SONOMA COUNTY – While building homes for low-income families remains a part of Habitat for Humanity’s mission in Sonoma County, local volunteers say they’ve found a cost-effective alternative in the current economy – purchasing and renovating foreclosed houses.
The yet-to-be-named initiative, which officially kicks off on Jan. 25, involves a coordinated effort from local banks, volunteers and the Santa Rosa Housing and Redevelopment Board. Habitat for Humanity of Sonoma County just completed the purchase of its first home, and organization officers said they hope to provide 100 percent, interest-free financing to low-income families for six homes this year.
“If you put it in the context of business – when the economy shrank, nonprofits like Habitat had to look for a new model,” said Gregory Putnam, treasurer for Habitat in Sonoma County. “Instead of building from the ground-up, we started looking at foreclosures.”
Talks of the approach first began last year, an idea Mr. Putnam said made immediate economic sense.
Building a three-or-four-bedroom home on donated land – the typical Habitat approach -- could cost $250,000 to $300,000 and take two years, he said. Meanwhile, foreclosed homes in the county were selling at prices from $180,000 to $250,000, and Sonoma County had nearly 1,300 bank-owned properties as of last week, according to the online foreclosure data company Realtytrac.
“It was strictly the ‘dollars and cents’ model,” Mr. Putnam said. “If the market wasn’t where it is today, this wouldn’t work.”
Financing for the effort was coordinated through the Sonoma County Loan Consortium, a coalition of eight North Bay banks that meets quarterly to cooperate on financing for affordable housing. Institutions take turns financing projects, joining up for larger loans.
Three members extended a $500,000 line of credit to completely finance the purchases: First Community Bank, Exchange Bank and Luther Burbank Savings and Loan.
“Having the consortium is a great plus for the community. It provides the local banks the opportunity to participate in funding affordable housing projects, which is always a focus of community banks,” said Janet Connors, senior vice president at First Community Bank and current chair of the consortium.
Redwood Credit Union also extended a $250,000 credit line to Habitat, though their financing structure has different requirements. That financing will be used for a yet-determined future housing effort, according to Habitat for Humanity