BCHA, Seven Sisters launch partnership

SANDPOINT — The hiccup in housing prices has forced developers to take a new look at a market sector they had all but forgotten — affordable homes for working families.

Loosely defined, affordable housing would include homes priced within reach of families earning less than 80 percent of an area’s median income. In Sandpoint and its adjacent communities, that puts home ownership well out of reach of everyone from service-sector workers right up to many mid-level managers at the county’s large employers.

“It’s a beautiful area, but I feel bad for people who want to live up there,” said Joe Cool, area specialist for the United States Department of Agriculture (USDA) Rural Development office in Coeur d’Alene.

“They just can’t afford it — there’s almost nothing in the way of affordable housing.”

The USDA, meanwhile, has been pouring stimulus dollars into affordable housing projects in and around Coeur d’Alene, where the market downturn created what Cool called “a huge inventory.”   The rural development team administered 700 of its Section 502 loans last year and is on pace to eclipse that rate for 2009, he pointed out.

The loans specifically target rural areas and are designed for lower-income households that don’t qualify for traditional financing.

“We are busy, busy, busy down here in Coeur d’Alene,” Cool said. “Last year was a record year for us and we’ve already doubled that production so far this year.”

If a Bonner County couple manages to convince local banks to play ball, a new development in Kootenai will begin to offer new, single-family homes in the $135,000-$165,000 range — a price that is virtually unheard of in an area where homes at twice the price have been advertised as “affordable.”

The development, called Seven Sisters and located on a 29-acre site with views of Roman Nose and its namesake string of seven mountain peaks, is a joint effort between the owners of Planet Construction and the Bonner Community Housing Agency (BCHA).    “This is their first project and we have partnered with them to create an affordable housing community,” said Michelle Hefley, who, along with her husband, Sean, operates Planet Construction.

“We’re not talking about tract homes,” she added. “These are quality built, comfortable homes.”

Initial plans call for the construction of at least 10 homes in two floor plans:  A 1,350-square-foot “Rancher” with an attached garage and a 1,150-square-foot “Cottage” with a carport. Using USDA financing, the homes would cost buyers approximately $165,000 and $135,000 respectively.

The developers estimate that a working family earning a little more than $31,000-a-year would pay about $785 for the Rancher, while annual income of approximately $26,000 would result in a monthly payment of about $665 for the Cottage.

According to Stephen Drinkard, founder and vice president of BCHA, the partnership was due partly to local housing market pressures, coupled with an eye toward serving an untapped demographic.

“The developers realized the market is clearly not there for $250,000 houses, so they approached us to work with them on the Seven Sisters project,” he said. “Their goal is to break even with affordable housing, because that’s where the market is going.

“We have a number of other developers who are now looking seriously at affordable housing,” Drinkard added. “Basically, that’s homes priced below $160,000 if you do the math for income levels in this area.”

The Hefleys’ original plan was to develop Seven Sisters as a community of 56 single-family homes on lots of at least 1/2-acre in size, all priced at market value. When the bottom dropped out of the market, they revised the plan by keeping the plat map intact and proposing to build the kind of modest-sized homes that fit the USDA’s requirements for direct loans.

Planet Construction still must pin down financing for completing infrastructure at the construction site, which sits on the north side of Highway 200 just east of Kootenai’s existing residential zone. Until now, banks have been standoffish about lending money for the Seven Sisters project — something the developers hope will change under the partnership with BCHA.

“We’ve had to put the cart before the horse,” Michelle Hefley said. “Our investors have put in more than $1 million for the land and we’ll need another $1 million for the infrastructure. We’re gong to the banks for that.”

Even so, the couple seems prepared for the fact that lenders might continue to stand back until the market for affordable homes is a proven commodity.

“Once we’ve got four or five of these in progress, a bank — especially a local bank that has recently received stimulus dollars and has publicly said it wants to put them to work in the community — would have to be ashamed not to take part,” said Hefley.

The BCHA views Seven Sisters as its potential first big step toward addressing the shortage of “workforce housing” that falls within the means of Bonner County families. The agency recently launched a first-time buyer education program titled, Finally Home!  The eight hours of classes teach prospective homeowners about all aspects of home buying, Drinkard noted, from budgeting to title insurance.

The ability to put that knowledge to work by putting lower-income families into their own homes would mark a significant milestone for BCHA, according Drinkard.

“Our goal is to help Seven Sisters find and pre-qualify homebuyers through USDA direct 502 loans and guide them to this project,” he said. “Why?  Because it’s a good deal.”

From his office — where this type of good deal has become a daily occurrence in Coeur d’Alene — the USDA’s Joe Cool also sees the project in Kootenai as a long-awaited opportunity to add affordable options to the Sandpoint-area’s formerly high-priced inventory.

“There is such a huge need for that kind of housing up there,” he said. “We market to first-time buyers — like the people who work at places like Coldwater Creek, Litehouse Dressing and Quest Aircraft or single parents with a couple of kids — and Seven Sisters will be a good project for that once it gets rolling.

“I don’t think we’re going to have any problem putting people in those homes.”

The Hefleys said they are committed to hiring only Bonner County tradespeople for construction of the homes and will offer buyers a chance to further enhance affordability by investing their own sweat equity into things like landscaping.

“I like the barn-raising idea,” Michelle Hefley said. “Seven Sisters would provide the trees and landscape materials and, if several families got together to help each other, before you know it, you’ve all got front yards.

“This about building a community,” she added. “It’s about getting back to ‘old school.’”

Planet Construction will continue to add new, affordable homes at Seven Sisters if the project takes off, the developers said. With bank financing in place, infrastructure would be run into the back of the property — which includes commercial highway frontage and space for future construction of lower-income apartments — and lots would be phased in over time. Initially, though, building a handful of modest homes at the entrance to Seven Sisters is the couple’s first priority.

Doing so would serve two ends — gaining visibility from a marketing standpoint and viability when it comes to working with lenders.

“Our goal is to get those 10 homes pre-qualified and built before the end of the year,” Michelle Hefley said.

Asked if an upturn in the housing market would dampen their enthusiasm for building affordable homes, Sean Hefley said that Planet Construction would still aim to construct an “integrated community” of market-priced and lower-income homes.

“But we would hold a few of the choicest lots to pluck out and hold to see if the market comes back,” he said.

At least one previous attempt at adding affordable apartments for sale in Sandpoint proper never reached its intended audience, as investors and real estate professionals snatched up the listings and “flipped” them for a profit before lower-income residents had a chance to enter the arena.

According to Drinkard, the USDA’s loan restrictions would keep speculators out of this particular game, while deed restrictions placed by BCHA would require lower-income buyers to remain in the home for a predetermined period of time to avoid quick turns for profit. Further, those restrictions also would maintain the inventory of affordable homes by limiting the amount of profit that could be made after sellers recapture their principal on these homes.

“Some people might say that all of this is contrary to the rules of capitalism, but, in a way, you can look at it as an entry to capitalism for about half of the residents of Bonner County who can’t buy a home right now,” Drinkard said. “What we’re looking at here is a way for people who can’t otherwise afford it to finally get into the housing game.”

Want to learn more?

BCHA and Seven Sisters will host a town hall meeting and affordable housing seminar on Tuesday, July 28, at 6 p.m. in the Sandpoint Community Hall. Floor plans, home renderings and plat maps will be on display and information about the USDA loan program and other financing options will be available. For more information, call 255-4423.