I M PA C T I N V E S T I N G A N D A F F O R D A B L E H O U S I - PowerPoint PPT Presentation

I M PA C T I N V E S T I N G A N D A F F O R D A B L E H O U S I N G CHRA CONGRESS | 2019

our mission _ Non for profjt social enterprise created in 2012. We help low to moderate income households become homeowners without a down payment while ensuring the perpetual afgordability of our homes. We are a community development tool. In cities, we ofger an ethical housing choice for the middle class in urban neighborhoods. In rural settings, we are an attraction tool to combat demographic decline. our main partners

why we chose this model ? _ HOMELESS- EMERGENCY SUPPORTIVE SOCIAL AFFORDABLE AFFORDABLE MARKET MARKET NESS SHELTER HOUSING HOUSING RENTAL HOMEOWNER- RENTAL HOMEOWN- SHIP ERSHIP Credits : CMHC Quebec AMI 22 676 $ 31 942 $ Household AMI 59 822 $ 39 200 $ 81 000 $ 1. Carve a more sustainable alternative to homeownership in the housing continuum 2. Adress the unmet housing needs of an increasingly large portion of middle class families and households .

VIVACITÉ _ FOR HOMEOWNERS

SHARED EQUITY : HOW IT WORKS _ Accessing homeownership Property value : 200 000 $ Future owner pays a 1250$ transaction fee and takes out a mortgage representing 80% of the property value : 160 000$ Vivacité invests a 20% down payment : Both parties sign a deed of covenant to ensure perpetual 40 000 $ afgordability (equivalent of a ground lease). Vivacité holds a second mortgage. Monthly payments are 839 $/month (3,5% mortgage rate, including 40$/month membership fee)

SHARED EQUITY : how it works _ Resale Resale after 5 years, Market appreciation : 20 000 $ with a 2 % annual market appreciation New property value : 220 000 $ « Market appreciation : Vivacité fjnds new owners who meets meet you didn’t build the qualifjcation requirements. • Households around AMI that. » • Owner-occupant • Property features

SHARED EQUITY : how it works _ Sharing the market appreciation When there is a resale, the household keeps... Amount disbursed for the initial purchase 160 000 $ 25% of the market appreciation 5 000 $ 25% Added value linked to renovations 0 $ Total paid 165 000 $ - Balance of the mortgage - 137 711 $ Owner’s net gain at resale 27 532 $ Savings made on monthly payments 8 378 $ (5% down payment - CMHM prime) 35 667 $ Gains

SHARED EQUITY : how it works _ Sharing the market appreciation 10 000$ DEPRECIATION (190 000$) When there is a resale, the household keeps... Amount disbursed for the initial purchase 160 000 $ - Depreciation - 10 000 $ 25% Added value linked to renovations 0 $ Total paid 150 000 $ - Balance of the mortgage - 137 711 $ Owner’s net gain at resale 12 289 $ Savings made on monthly payments 8 378 $ (5% down payment - CMHM prime) 20 667 $ Gains

SHARED EQUITY : how it works _ Perperual afgordability With 75% of the market appreciation (15 000 $), Vivacité... + Reinvests 4000 $ to maintain a 20% Uses 11 000 $ to make new developments downpayment for the next owner. and remunerate its investors. (44 000 $ for a 220 000 $ property)

VIVACITÉ _ for investors Julien Durocher 8 years old

getting started _ intital cycle of development : 240 units within five years 7 projects spread accross Quebec Need in investment : 5 M$

portfolio approach _ Building territorial solidarity 10 % 50 % 40 % rural markets MeTROPOLITAN markets URBAN markets _ _ _ • Rural areas • Suburban areas • Central neighborhoods • Low market values • Average market values • High market values • Low median incomes • Median incomes close to • Incomes slightly above national average national average.

funding the down payment _ Social economy at work 2,5 % owner’s transaction fee 73,5% 24 % vivacite’s PRIVATE developers’ investment margin « The difgerence between the project costs and the market value : you didn’t build that. »

portfolio value _ 240 initial units after 25 years 84 M$ 55 M$ asset : 17 M$ asset : 11 M$ 240 households 850 households

INVESTMENT PARTNERSHIP _ 15 yrs 5 M 6 %+ RATE OF RETURN EQUITY NEED patient capital _ _ _

THE PROCESS _ lessons learned Kent Monkman The Daddies

LESSON #1 _ Money produces reality “ Power produces; it produces reality; it produces domains of objects and rituals of truth. ” - Michel Foucault

LESSON #2 _ Impact investing is not about innovation “ And when we dream it, Let’s dream it, we’ll dream it for free, Free money, free money, free money. ” - Patti Smith

LESSON #3 _ There are no rules “ As long as the structure of the group is informal, the rules of how decisions are made are known only to a few and awareness of power is limited to those who know the rules. Those who do not know the rules and are not chosen for initiation must remain in confusion, or suffer from paranoid delusions that something is happening of which they are not quite aware. ” - Jo Freeman

LESSON #4 _ Housing should not be about innovation “ The idea of progress views time as constructive. Time is our ally. It makes things grow. Whereas the rhetoric of innovation views time as corruptive. It deteriorates things. Innovation presents itself as what needs to be done so that the world does not undo itself. It is an imperative to repair the corruptive passing of time. ” - Étienne Klein