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Residential Real Estate
Affordable Housing Challenge
In Florida, a family of four must have 2.6 wage earners working full time at minimum wage or one full-time wage earner working 102 hours a week in order to afford a modest two-bedroom apartment, according to a report from the National Low Income Housing C
Response ... Private Sector
One-Man Band
A Sarasota businessman has developed his own approach to affordable housing that works without government involvement.
PRIVATE
SECTORVengroff Williams & Associates, the asset-management firm Harvey Vengroff founded in 1963 in California, employs 300 in Sarasota, 1,100 worldwide and manages more than $20 billion in receivables annually. This year, Vengroff, 64, adds a new chapter to his life experiences -- workforce housing developer. He is putting 31 single-family homes up to sell to his firm's employees, with the help of the firm's principals.
"Kind of a hobby," Vengroff says. Vengroff is no stranger to real estate. He and other firm principals own more than 1,000 rental units they lease out for an average of $650 to $750 a month. They believe they're the largest affordable housing landlord in Sarasota.
LANDLORD: Businessman Harvey Vengroff and other principals at his company own more than 1,000 affordable housing units.The depreciation, which Vengroff estimates at $4 million a year, offsets taxes from their earnings at the firm. Their experience in the collection business means they know how to deal efficiently with a tenant in arrears. As landlords, they know how to buy a dump and make it rentable. Iffy neighborhoods don't bother them. Some units are rented to employees.
In the past, employees looking for a home drew informally on Vengroff's knowledge. Christy Lee, an investigative unit supervisor for the firm, moved with her husband and daughter from Chicago in 2003 to Sarasota. Appalled by home prices (the median sales price in the Sarasota area at the time was $204,100) they decided to rent while looking. Prices kept going up -- the median price was $338,200 last October -- so they looked farther afield. "We were so close to buying five acres and a manufactured home east in Myakka," Lee says.
While walking his dog, Vengroff found her a five-bedroom house near his own home by Riverview High School. He negotiated the sale, assigned her the contract and helped her find a mortgage for the $240,000 house. "I feel I'm a good negotiator myself, but I would never have been able to negotiate the deal he did," Lee says.
Vengroff and the firm now are creating a formal program. Vengroff explains it with a hypothetical. He buys a house for $145,000 and puts in $15,000 to fix it up. He has a line of credit so his out-of-pocket expense is nil. For the first year, the employee pays only interest, taxes and insurance -- no principal. At the end of that year, if all payments have been on time, Vengroff will provide a guarantee for the employee to take out a mortgage.
By then, the house will have appreciated to, say, $200,000. The employee uses half the $40,000 in appreciation as a down payment, and Vengroff takes half. Each year, for the next five years, the employee gets the right to keep 20% of the house's appreciation if it is sold. If held for at least five years, all the appreciation goes to the employee.
Vengroff would like to put 1,600 units on an eight-acre site he owns. He also is willing to buy a house an employee finds and put it in the program. "Harvey is on the lookout all the time, and he finds good buys," says David King, the firm's compliance officer.
Vengroff has a typically breezy way of looking at his initiative: "We just evolved things. If this works, great. If it doesn't, we'll do something else."
Affordable Housing: AROUND THE STATE
>> Tallahassee is putting developers on notice: City council members adopted an inclusionary law that requires 10% of developments with more than 50 units to be priced below about $160,000. The new law will take effect Oct. 1 if council members are not satisfied with voluntary efforts by developers before then...
>> Developer Syd Kitson, who is purchasing the 91,000-acre Babcock Ranch property in southwest Florida, says he will build affordable housing for teachers and other school personnel as part of his planned development...
>> In Boynton Beach in south Palm Beach County, Coconut Grove-based Housing Trust Group and Boca Raton-based Goray Communities plan Green Cay Village, a 420-unit condo, townhouse and rental project targeted at workforce, family and senior buyers. Condo prices start in the low $200,000s and townhouses in the mid-$200,000s. Amenities for seniors include elevators...
>> Palm Beach County is studying whether to mandate that residential developers include affordably priced housing in their developments. Commissioners say a voluntary program isn't working...
>> In east Naples, Habitat for Humanity of Collier County plans to break ground on the first phase of Trail Ridge, a community of 204 villa-style homes. Habitat's Collier operation, the largest in the nation, has built 750 homes since it began in 1978.
