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ROCKWOOD NEIGHBORHOOD ASSOCIATION
TOGETHER WE MAKE A DIFFERENCE!
18162 East Burnside
Portland, OR 97233
Phone and FAX: 503-666-2776
Roger N. Meyer, President Alvaro Gongora, Vice President
Bryan Skibba, Secretary/Treasurer
Roger Meyer, Chair, Land Use Committee
February 7, 2005 RE: Issues, Mt. Hood Habitat for Humanity
Erik Kvarsten
City Manager
City of Gresham
1333 NW Eastman Parkway
Gresham, OR 97030
Dear Erik,
As promised, here is a list of concerns regarding Mt. Hood Habitat for Humanity. I am pleased that the city intends to meet in high-level policy discussion(s) with the Habitat Board of Directors.
This letter is divided into two parts. The first part proposes policy. The second part is a proposed checklist for city policy-makers with details that should be considered before the city engages in further partnership arrangements with Habitat.
Policy
I propose owner/resident satisfaction as the primary measure against which the success of any city assistance to Habitat should be gauged. In this case, we're talking about low cost, first-time owner, common-wall condominium construction, with Habitat as developer/builder/lender. The city stands in a unique role as underwriter of the cost of land, and further, as issuer of shared appreciation mortgages to condominium owners. That role involves many responsibilities which individual city departments cannot address singly or collectively. Furthermore, the one thing that individual city departments can't do, because of building code, ordinance limitations, and jurisdictional fire walls is to make certain decisions affecting the ultimate end users -- Habitat as the declarant, and individual owners as occupants and members of a separate corporate entity -- to determine, on a policy level, whether a given development is a good one or a bad one. That overview is the responsibility of the elected leaders -- the Council -- and its appointed employees, the City Manager and the City Attorney, with advice from citizen committees and the city's commissions.
Determination of owner satisfaction can be made by conducting independent polling, owner completion of questionnaires, and facilitation of meetings of present owners for the purpose of providing city policy makers with unbiased, non self-serving unfiltered information.
Habitat owners are not run-of-the-mill home owners. They are vulnerable but solid individuals requiring special "up front" training to assure the long-term success of their home occupancy. What further differentiates Habitat's owners from other home owners from their same background is that they've signed up with a program, not just a realtor. They've been vetted, screened, and evaluated for certain characteristics that would make them good co-owners in a condominium setup. The city must require of Habitat that it provide proof, not mere assurances, that individual owners and the HOA board, composed primarily of owner/occupants of each development, have received training and understand corporation board conduct and responsibilities outlined in Chapter 100 Condominium law.
The partnership between the city and Habitat thus extends beyond ordinary city department/developer-builder relationships.
First, the purpose of this partnership is public-policy driven. It satisfies Gresham's Five-Year Consolidated Plan objectives of assuring development and maintenance of affordable low income owner-occupied housing. Numbers
of units, numbers of families served, costs, and compliance with codes and ordinances are important, but looking only at these "input" figures does not assure the city or the developer of a truly satisfactory outcome for these new owners and their neighborhoods, either in the short run or the long run.
Second, city policy-makers have a unique public policy interest in neighborhood quality of life. That interest extends beyond the interest and the existence of any developer/builder, whether partnership is involved or not. Neighborhoods are here to stay. Generally, they do not "disappear." Developers come and go. Because of the city's public interest in neighborhood building and preservation, Habitat has the responsibility of presenting a comprehensive market survey, demonstrating the long-term HOA corporation financial soundness of its development proposals, as well as assuring the city that safe transportation, in-place public infrastructure, convenient, affordable shopping, medical and social services, and crime and public safety statistics that induce private, for-profit developers to invest in the same immediate area. With the limited amount of public dollars available through HUD CDBG and HOME funds, it is imperative that the city invest its money wisely in sound projects.
The reason why resident satisfaction must guide the city's involvement is because condominium developments are, by their very nature, turn-key operations. Once built and occupied, the developer/builder must walk away, even if the builder/developer is also the lender. Condominium law (Chapter 100, ORS) and the state's insurance regulations require such a separation. Since the city and Habitat remain lenders during the life of their zero-interest mortgages, it is to both parties' benefit to see that their mortgagees remain satisfied with their housing as well as good performers financially.
The housing itself is a long-term investment, whose useful life will extend beyond ownership of the first occupying parties. Because of the city's investment, it is critical that wide-ranging policy discussions regarding partnership with Habitat include matters beyond up-front, one-time financial assistance to cover the cost of land. If the land itself is considered "undevelopable" by other developers and builders, the wisdom of the city's investment must be informed by the same considerations that other investors in housing projects exercise. The city's own employees and its departments simply do not have the kind of experience in matters of this nature to competently advise its policy-makers. The presence of the city's contract Real Estate consultant in such discussions is strongly recommended. Experienced, disinterested private market mortgage bankers should also be consulted as city policymakers weigh the wisdom of city investments of the kind it has made in Habitat's past and current undertakings. There is no substitute for practical, hands-on advice and experience of this kind. Failing to involve disinterested expertise of this kind leaves city policy makers "flying blind."
"The List"
City policy-makers and Habitat resident/owners' satisfaction concerns must, as a minimum, involve the following elements:
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completion of full, legal turnover of the condominium corporation by Habitat to the Board of Directors of the homeowners association for each development, on time, and as required by Oregon condominium law and regulations including registration of the HOA with the Oregon State Realty Department;
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comprehensive, easy-to-understand CCNRs ("The Declaration") and Bylaws with clear descriptions of the property elements involved, clear delineation of officer roles, the distinct powers of the Board of Directors compared to those of individual owners, and clear statements of owner obligations to the corporation and the corporation's obligations to its owners;
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a declarant-prepared and written proposed annual budget for the HOA corporation submitted to each owner prior to sale, included in "The Disclosure" and in Habitat documents at time of turnover;
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complete financial records and books, including a statutorily required reserves account stating initial owner contribution as a mandatory condition to be satisfied at time of sale, and proposed regular assessment amount following turnover;
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clearly identified means of resolving conflict between the builder and individual owners under the terms of builder warranty, plus clear statement acknowledging builder warranty responsibilities towards the homeowners association involving common elements and limited common elements (now established in Oregon case law);
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designation of means of resolving disputes between owners, the HOA as a corporation that acknowledge the responsibility of all parties to indemnify third party mediators for the cost of mediation conducted beyond conflict resolution measures specified in owner/HOA corporation documents;
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identification of means whereby the homeowners association, as a corporate entity, can conduct policy-level discussions in joint meetings with Habitat Board of Directors and City of Gresham public policy makers; and
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proof, not mere assurances of future compliance, that the Mt. Hood Habitat for Humanity Board of Directors has on board, an actively participating representative number of persons (including owners of completed projects) whose ethnic and cultural backgrounds reflect the profile of Habitat's current and proposed owners.
Each of the above measures, had they been in place prior to the City of Gresham's involvement with Mt. Hood Habitat for Humanity, would have gone a long way to address owner/Habitat problems now being experienced at Habitat's first completed project on SE 188th Avenue.
Thank you for the opportunity you will be providing the Mt. Hood Habitat for Humanity Board of Directors to directly engage top-level City of Gresham public policy makers. I am grateful for the opportunity you've provided me to outline the concerns that have driven the Rockwood Neighborhood Association's involvement in these matters.
Presented to the City of Gresham for and on behalf of the Rockwood Neighborhood Association
ROGER N. MEYER
President, Rockwood Neighborhood Association
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