Housing Enterprise of Central Alabama

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Overview

• How HECA was formed
• HECAs structure
• Two of the most pressing challenges, which we
  also view as opportunities

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Region 2020 Visioning Process

• The Housing Enterprise of Central Alabama LLC was
  established as a cooperative effort and as the
  end product of a regional study to increase the
  supply of affordable housing in Central Alabama.
• This effort was initiated by Region 2020, a 501
  (c)(3) citizen- driven, grassroots
  organization that advocates regional cooperation
  and citizen involvement in Central Alabama to
  improve quality of life in areas such as
  education, affordable housing, the environment,
  transportation and the arts.
• The visioning process started in 1997 and
  encompassed a 12-county Central Alabama region,
  involved some 5,000 citizens and helped to
  formulate Region 2020s 34 goals and 217
  strategies for implementation.

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Focus Areas Included

• Government
• Structure of Government and Service
• Environment
• Preservation of Natural Resources
• Places and Activities
• Downtowns
• Economy and Jobs
• Economic Development
• Learning
• Professional Development in Education
• Moving Around
• Mass Transit
• Neighborhoods
• - Housing
• Develop regional center for affordable housing to
  facilitate local
• partnerships of governments, financial
  institutions, charitable
• institutions and developers.

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Region 2020 Visioning Process

• Summarily, during the visioning process, citizens
  in 12 counties in Central Alabama pictured a
  region with strong, diverse, beautiful and safe
  neighborhoods, towns, and cities in which to live
  and work.
• Because places such as these cannot exist without
  quality affordable housing, Region 2020 initiated
  a focus on affordable housing.
• In 1999, the Community Foundation of Greater
  Birmingham, which also recognized that a lack of
  affordable housing is an ongoing problem in our
  community, partnered with Region 2020 and Habitat
  for Humanity to launch the Region 2020 Affordable
  Housing Initiative.

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Woodlawn Housing Initiative

• Seven subcommittees were formed, including one to
  launch a pilot program called the Woodlawn
  Housing Initiative. It entailed a 9-block area
  that was targeted for in-fill, new construction,
  and rehabilitation by private and non-profit
  developers.
• From June 2000 to December 2001, eleven houses
  owned by absentee landlords were purchased.
• Five of these units were rehabbed and sold to new
  homeowners.
• Two new units of rental housing were developed.
• Additionally, six homes owned by existing elderly
  were repaired.
• Other tangible accomplishments include
• Requests from 200 people for information on the
  initiative
• Applications to purchase homes from 32 people
• Identification of critical need for more
  comprehensive homebuyer training and
• Establishment of a homeowners association

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Legacy Study Committee Hearings

• Next, Region 2020 recruited the Legacy Study
  Committee (one of the 7 subcommittees formed) to
  undertake the long-term challenge of eliminating
  substandard housing and increasing the supply of
  safe, decent housing in the region.
• This committee, which was headed by Maria
  Campbell, the former State Superintendent of
  Banking, researched affordable housing prototypes
  across the United States including Land Banks,
  Community Development Corporations, Housing Trust
  Funds and Community Development Financial
  Institutions.
• Additionally, more than 10 half-day meetings were
  held to speak with experienced private
  developers, non-profits, banks, governments, and
  other industry stakeholders to gain insight into
  the state of affordable housing in Central
  Alabama.

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Lessons Learned and Conclusions

• Experience from the volunteer study groups,
  lessons learned from the pilot project, and its
  own research lead the Legacy Study Committee to
  conclude that barriers to the development of an
  Affordable Housing industry in Central Alabama
  included
• a lack of consistent long-term resources
• an absence of flexible gap financing
• few incentives for private sector involvement
• Thus, the Committee recommended the creation of
  a Community Development Financial Institution
  (CDFI) and an affiliated non-profit as a method
  to address these issues.

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Two Related and Coordinated Organizations

• Housing Enterprise of Central Alabama (HECA)
• A community-spirited LLC owned by its investor
  institutions, including
• AmSouth Bank
• Regions Bank
• Compass Bank
• New South Federal Savings Bank
• The Housing Fund of Central Alabama (the Fund)
• Non-profit affiliate whose investors include the
  financial institutions listed above and
• The Community Foundation of Greater Birmingham
• The Walker Area Community Foundation
• The Calhoun County Community Foundation

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HECA/HFCA Organizational Chart
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Board Of Directors

• Ted Kennedy
• BEK Founder, HECA Board Chair
• John Oliver
• Walker Area Community Foundation, President
• The Honorable Jerry Pow
• Bibb County, Probate Judge
• Jerry Powell
• Compass Bank, General Counsel Secretary
• Mimi Tynes
• The Community Foundation of Greater Birmingham,
  Former President
• 2 vacant seats
• Bank/Tuscaloosa County

• Jim America
• U.S. Pipe Foundry Company, Vice President of
  Human Resources
• Charles Ball
• City of Gadsden, Director of Planning
• Gale Blackstock
• Regions Bank, Corporate CRA Officer
• Maria Campbell
• SCB Strategic Services, Chairman
• Jesse Cleveland
• Head Start, Director, Talladega, Clay, Randolph
  Counties Former Mayor, Sylacauga, AL
• Gayle Cunningham
• Jefferson County Committee for Economic
  Development, Executive Director
• Wayne Hoar

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HECAs Loan and Investment Committee

• AmSouth Bank, Regions Bank and Compass Bank each
  have a representative on the Loan and Investment
  Committee
• Members of the Committee are
• Neill Fox, Compass Bank, Executive Vice President
  Real Estate Banking
• Jeff Gish, AmSouth, Vice President, Corporate
  Community Reinvestment Manager
• Jeremy DiPiazza, Regions Bank, Senior Vice
  President Group Credit Officer

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Mission

• The mission of HECA and the Fund is to lend money
  to private and non-profit developers to help
  build and renovate safe, decent entry-level
  housing for low- and moderate-income families.
• Jointly, HECA and the Fund will provide gap
  financing and/or aggressive construction/acquisiti
  on loans or investments to qualified projects.
• In addition, the Fund provides grants to
  non-profits for core operating support and other
  initiatives on a limited basis. The Fund also
  provides technical assistance and programs
  related to capacity building in the affordable
  housing development community.

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HECA Investor Equity, Charitable and Loan
Contributions
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Housing Fund of Central Alabama Foundation
Investors
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Financial Products

• Loan Products HECA offers two financial
  products construction loans and permanent
  financing
• Construction Loan
• Interest Rate Floating
• Term Up to 36 months
• Loan To Value Up to 100
• Guarantee Completion guarantee only
• Convertible to permanent at stabilization
• Minimum Loan Size 500,000
• Permanent Financing
• Interest Rate Fixed or Floating
• Term Up to 10 years 20-30 year amortization
• Loan to Value Up to 100
• Debt Service Coverage 1.2x minimum
• Guarantee Not required
• Minimum Loan Size 1,000,000

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Where We Work
HECAs service area includes the following twelve
counties Bibb, Blount, Calhoun, Chilton,
Cullman, Etowah, Jefferson, St. Clair, Shelby,
Talladega, Tuscaloosa and Walker Counties. By
studying the workforce and commuting patterns of
areas surrounding Birmingham and considering the
projected growth of its surrounding counties, the
group that started Region 2020 decided that its
boundaries should include Jefferson County and
the 11 other counties whose borders fell within a
one-hour drive of Birmingham.
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Greatest Challenges

• First, we face the challenge of Urban Sprawl
• Outmigration of the City of Birminghams
  population to surrounding counties.
• This is an important issue because
• Birmingham is the largest urban area in the
  state.
• Birmingham is the heart of the region.
• The problem is that the growth is in the cities
  and surrounding counties outside of Jefferson
  County (Birmingham).

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Regional Growth
Predicted Fastest Growing Counties 2000 - 2025
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Where We Are
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Housing Starts

• Adams Homes (new housing developer in the
  Birmingham market)
• Area of interest Shelby County Alabaster and
  Calera.
• Has 10 to 15 for-sale, single-family subdivisions
  slated for construction commencement in 2005.
• Will result in the production of between 200 -
  300 new homes.
• Sales prices of between 136,000 - 145,000.

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Housing Starts

• Shelby County Alabaster, Helena, Pelham

Source Joseph Company, Real Estate Appraisers
(Hoover, AL)
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Housing Starts

• Jefferson County Homewood, Vestavia

Source Joseph Company, Real Estate Appraisers
(Hoover, AL)
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Housing Starts

• City of Birmingham
• From January to October 2004 8,770 permits for
  commercial and residential construction were
  pulled.
• Of this number, 189 were for single-family new
  construction
• Problems
• Land assembly
• Reasonable prices
• Title clearance issues associated with heir
  property
• Community Amenities
• Poor school system
• Perception of higher crime rate
• Bureaucracy
• Results Market value of homes are below
  construction costs, generally speaking. Cant
  attract builders in any great number to the area
  without significant subsidy.

Source City of Birmingham, Department of
Planning Permits
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Birmingham Bright Spots

• Urban Design Associates, a nationally recognized
  urban planning and design firm based in
  Pittsburgh, PA, just completed Birminghams City
  Center Master Plan.
• This process took several months and was done in
  three phases.
• First phase information gathering
• Second phase design charette and presentation of
  recommendations
• Third phase final presentation, October 2004

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City Center Master Plan Area
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Birmingham Bright Spots

• That plan projects that the City Center can
  absorb 1,700 new apartments, condominiums and
  townhouse units.
• Additionally, that 1,300 units of detached,
  single-family housing can be built and absorbed
  in the 14 neighborhoods directly abutting the
  City Center. The recommendation is that 10 20
  of these units should be affordable.

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Greatest Challenges

• The second challenge we face is housing
  affordability.

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Metro Area Profile

• Birmingham Metro Employees 450,890
• Occupations Earning
• (60 of Median 55,200)
• What Do They Do?
• Job Total Employees Income
• Office Clerks 9,900 20,770
• Secretaries 8,440 23,840
• Customer Service 7,760 25,700
• Retail Salesperson 14,740 18,540
• Maintenance / Repair 4,590 28,150
• Bank Tellers 1,900 18,520
• Metropolitan Statistical Area is made up of 6
  counties including, and surrounding, Jefferson
  County.

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How We Get Money Out the Door

• Jointly Utilize HECA and HFCA resources to
  finance projects
• Underwrite project according to HECA Loan
  Guidelines
• Evaluate market viability and social impact
• If necessary, structure gap financing (grant,
  mezzanine debt) to achieve financial viability
• LLC will also finance projects with outside
  subsidies