Denver Development

Habitat for Humanity Keeps Hitting Home Runs

Francisco and Liza Gonzalez with their six children.
Christine Koleski, Habitat for Humanity of Metro Denver
Francisco and Liza Gonzalez with their six children.
Lisa Gonzalez is well acquainted with the miserly beast that Denver's housing market has become. "We just got whatever we could get," she says. Before getting a gig managing apartments in exchange for free rent, at one point she, her husband and their kids lived in a van.

Finally, in 2012, they settled into a three-bedroom home in a low-income apartment complex off South Federal Boulevard and Dartmouth street. While rent was reasonable, Gonzalez says, "with six kids and two adults, it was kind of crowded." On top of that, the area was dangerous; there were three shootings near their home during the five years the family lived there.

"It just got to the point where it was like, 'This is crazy,'" she recalls. "That's not how you should be raising your children, where if they hear gunshots they run from downstairs to hide in the downstairs bathroom. It's not the way any family should live."

But now, with the help of Habitat for Humanity, they're living the way she thinks a family should. They moved into their new home on April 23.

Established in 1976, Habitat for Humanity is a national nonprofit that works to provide quality, affordable housing for those in need via "partnership housing," a model in which future homeowners work alongside volunteers to build houses for themselves and others. Since the Denver branch was established in 1979, it has built 600 homes in the metro area.

The Gonzalez family had applied for the program twice before they were selected from a large pool of applicants. After that, they worked for the better part of a year, laboring alongside Habitat volunteers to construct a five-bedroom house from scratch. Located at Sheridan Square, a Habitat development off of South Federal and West Kenyon Avenue, theirs is one of what will eventually be 63 Habitat homes on the site; 53 are either under construction or already complete.

Fronted by small, tidy lawns and freshly planted trees, the neatly constructed homes line two streets on the 4.35-acre site, Habitat's largest Denver development. When it's completed, it will house over 350 people.

click to enlarge Habitat Homes at Sheridan Square. - CHRISTINE KOLESKI, HABITAT FOR HUMANITY OF METRO DENVER
Habitat Homes at Sheridan Square.
Christine Koleski, Habitat for Humanity of Metro Denver
A plot of available land as large as Sheridan Square — the former site of Fort Logan Elementary School — is difficult to come by in metro Denver, and very expensive. Habitat purchased the parcel at market rate from the Sheridan School District, which covered the cost of tearing down the school — almost $400,000, according to Heather Lafferty, CEO and executive director of Habitat Denver.

"In this market, you do whatever you can," says Lafferty, almost echoing Gonzalez's mantra. "For us to be able to build two full city blocks that have right angles to them is very unique. Usually we're on the bits and pieces that nobody else wants to deal with, but we make it work. That's one of our core competencies."

While Habitat sometimes has to pay market value for land, its projects benefit from volunteer labor and materials that are either donated or funded by Habitat's ReStore organization, which flips donated home improvement supplies, pouring all of the profits back into Habitat's programs.

Habitat generally secures land through one of three channels: in partnership with local governments; from  developers that want to satisfy Inclusive Housing Ordinance (IHO) requirements; or through realtors, simply purchasing land outright.

In the fall, Habitat Denver plans to start work at a site at East 43rd Avenue and Elizabeth Street. There it will partner with the Denver Office of Economic Development — which purchased the site from the Denver Housing Authority for $1.75 million — to build 32 homes. At South Santa Fe Drive and Evans Avenue, it's  building nine homes on land purchased from a developer looking to satisfy IHO requirements. And at Federal and West 52nd Avenue, it's building 28 homes on land purchased from Urban Ventures, an urban redevelopment company.

Despite all this activity, the supply of Habitat for Humanity homes still falls far short of demand. Last year, 1,500 families applied for the fifty to sixty homes that Habitat planned to build. To qualify, applicants must make between 35 and 85 percent of the Area Median Income and be able to afford monthly payments capped at 30 percent of their monthly income; Habitat also considers an applicant's need, giving priority to those in overcrowded, dangerous conditions.

The first time her family applied, Gonzales says, "we weren't where we needed to be [financially]". She and her husband both work, as a property manager and a mover, respectively, but their income wasn't enough to make the mortgage payments; on top of that, they had no credit score.

To get on track, Gonzalez worked with a financial counselor embedded in Habitat's office through its partnership with mpowered, a Colorado nonprofit, learning budgeting and, she explains, "pretty much how to be an adult. They don't teach you that in high school. You don't know how to get a credit score, how to build it."

Although Habitat homeowners do not have to make down payments, they must cover closing costs and complete "sweat equity" hours, which require that each adult in the household put 200 hours of labor into the construction of their home and others.  According to Gonzalez, this creates an incredible sense of community. "Our neighbors are great," she says. "We have such a good bond because we worked with them literally side by side, building our house."

Although snafus with the sale of affordable-housing homes grabbed headlines this spring, Habitat for Humanity has protections in place to ensure that the homes it builds remain affordable. Since Habitat serves as both homebuilder and mortgage lender, it is able to divide its mortgages into two parts. For the first, Habitat looks at what the family can afford based on 30 percent of household income; often, this falls short of the home's total appraised value. Habitat will then subsidize up to 20 percent of the appraised value to ensure affordability, covering the difference between what the home costs and what the family can pay. This portion is structured as a second, "silent" mortgage, which only comes due in the event that a family decides to sell.

If one does, various other safeguards are activated. As the mortgage lender, Habitat is notified by the title company of any request to sell. Then, thanks to a first-right-to-repurchase policy, it has an opportunity to buy the home back from the family at market rate. Finally, it tacks on affordability deed restrictions and affordability covenants to protect the home in the long term.

In contrast, the Denver Office of Economic Development only acted as builder on the controversial Green Valley Ranch affordable-housing units, and was therefore limited to Habitat's final wall of protections: deed restrictions and covenants. By partnering with Habitat on projects like the 43rd and Elizabeth development, the city can shore up these defenses. Unfortunately, land shortages in Denver are making such partnership opportunities increasingly scarce.

And with Habitat homes scarcer still, few are ever sold, Lafferty says.

Gonzales certainly has no intention of ever leaving Sheridan Square. "I can't imagine selling it," she says. "We've invested way too much. Not just our sweat equity, but just our everything into this home. It's everything to us."