Key Learning’s – Hannah

By: Hannah Kim

Over the last six weeks, the most valuable lessons that I have learned come from the various community stakeholders I have spoken to about the homelessness issue in the Tri-Cities as well as my team’s giving circle model of funding supported housing. Taking all of their feedback together, the biggest lesson of all would be that developing, testing, and implementing a social innovation that addresses the needs and concerns of all of these community groups is a task that takes time, perseverance, and conviction in the solution.

Here are the comments and questions that I will take to heart the most in order to improve our model.

Peter Kobayashi, Port Coquitlam Branch Manager, G&F Financial Group:

• Decide on who will actually be taking out the mortgage from a bank. Will it be the foundation or the group of investors?
• Prepare a budget for the program to show its viability

Linda Reimer, Councillor, City of Coquitlam:

• Participation of provincial and federal governments is needed at some point, since housing is in their jurisdiction (in terms of funding)
• Consider a more permanent housing for homeless clients than a 6 – 12 month period

Erin Ireland, REACH Program Coordinator, Buxton Consulting:

• Get homeless clients involved in repairing and refurbishing the supported housing units
• Hiring the homeless to paint/repair/refurbish the supported housing units is an incentive for them to participate in the program as tenants

Ian Duke, VP of Corporate Development, Onni Group of Companies:

• Exit strategy for investors may be tough
• Best approach may be to focus more on the philanthropic (with charitable status) approach than the pure investment/return model. A charitable fund that acquires and manages housing units for the purposes of providing homes for the homeless. Donations could be made anonymously or on a named basis. This deviates from the ‘giving circle’ model you’ve outlined, but helps to obviate the need for a profitable exit strategy.

Home Makeover

By: Hannah Kim

On Friday July 10, 2009, Jackie and I had the opportunity to present our Homeless Sponsorship idea to the Tri-Cities Homelessness Task Group at the Coquitlam City Hall. As a reminder, the Homeless Sponsorship idea is centred on model of using a giving circle of socially conscious investors to buy a housing unit and then rent it to 2 – 3 homeless clients while providing support services to these clients with the help of outreach workers and volunteers (see previous post, “A Flowchart to Visualize Our Idea”).

After the presentation, feedback on our novel solution included a great suggestion from a prominent local businessman (who is also a board member on the Tri-Cities Chamber of Commerce): in addition to foreclosures, look for properties that are in need of repair when finding housing! Such properties would be less expensive for the giving circles to purchase. Once the property is purchased, we can look to support from the local business community in the form of services and materials donations for the repair and refurbishing. This process adds value to the property for the giving circle members, which is another incentive for these investors. Further, if we are able to garner support from the same local businesses in refurbishing and repairing housing units on a yearly basis after a given group of homeless clients move out, investors would have even more reason to participate in our Homeless Sponsorship idea.

Some Critical Issues

By: Arita Liu

There are several critical issues we need to consider in the process of the model.

It is critical to identify each partner’s focus, competencies and capabilities in order to facilitate collaboration in the network. In spite of the shared vision of reducing homelessness, each partner may have their specific value orientation due to religious, economic and social reasons. It is therefore important to evaluate the potential risk of value incompatibility and reduce the risk to the maximum extent.

Effective communication among investors and partners will be a high priority, which happens both before investors make the decision to purchase certain property, and during the time of jointly supporting the homeless individuals. A trust mechanism needs to be developed among investors to ensure the sustainability of the solution.

As we have a relatively complex funding environment which is populated with many potential funding opportunities, we need to find a way to manage and mobilize the funding effectively. Should we have a community foundation, or can we channel the funding to an existing NGO or a church, or are there any other options that serve our vision? We need to further explore into potential partners before we make the decision.

Incentives to benefit the investors or landlords need to be identified through various channels of municipal, financial and private sectors. More research into public policies and further discussion with experts and the investors or landlords themselves are needed to measure if the incentives will invite long-term investment.

Selecting clients is a complicated issue that we need to proceed carefully. We have worked out the criteria to select our clients, however, we will need to talk to outreach workers and homeless experts to further verify the applicability of the criteria. The selection criteria must be based on fairness and should not involve any degree of ambiguity or inadequacy; in other words, there must be well-grounded reasons for selecting certain clients. Again, this needs to be ensured by confirming with the experts.

Legal Issues Regarding Property Rental In BC

by: Ryan Chahl

Our social innovation needs to consider different funding options. Our first option is to approach the church or community organization and ask them to fund the housing unit. The second option is to consider a property management scheme, where we would look for investors who would pool their money in order to purchase a piece of property together.  The investors would be able to have a safe investment in the form of the appreciating property as well as the $375 per month for each client who stays at the place as this is the amount of government assistance that is available for housing for one person.

Here is an overview of some legal issues we might encounter.

The length of time we rent a unit for can be any amount of time, this is decided upon in the contract.

The usual standard for this is the tenant takes a years lease of the property and once this is complete they can either re-new the contract or move to a month to month basis. The issue we will have with this is the fact the rent is for one year, for our purpose it would be a lot safer if we could go from month to month right from the start. Most landlords would not agree to a contract that give the tenants so much power but as we are a non profit organization trying to help people we may be able to find someone who is willing to do this as a gesture of good will.

Can we can terminate the rental agreement without a penalty?

The answer to this is almost always no unless the lease is up. The best way to resolve this is to push for the month to month rental agreement so we are not tied down to the property for a long period of time. If we can’t find anyone who is willing to do this type of rental agreement we will have to try and put a clause in the contract that allows us to terminate the contract after a period of time we are comfortable with. Once again this is not normally done but we will be trying to use our non profit organization to gain support.

How much will our rent be?

This is going to be one of the biggest challenges we will face. Rental prices are lower in the tri-cities are compared to many other places in Grater Vancouver but this does not mean they are cheap. We will be trying to find a landlord who is willing to rent at a very low cost and we believe the best way to do this is by searching for people at church venues where people are open to helping people who are less fortunate than themselves.

Another funding option: Using “Giving Circle” Investment Groups to Fund Housing for the Homeless

by: Ryan Chahl

This is an idea that looks for several different investors that want to be able to buy property but either don’t want to invest large amounts of money or can’t afford to buy the property on their own. With the housing prices currently low throughout Canada investors are beginning to realize the potential for long term profits. The basis of the idea is that the investors come together to make the down payment on a piece of property. Our organization then house homeless people in the property and using the allowance the homeless people get from the government we will be able to cover the cost of the investors mortgage.

This has several benefits to the investor:

• They have to put less into the investment so they are not risking as much
• Due to the lower amount needed it opens up the opportunity for people with lower incomes to own a portion of a property
• It is a hard asset that will increase in value so they have a long term return on investment
• There is less risk involved as we can guarantee their mortgage payments whereas if they rent it out themselves they may have times when it is vacant
• If they are part of a company they can advertise the fact they are involved in helping reduce the problem of homelessness though a social innovation.

These benefits will be used to attract the investors. The fact that mortage rates are currently very low also makes this a viable solution.