housing as a business (haab) · housing as a business (haab) principles • community decision...

Housing as a Business (HaaB) By Ken Jacobs

Senior Issues Management Advisor Aboriginal Affairs and Northern Development Canada

E-mail: [email protected]

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God teaches the birds to make nests, yet the nests of all birds are not alike.

Source: Native American Quotes- Duwamish

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Five objectives of this presentation

1. Explain Housing as a Business (Haab); 2. Overview on-reserve housing needs; 3. Review a plan to build more houses

on a First Nation; 4. Identify the major components

of a 4 phase approach to HaaB, and; 5. Outline the components of a strategic

business plan for a First Nation Community to build, renovate and sell more houses.

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What is Housing as a Business (Haab)?

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Housing as a Business (HaaB) principles

• Community decision making and control will be maintained;

• Quality and fair price (including a reasonable profit) are required; and,

• Needs-based and affordability-based housing are both required, ie: larger, more expensive homes should be available to members that qualify for large mortgages.

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Housing as a Business (HaaB) principles continued

• The legal title to land and home ownership must be clear, i.e. Certificate of Possession, First Nation Allocation, etc.; and,

• Traditional housing construction and financing methods will be practiced and modified where appropriate; however, new and innovative practices will be promoted.

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What are the characteristics of Housing as a Business (HaaB)?

• Profitable; • Self –sustaining; • Supports job creation; • Promotes skills development; • Part of a growing market; • Identified revenue sources, and • Practical debt to equity ratios.

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What is Housing as a Business (HaaB)?

Seller: Honest Established Reputable

Buyer: Ready Willing Able

Product: Quality Demand Fair price

Very simply stated: • The production of goods or services

for profit.

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• Money generated from the construction of a house Based on a $200,000 house $ per house X 10 houses

Finance and interest (25 year amortization 4% interest spread - $180,000)

$104,050 $1,040,500

Labour Component (labour ratio is 50% of the house cost)

$100,000 $1,000,000

Materials (37 % - 45%) $74,000 $740,000

Developer Profit (10% of cost - Stats Canada - performance plus)

$20,000

$200,000

Professional (3%) $ 6,000 $ 60,000

TOTAL $304,050 $3,040,500

What are the revenue opportunities for Housing as a Business (HaaB)?

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Secondary revenue sources from Housing as a Business (HaaB)

• Financing, mortgages; • Materials, infrastructure, construction; • Maintenance, housing inspections; • Furnishings, repairs, and a host

of other opportunities.

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More secondary revenue opportunities from Housing as a Business (HaaB) Landscaping Snow removal Deck building Additions Renovations Furniture Interior

Decorating Appliances

Insurance Maintenance Repair Bulk purchases Refinancing Foreclosure Commissions Utilities (fuel) Other

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Housing as a Business (HaaB) potential to meet on-reserve

housing needs

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• Currently, there are 615 First Nation communities, which represent more than 50 nations.

Source: (2012, August). First Nations.

Retrieved from: http://www.aadnc-aandc.gc.ca/eng/1100100013791

Housing as a Business (HaaB) potential to meet on-reserve housing needs

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• The Assembly of First Nations estimates a current housing shortage of 85,000 units nationally and about 44,000 requiring major repairs.

Source: (August 10, 2012). CMHC reductions concerning, Assembly of First

Nations National Chief. Retrieved from: http://www.afn.ca/index.php/en/news-media/latest-news/cmhc-reductions-concerning-assembly-of-first-nations-national-chief1


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• The shortfall is growing by an estimated 2,200 units a year. The limited supply of housing not only leads to unhealthy, overcrowded conditions but it also accelerates the depreciation of the housing stock. It affects the health and well-being of Aboriginal people living on-reserve.

Source: (October, 2006. Modified September 15, 2010). Aboriginal Housing. Retrieved from: http://www.aadnc-aandc.gc.ca/eng/1100100016239


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National market • 60,000 units in backlog • $200,000 cost per house • $12 billion housing market Ontario First Nation • 20% Ontario backlog market • $2.4 billion housing market • $19 million per community The housing market examples above are provided for discussion purposes only. They are not

accurate and users should verify information before acting on it.


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Housing as a Business (HaaB) as a plan to build more houses on-reserve

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Assumptions and realities • First Nation members knowledge of housing

concepts and mortgage concepts is limited; • Housing on-reserve is sometimes viewed as a

social and political right; • The climate to access financing for housing

on-reserve is improving; • The market for residential on-reserve housing is

vast and increasing.


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Assumptions and realities • The young population and members returning

from off-reserve add to this market; and, • Brain drain (bringing the talent home to stay).


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Assumptions and realities • There is an untapped market of gainfully

employed middle to upper class that require suitable housing;

• Existing housing policies favour high-need and low-income community members; and,

• Existing policies have restrictive limits on loan ceilings and conditions.


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First Nation characteristics • Reasonable employment levels; • Willingness to take on debt; • Lands Department; • Land base (Infrastructure); • Serviced land; • Security of Land Tenure; and, • Willingness to separate politics from business.

Determining community readiness for Housing as a Business (HaaB)

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The Four Phase Approach to establishing

Housing as a Business (HaaB)

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Research & Training

Resource Establishment

Business Model

Implementation Delivery of Housing

1 2

3 4

The Four Phases

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• Collect data on the housing needs, types of homes required, client profiles and existing housing programs;

• Arrange and deliver a series of information sessions to familiarize stakeholders with the concept of mortgages and the economic opportunities with housing; and,

• Develop policies, best practices, procedures, and other agreement documentation.

Phase One – Research & Training

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• A five-year business projection and business plan will be developed; and,

• Mandate will be required from Chief and Council to establish the structure of a separate entity to operate housing as a business.

Phase Two – Business Model

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• The entity will be resourced with proper staff, equipment and facilities needed to deliver on the five-year business plan; and,

• Agreements will be negotiated with various agencies, such as: contractors, suppliers, financial institutions, government agencies, technical service groups etc.

Phase Three – Establishing Housing as a Business (HaaB) Resource Establishment

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• Delivery of housing construction; • Selling of the houses; and, • Management of the business.

Phase Four – Implementation delivery of housing

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Housing as a Business (HaaB) strategic business plan

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Contracting and Purchasing

Land Issues

Applicant Inventory Data Base

Quality Control

Inspection Unit

Financial Management

(Sources & Uses of Funding)

Policy/Program Management

Government Relations

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2

1

6

5

4

3

Housing Business

Entity

HaaBHaaB

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• Client criteria for eligibility; • Selection process methodology and criteria; • Special subsidy eligibility, incentives and

bonuses; • Housing options; • Landlord Tenant Act equivalent (guarantee,

warranties and appeal rights); and, • Enforcement and collections.

Policy and Program Management

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• Between First Nation communities; • Federal government: AANDC, CMHC,

Environment Canada, Revenue Canada, etc.; • Provincial government; and, • Neighboring municipalities.

Government relations

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• CMHC section 10 and section 95 housing, direct lending programs;

• Community mortgage funds (revolving loan); • First Nation guarantees with banks; • Client equity; • Provincial subsidies; • Federal government capital funds; • Major Capital Plan; • AANDC First Nation Market Housing Fund; and, • Other sources.

Financial management

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• Detailed community profiles of existing housing; • Developed client profiles and applicant

inventory for new housing requirements; and, • Linking client purchasing power with existing

housing resources.

Applicant Inventory and Database

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• Community property (band owned); • Certificate of Possession (private); • Other First Nation Land Management Systems; • Environmental Management; and, • Zoning or bylaw considerations.

Land Issues

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• Building Code Standards; • Health and Safety Standards; and, • Inspection Services.

Quality Control Inspections

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• Issuing tender documents; • Negotiating purchase agreements; • Contracting documents; and, • Mortgage documents.

Contracting and purchasing

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Why Housing as a Business (HaaB) today?

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• Large and growing market; • Low interest rates; • Proven profitable business; • Proof of low-loan delinquency of housing

in First Nation communities; • Bank and other institutions are eager to finance

housing deals; and, • Profitable venture based on non-social housing

concepts.


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• Proven best practice business models e.g., First Nation Revolving Loan Funds:

• Six Nations: $17 million portfolio • MBQ: $13 million • Wendake: $22.8 million • Kahnawake: $15 million • Piikani: New • Nipissing: $421.6 K • Namgis: $3.5 million • Plus others ** Data Source Michael Rice.


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• Profits can be allocated to social housing or other community needs;

• Step towards having control of our own housing; • Government housing initiatives; • First Nation readiness; • Many factors are finally in place to support

on-reserve housing; • Housing Opportunity Management Expertise

(HOME)Team.


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The Housing as a Business (HaaB) initiative is guided by a volunteer advisory board of professionals from the private and public sector. For more information: Housing Opportunity Management Expertise (HOME) Team Web site: www.haab.ca

Need more information on Housing as a Business (HaaB)

http://www.haab.ca/

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housing as a business (haab) · housing as a business (haab) principles • community decision...

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