Humanity Portland/Metro East’s Strategic plan for expanded operations to scale up annual construction output by 50% (up from 20, to 30 homes per year). To achieve this goal, Habitat has taken advantage of record-low land prices to secure lots for 152 more Habitat homes with concentration on the east Portland area, where the 23 homes funded by this investment are located.
In May, 24 new Habitat families were welcomed into the Homeownership Program, selected from among 194 applicants. The demand is great, the competition for existing resources is challenging, but for those who qualify, the experience is life changing. Micheal and Ewelina Mansi and their two sons are among families recently accepted into Habitat’s Homeownership Program. Having moved five times in five years to chase affordable rents, they were overjoyed to learn they qualified to become homeowners. “I have no words to explain how happy I am,” said Micheal. “It is the best feeling when you are safe and know that your home is a place you own and can live in forever.”
The idea of applying NMTCs to “for-sale” affordable housing as a funding vehicle for Habitat for Humanity affiliates was the primary goal and focus of Smith NMTC co-founders Howard Smith, JD, Principal and Donna Smith, JD, Executive Vice President. Howard had served as president, general counsel and a member of the Habitat for Humanity St. Louis board of directors for over 20 years and knew the revitalizing impact home ownership had on low income communities. After discussing the idea with NMTC officials at U.S. Bank and putting together a working model, the Smiths saw their idea build – literally. The Smith NMTC Model now makes NMTC dollars available to help Habitat affiliates build more homes and make more interest free loans available to industrious Habitat family partners.
“It’s gratifying to be a part of Habitat’s momentum in Portland, as they increase their annual home building by 50% to help more families and bring renewed vitality to east Portland,” said Howard Smith, Principal of Smith NMTC. “This is the second time the Portland Habitat affiliate has attracted NMTC funding since January 2011. We are pleased to have an opportunity to work with them again.”
Habitat family partners contribute 500 sweat equity hours before purchasing their home. They pay a modest down payment, sign standard loan documents, and make affordable, monthly mortgage payments to repay the 0%-interest loan over 20-30 years. This Habitat affiliate offers homeownership opportunities to low-income families unable to obtain conventional financing.
Since 2008 Habitat for Humanity Portland/Metro East has built Leadership in Energy and Environmental Design (LEED) certified homes that meet a minimum of Earth Advantage certification standards by the US Green Building Council. Each of the Portland homes will be energy-efficient, water conserving, and use materials that are less toxic and more environmentally sustainable.
An additional benefit of the Habitat home builds receiving NMTC funding are the number of local businesses and volunteers that get involved in the build furthering their businesses and the local economy. The Portland Oregon affiliate spent $1.5 million last year on the 19 homes it built and sold in partnership with 272 local businesses that supplied materials and professional trade labor. At that rate, the 23 homes that will be built using these new NMTC leverage funds over the next few months should churn about $1.8 million into the economy, to at least 300 local construction sector businesses. This includes 180 construction pre-development jobs created to perform electrical, mechanical and plumbing work on all 23 NMTC homes in Portland. Nationally, 310 full time and 36 part time Habitat affiliate jobs were retained and a total of 696 temporary construction jobs were created from CCML’s total NMTC investment of nearly $22 million.
”CCML is pleased to be a partner with Smith NMTC in developing a creative way to fund Habitat for Humanity Portland/Metro East,” said Tad Atwell, CCML’s Senior Investment Officer. “This project hits on each of our underwriting criteria where the beneficiary furthers economic progress, social equity and environmental sustainability.” CCML utilized the developed by Smith NMTC Associates specifically to tackle the roadblocks to NMTC funding of smaller projects associated with affordable, for sale, single family housing.
Habitat for Humanity Portland/Metro East, CEI Capital Management LLC, U.S. Bank and Smith NMTC Associates, LLC, partnerships building communities, are looking forward to seeing the 23 new Habitat family partners at work with local business and volunteers raising their new houses and fulfilling a time-honored American dream.