Moving to Homeownership In Kahnawake

Transcription

1 Moving to Homeownership In Kahnawake Housing as a Community Asset Information Session AFOA National Conference February 17-18, 2016 Montreal

2 Moving to Homeownership in Kahnawake Key Definitions Evolution of Housing Products in Kahnawake. Innovative Products and Features. Success Factors/Results. 2

3 What is a home? A house has a multifunctional role Personal Infrastructure: The place to raise your family, ensure health and security, provide basic shelter, etc. Most FNs trying to get here Economic Asset ( Equity): Build personal credit and financial resources, inheritance /retirement nest egg, remortgage and use proceeds to start a business, finance children's education, etc. Very few FNs here 3

4 What is Private Home Ownership? o An owner-occupier is a person who lives in and owns the same home. It is a type of housing tenure. The owner may own a house outright, or it may be mortgaged. o Having not just occupancy but responsibility for ensuring house reaches full life cycle (i.e lasts at least 50 years) 4

5 What is A Revolving Loan Fund? o o The Revolving Loan Fund (RLF) gets its name from the revolving aspect of loan repayment, where the central fund is replenished as individuals pay back their loans, creating the opportunity to issue other loans to new borrowers. Capitalization of the RLF can be a combination of internal and external capital. An instrument to help First Nation community members to transition into private home ownership. o The RLF is established to be a for profit selfsustaining loan fund which can also be used to fund other housing programs. 5

6 What is A Housing Continuum? o o o A continuum is something that keeps on going, changing slowly over time, like the continuum of the four seasons. It assumes that one wants to move up in a linear fashion and not go backwards. In housing the basic premise is that we want to move people from social housing to market housing. However, in housing one may actually move around the continuum based on their needs over time. (i.e moving up and down the curve). 6

7 The Housing Continuum: FN Instruments Social Housing Rental Housing Market housing Shelter Allowance Section 95 subsidy MLGs Rent to Own (limited) Down payment assistance Revolving Loan Fund ( limited) FNMHF ( limited) Band Guarantee/MLG ( limited) Trust Deed Model Designated Land Model (very limited) Low Income High Income 7

8 Sample of FN Revolving Loan Funds Six Nations: $19.9 million portfolio MBQ: $13 million Wendake: $29 million Kahnawake: $14.5 million Nipissing: $3.8 million Namgis: $3.5 million Curve Lake $3.8 million And newly emerging funds: Wikwemikong, Kettle & Stony Point, Peerless Trout 8

9 Background on Kahnawake Located on south shore of Montreal Always a strong economic base Land tenure for most part is CP Social housing was taking root in the 1960s but stopped by strong leadership

10 Details at a Glance o o o o Population: 10,700 (7,900 on reserve). Land Mass: Square Kilometres. Households 2,100 (88% Homeowners). Culture: Kanien kehá:ka (the "People of the Flint"). The most easterly nation of the Haudenosaunee (Six Nations Iroquois Confederacy) and are known as the "Keepers of the Eastern Door". 10

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12 Kahnawake Housing Services Kahnawake Housing Department ( KHD) same as in MBQ and Six Nations with main product line a Revolving Loan Fund ( $27.7 million portfolio includes $14.5 million in loans). A full service credit union,caisse populaire Kahnawake ( CPK), on reserve which provides housing loans. ( a $35 million loan portfolio). Housing Framework Supports: Services/Trades. Both KHD and CPK work together to serve all housing needs of community and both entities run like a business. 12

13 Kahnawake Housing Department Products o New construction and renovation RLF loans: up to $150K. o Rent to Equity and HOPE initiatives new in o Shared Equity Affordable RLF Housing Loan $60K ( with INAC Subsidy of $25K). o o Improved Housing Loans: 5% down payment (lender CPK or BMO) with $175K cap. 36 (3 bedroom) Rental Units and Single Rental Units ( both Section 95). o Major Housing Repair (CMHC & INAC) and Minor Housing Repair RLF ($25K). 13

14 Caisse Populaire Kahnawake Improved Housing Loans: (with KHD) featuring: 5% down payment $175 loan size cap KHD and CPK share risk with borrower. Trust Deed Loans featuring: Loan to 75 % appraisal value of house or cost of construction No cap on loan size Equivalent to mainstream mortgage. Conventional Mortgage (for off reserve). No more MLGs or Section 95s left. 14

15 Housing Framework Supports Construction sector (Private Sector). Construction Management and Inspection services (KHD). Trades: plumber, electricians, etc (Private). Insurance Products (Non Native). Housing evaluation services (CPK). Lot servicing (Public Works). Fire and mold testing (Community Protection, KSCS). 15

16 Key Interventions that moved Kahnawake to Revolving Loan Fund in 1977 o Move away from welfare homes. o Leadership wanted to lever government funds. o Community members were willing to put skin in the game Capital & Interest. o Kahnawake wanted ownership and control of financial lending resources. o Need to create revenues to run Kahnawake Housing Department like a business. 16

17 Evolution of Housing Products in Kahnawake SECTION 95s WELFARE HOMES SELF FINANCED CMHC LOANS Pre -Sect loans from 1968 to 1974 DOWN PAYMENT ASSISTANCE MLGs REVOLVING LOAN FUND ( RLF) STARTS in 1977 with six $25K loans MLGs RLF TAKEUP and CHALLENGES (INAC, Chief s) Loan amt. $35K-45K CPK OPENS 1987: TRUST DEED STARTS MLGs DECLINE RLF GROWS Loan amt. $50K-55K TRUST DEED TAKEUP 1960s 1970s 1980s

18 Evolution of Housing Products in HOUSING DEMONSTRATION PROJECT 1998 RLF ENHANCES PRODUCT LINE: Affordable and Repair Loans TRUST DEED ACTIVE MLGs REDUCED Kahnawake RLF REDUCING BACKLOG Loan amt. $60K & $50K ( Affordable) TRUST DEED ACTIVE MLGs DISCONTINUED RLF:GREATER LOW INCOME FOCUS with Affordable Loans Loan amt. $75K & $60K ( Affordable) TRUST DEED ACTIVE Late1990s Early 2000s Mid 2000s 18

19 Evolution of Housing Products in SHARED EQUITY UNITS BUILT with RLF funds RLF DECLINE IN USAGE. Affordable Loans Discontinued 62 made over 10 years IMPROVED HOUSING LOANS 2007 TRUST DEED ACTIVE RLF FURTHER DECLINE PROGRAM STUDIES RENOVATION CONDUCTED EXECUTE PROGRAM RENOVATION Kahnawake RLF: INCREASED LOAN AMOUNT to $150K GIMME SHELTER RENT TO EQUITY EXPLORE MORE TRANSITIONAL PRODUCTS BUILD PARTNERSHIPS HOPE INITIATED ENHANCE TRANSITIONAL PRODUCTS EXPLORE MARKET RENTALS, ELDERS, etc. Later 2000s 2008 to / and Onwards 19

20 Revolving Loan Fund KHD The New Construction Loan Program has been the main product line since the loan fund began in 1977 with initial capitalization of $150,000 and has now grown to $27.7 million ( $14.5 loans) Over the years the loan amount available has changed: 1977 $25, $35, $55, $60, $75,000 Today $150,000 In 1998 RLF started providing new product lines to bridge the gap between Section 95 and New Construction loans. These transitional products include the Affordable Loan ( since discontinued), Shared Equity, Rent to Equity and the Home Ownership Program Enhancement ( H.O.P.E.) programs. 20

21 Revolving Loan Fund KHD The New Construction Loan Program: Maximum loan amount $150,000. Mortgage rates set as per market conditions. Minimum 5% down payment. Flexible repayment plan (weekly, semi). Maximum 30 Year amortization. Choice of fixed, variable or hybrid mortgage. 21

22 The Shared Equity Program This program started in A three bedroom semi detached affordable unit could be purchased for $60K with no down payment required with purchaser immediately having title to unit. Unit cost of $85K was financed by KHD (RLF Loan of $60K) and INAC Subsidy of $25K. Owner can resell unit to another qualified ( by RLF) community member and earn equity in sale. Allows an affordable builder home step up from rental to detached home ownership. This program evolved from Affordable Loan Program developed in early 2000s. 28 built to 2008 and currently re-engineering program. 22

23 The Shared Equity Program 23

24 Rent To Equity (RTE) Program A total of four units built in fiscal 2015 and minimum of three units ( and up to 10 more) to be added in All are three bedroom. Additional units to be converted from existing Shared Equity (3) and Multi Dwelling units ( 10 former Section 95s). Tenants pay below market rent ($500 per month, plus utilities). Tenants also pay and save equity payment that are 50% matched by KHD in order to purchase or build a new home after 25 months. 24

25 Rent To Equity (RTE) Program Occupant contributes $5,000 ( $200/mo.) equity and RLF contributes $2,500 ($100/mo.) for a total of $7,500 to be used for down payment for new house. The four newly constructed units were financed by RLF and receive CMHC subsidies. Conversion of Shared Equity units financed by RLF. Multi Dwelling Units are former Section 95s. The premise is to move these clients away from long term rentals and prepare for homeownership. 25

26 Rent To Equity (RTE) Program 26

27 H.O.P.E. Housing Program Four units built in fiscal 2015 with five and six projected for fiscal 2016 and All three bedroom and unit location not segregated. Focused on single parents ( includes men) with children. Home Ownership Program Enhancement ( HOPE) features affordable housing, training/education leading to full time job and a home ownership savings plan. Similar to RTE in features but with four year horizon to save down payment ( to be saved in last two years). 27

28 H.O.P.E. Housing Program Three of four units built in fiscal 2015 financed by private sector and the other by RLF. Future units ( all new constructions) to be financed by RLF with CMHC subsidies. Occupants must be willing to work with Social Development Case Management ( KHD, Social Assistance Department and a mentor) to prepare for homeownership. There is significant client interest in this program and results will be monitored closely. 28

29 H.O.P.E. Housing Program 29

30 Existing Additional Products Multi Dwelling Rental Units Section 95s ( 3 bedroom). A number to be converted to RTEs. Single (one bedroom) Rental Gimme Shelter Section 95 Units. Housing Repair/Renovation Loan Program (HRLP). Residential Rehabilitation Assistance Program (RRAP) supported by CMHC and INAC funding. Housing Services Construction/Contract Management. 30

31 Existing Additional Products: Gimme Shelter 31

32 Existing Additional Products: Multi Dwelling 32

33 REVOLVING FUND GROWTH HAS LEAD TO DEVELOPMENT OF TRANSITIONAL PRODUCTS Sources Loan Repayments INAC Minor Capital Revolving Loan Fund Liquidity Uses Matching Equity Loan Capital Admin RLF Products Rent to Equity HOPE New Construction* Shared Equity *New Construction only product line from 1977 to 1997

34 Improved Housing Loans (CPK & BMO) Joint initiative of KHD with choice of CPK or BMO as financier/lender. Minimum of 5% down payment required toward cost of construction, purchase, refinance or renovation. Band Council guarantor of loan outstanding (cap of $175K per transaction) with overall cap for each lender. Application recently made to FNMHF. 34

35 Trust Deed Loan Fund (CPK) Used exclusively by CPK since Allows basic economic principles: attach value, lever and accumulate wealth. Section 24 transfer registered by INAC. Up to 500 housing and commercial loans exceeding $40 million. Facilitate development of resale market. Only five executions and all loans outstanding recovered. Uses conventional limits for residential (75%) and commercial ( 60%) lending amount based on valuation. 35

36 Kahnawake Housing Products Continuum Social Housing Transitional Instruments: includes Rentals Market Housing: Home Ownership Section 95 Products: Multi Dwelling Gimme Shelter RLF Other Products: Section 95 HOPE RTE Shared Equity RLF New Construction Improved Housing Loans Trust Deed Model FNMHF Limited Usage Growing Use Majority Here Moving to Home Ownership 36

37 Kahnawake Housing Continuum Annual Family Income Low Income Level High $10K (186) $20K (279) $30K (349) $40K (419) $50K (279) $60K (209) $70K (162) $80K (441) GDS (28%) Monthly $233 $465 $700 $933 $1,166 $1,400 $1,633 $1,866 Maximum Mortgage Size (5%- 20Am) $36K $71K $107K $143K $177K $214K $249K $284K Mainstream Housing Sector Social Housing Rental Assisted Home Ownership Private Home Ownership KHD Programs Multi Dwelling (36) Gimme Shelter (4) SE: (28), RTE: (4) HOPE :(4) RLF New Construction and Affordable (550) CPK: (82), BMO: (5) + Trust Deed

38 Common Features of KHD Products Which Contribute to Home Ownership Ownership and financial obligation established upon occupancy/purchase. Establishes risk sharing of all participants in lending transaction which instils discipline. Provides incentive to move out of long term rentals. Promotes basic economic principles: attach value, lever and accumulate wealth (equity). 38

39 Key Results Greatly reduced backlog in housing financing needs with 550 homes ( majority New Construction) built since RLF has built up sizeable fund liquidity available ( greater then $10 million) and has flexibility to build new products ( e.g. loans to meet lower income backlog) to fill gaps. Kahnawake has ownership and control of housing solutions: resources, enhancement, partnerships in place, etc. 39

40 Key Results RLF a key instrument in anchoring a full continuum of products and moving more to home ownership. KHD has developed strong capacity to manage and innovate programs as required. Transitional products encourage financial literacy. No sense of something free owed to me - everyone works to support collective. Increased values of homes (asset building). 40

41 Questions? 41