business plan - attainyourhome.com€¦ · sales centre, completing our education session, and...

BUSINESS PLAN

2016

INTRODUCTIONWe help people live their best life through a secure home and a stronger community.

With a $2 million start-up contribution from The City of Calgary and Government of Alberta in 2009, City Council created an innovative social enterprise that has educated thousands of Calgarians and made housing independence possible for more than 700 families. With this initial investment, we have built an estimated $6.6 million in equity that will deliver even more homes in the future.

In essence, AHCC is paying forward its seed funding. And we will continue to do so for years to come and for the benefit of many more Calgarians.

After several years of rapidly rising house prices and record low vacancy rates, we’re now living in uncertain times. We’re taking advantage of the slowdown to focus on opportunities to make some strategic moves that will help us continue to deliver affordable homes in the future.

The need for attainable and affordable housing in our city continues. We’re doing our part to make Calgary a better place to live and we’re ready to do even more.

www.attainyourhome.com | 2016 BUSINESS PLAN

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TABLE OF CONTENTS

VISION AND VALUES

2016 ECONOMIC OUTLOOK

2016 STRATEGIC INITIATIVES

ATTAINABLE HOME OWNERSHIP PROGRAM SALES

2016 DEVELOPMENTS

COMMUNICATIONS AND STAKEHOLDER RELATIONS

FINANCIAL STRATEGY

2016 BUDGET

THE CALGARIANS PAYING IT FORWARD

OUR PARTNERS

CONTACT

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2016 BUSINESS PLAN | www.attainyourhome.com Orchard Sky by Truman Homes

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VISION AND VALUESWe developed a vision and values to help direct our organization through the transition from a small to medium-sized social enterprise. The vision reflects our bold ambition. The values reflect behaviours already prevalent within our business. Together, the vision and values are inspiring our team and will help us remain focused for many years to come.

ValuesPassion and adaptabilityWe are deeply committed to our work and have the courage to change course when needed.

BoldWe encourage creativity and dare to pursue new ideas.

CompassionWe always put the needs of the people we serve first and we go above and beyond to help others.

TeamworkWe support one another and leverage individual strengths to accomplish shared goals.

VisionOur vision is to be Canada’s largest, most respected social enterprise, delivering mixed multi-family housing.

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2016 ECONOMIC OUTLOOK We operate in a volatile, cyclical environment that requires a strong focus on inventory management and risk management. We are always considering the number of available units, our project pipeline, and new opportunities but it will be particularly important to monitor inventory levels this year. Management and the board will closely monitor unit absorption before entering into new agreements, in addition to reviewing the format of contracts and pricing to limit exposure and protect our small margins. Our ability to be opportunistic will depend on the velocity of sales and debt capacity.

Calgary experienced a dramatic shift in 2015 as oil prices dropped and thousands of employees were laid off. Slower economic conditions reduced demand for labour and in-migration, reducing pressure on vacancy rates and slowing the pace of construction. Home sales were down in the Calgary area and average resale home prices dropped by 2.6 percent. Calgary’s real estate board predicts prices may fall another 3.4 percent this year.

Despite the outlook, there are still many people visiting our sales centre, completing our education session, and buying attainable homes. In January, for example, we sold nine Chalet townhomes by Hopewell Residential in less than an hour.

Calgary’s average apartment price of $305,041 and average attached home price of $391,034 remain unattainable for many middle-income families, especially when the required five percent down payment is around $15,000. According to BMO Rainy Day Survey, nearly a quarter of Albertans are living paycheque to paycheque and 42 percent of people reported they had less than $5,000 saved. The economic downturn may create an even greater need for attainable and affordable housing solutions.

Based on market conditions, current contracts, and our project pipeline, we anticipate 176 possessions in 2016, compared to 208 in 2015. We are anticipating that sales will slow down throughout the year and are subsequently budgeting to carry some inventory units. We are also stepping up our strategic marketing and communications efforts to help sell homes as outlined in the plan.

www.attainyourhome.com | 2016 BUSINESS PLANARRIVE at Skyview Ranch Arbours by Partners Development Group

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Expand the modelIn 2016, we will explore all possible means of supporting middle-income Calgarians to own a home, such as financingsolutions, new builds,the perpetual model, leased land and a rent-to-own solution. As the cost of land, construction, labour, and the market value of housing rise, the pool of buyers eligible for our program tightens. We need to find a way to lower the price of units to broaden our customer base and ensure we can continue to serve Calgarians in the future.

We will continue to closely monitor and evaluate the existing model as more home owners exit the program – either by refinancing or selling their attainable homes on the market. With social media, newsletters and events, we will keep in touch with home owners all around the city and support them when they are ready to exit the program.

Build partnershipsEngaging builders and developers in our program is crucial to our business. Throughout 2016, we will continue conversations with several companies regarding new or renewed partnership opportunities to launch sales for homes sourced from partner projects. We will carefully steward the developments on our own land to achieve the best results for our buyers, communities and other stakeholders.

We will be a thoughtful long-term partner as we work closely with private businesses navigating a softer market than in previous years. In this environment, we are a very strong partner. We will work with more builders, both big and small. We will continue to support them with pre-sales and selling out projects, as well as managing marketing and sales so their teams can focus on their next priority. We will ensure contracts and pricing structures are appropriate and we will be cautious of the projects we choose to undertake in a volatile environment.

We will also explore partnerships with the many affordable housing providers in the city to create opportunities for their clients to move into home ownership.

Increase in-house capacityStriving for greater efficiencies and searching for better ways of doing business is integral to our culture. We don’t let our position as a small nonprofit organization hold us back. With only nine full-time staff, we are committed to running a lean operation but we also have the drive to continually go above and beyond to exceed expectations.

In 2016, we will focus on building the skills and knowledge of current staff. Our team includes subject matter experts in planning and development, finance, sales, marketing and communications, and we have access to some of the best consulting agencies in the city. To best leverage our skillsets, we will actively set aside time to develop new ideas and ensure we are always making progress on our strategic plan as a team.


2016 STRATEGIC INITIATIVESOur focus has always been to help people live their best life through a secure home and a stronger community. As the cost of living remains high and people struggle to save a down payment in our city, the need for attainable homes continues. If people can no longer justify the cost of living here, we risk the very things that make Calgary great.

In 2014, the AHCC board of directors approved a five-year strategic plan (2015 – 2019) which outlined three key themes to guide the strategic direction of the organization: • Grow, diversify, rebalance, and repeat.• Work with Calgary Housing Company and others.• Implement new forms of ownership/construction.

To achieve these goals we have the following deliverables.

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Research projectMount Royal University has agreed to study the difference AHCC is making in the city, not only financially, but also culturally and socially. In 2016, two of the social innovation classes will undertake research with an aim to gain a better understanding of the real impacts of our work. We will receive survey results in a paper that will begin to explore the social return on investment resulting from attainable home ownership. This will provide opportunities to bring together home owners and deepen knowledge of how the organization is creating value in the community. We will also connect with University of Calgary’s Haskayne School of Business regarding additional research opportunities.

Increase debt capacityWe have an opportunity this year and beyond to make some strategic moves that will help us continue to deliver attainable and affordable homes in the future. To support medium- to long-term projects, we are recommending an additional secured debt facility for three key types of expenditures: buying land; construction financing; and purchasing inventory units. The funds will not be used for operating expenses.

In 2016, we will seek approval from City Council to support this longer-term debt facility that will provide an appropriate and sustainable capital structure to acquire and develop new projects as part of our vision. We have access to favourable financing rates and terms based on our social mandate and strong track record of placing people in homes. Discussions with lenders indicate a guarantee from The City will not be required.

Buy landWe transform vacant and underutilized land into highly desirable multi-family developments with a mix of market-priced and attainable homes. As residents begin to move into Varsity 4818 and we break ground on our land in Bowness, we must secure other sites to start working on future developments. We are specifically looking for school sites, odd-shaped residual parcels in good locations, and partnering opportunities coming out of the Main Streets initiative.

Our long term strategy to deliver homes at below market prices requires that we continue to purchase underutilized land.

ATTAINABLE HOME OWNERSHIP PROGRAM SALESWith more than 20,000 website registrations since inception, interest in attainable homes continues to grow. Our position as a City of Calgary initiative adds to our appeal, combined with a strong track record and a network of over 700 home owners who are referring their friends and family to us.

Based on current contracts and the timing of construction, we anticipate 176 possessions in 2016. This is just below our long-term aim of 200 homes per year, reflecting softer market conditions compared to previous years. Our ability to continue achieving steady sales comes down to the fact that we offer home stability and financial stability for a similar cost to rent. In 2016, we will provide a range of different homes in locations all around the city with monthly mortgage payments starting from less than $1,000 a month.

UNIT PossessionS

20110

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150

200

2012 2013 2014 2015 2016(forecast)

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www.AttainYourHome.comOur website is the first step on a journey to attainable home ownership. We anticipate website traffic will remain consistent at around 16,000 visits a month throughout 2016.

Having an online platform that is effortless to navigate sets us apart from others. Qualifying Calgarians simply check that they meet the program criteria, answer a short survey so we know what they are looking for in a home, sign up for a home education session, and finally connect with one of our partner lenders to arrange a mortgage pre-approval. As soon as a lender completes the required checks and balances to ensure an applicant meets the criteria and can manage mortgage payments, they are invited to choose from the properties listed on our website.

Education sessionsIn 2015, we produced a series of educational videos to supplement the in-person tutorials. This year, we will explore partnering with another organization to boost our education offering even further. We are inviting Momentum to present the credit module of their money management course which equips Calgarians with more knowledge and tools when building a credit rating in order to buy an attainable home in the future.

Our home education session is a mandatory step in the program. It covers all the basics of buying, owning and selling an attainable home and it can be completed at a group presentation session or in a self-directed format on computer terminals in the sales centre. More than 5,000 people have invested time in visiting the sales centre to complete the education session, indicating a serious interest in buying an attainable home.

Mortgages and insuranceWe currently partner with Canada Mortgage and Housing Corporation, Genworth Financial, and seven different banks. Having the support of these large institutions reflects the integrity of our program and our offering.

Every single development is appraised and underwritten by a mortgage insurer before we launch sales. All of our buyers must have mortgage insurance and they must qualify for a five-year fixed mortgage. We continually monitoring interest rates and lending regulations.

Open houses and the downtown sales centreOur sales staff are often out of the office to show interested buyers the available properties. As we offer more homes in different locations around the city, the cost and effort to achieve sales increases because our staff must travel to show the homes. In 2016, we will open our first ever show suite at Orchard Sky in Skyview Ranch with extended operating hours. We will also host regular open houses at other locations to minimize mileage, manage our time efficiently, and to provide the most convenient service to buyers.

A high level of car, transit and foot traffic pass our downtown sales centre every day and exterior signage draws people into the office to explore their attainable home ownership options. This year, we will renew some of the signage on the exterior of the building to continue attracting the attention of those passing by.

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2016 DEVELOPMENTSFive years ago, we had one building partner and two projects. Today, we’re working with at least seven different builders and we’re in negotiations with others, and we have 20 projects in various stages, from planning to occupancy, across every quadrant of the city. We’ve become a trusted partner to private industry and expanded our offering, which translates to more choices for the families that qualify for our program.

Importantly, builders genuinely want to give back to the community and our program is a unique way they can contribute their own skills and products to a social enterprise creating positive social change in the city. We help the builders by completing presales so they can get their financing, as well as finishing projects so they can send their staff to focus on the next project.

In the current market, there may be more opportunities for our organization. We are doing a lot of research and proceeding with caution, but there is no doubt that this is a good time to continue conversations with other builders and boost our project pipeline.

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ARRIVE atEvanston

ARRIVE atSkyview Ranch

Arbours

Bowness

Chalet No 6

Glenbrook Park

LiFTT

Martindale

Mount Pleasant1740

Sandgate

Orchard Sky

Sunalta

Varsity 4818

Name

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Unit acquisition

Unit acquisition

Landdevelopment

Unit acquisition

Landdevelopment

Unit acquisition

Landdevelopment

Landdevelopment

Unit acquisition

Unit acquisition

Unit acquisition

Landdevelopment

Type of project

Sales,possessions

Sales,possessions

Developmentand building

permits

Sales,possessions

Final quickpossession sales

Sales

Due diligence, land use and

development permit

Final quickpossession sales

Sales

Sales,possessions

Sales

Sales,possession

2016 Focus

Townhouses

Townhouses

Townhouses

Townhouses

Apartments

Apartments

Mixed

Townhouses,apartments

Apartments

Apartments

Apartments

Apartments

Type of homes

PartnersDevelopment

Group

PartnersDevelopment

Group

PartnersDevelopment

Group

HopewellResidential

Truman Homes

Vericon RealEstate Ventures

TBD

Lexington Development Management

Hopewell Residential

Truman Homes

LexingtonDevelopmentManagement

LexingtonDevelopmentManagement

Partner

Key 2016 projects

COMMUNICATIONS AND STAKEHOLDER RELATIONSWe approach communications and marketing with an aim to remain top of mind with potential buyers through the most cost-effective tactics. An integrated communication strategy ensures we efficiently connect with our stakeholders across multiple touchpoints, from traditional and social media to newsletters, events, collateral and a prominent online presence. We also place great importance on having two-way communication with community stakeholders. As we consider future land developments, we connect with residents early to ensure the design reflects the values of the neighbourhood.

Marketing Calgary’s Attainable Home Ownership ProgramWe will continue to inform local media, promote our program through social media, and we will advertise online, in print and on the radio. From time to time we hold special events to highlight certain projects or to celebrate program milestones.

Optimizing word-of-mouth referrals is a cost-effective way to increase the reach of our program and it will be a key focus moving forward.

Those people who register on our website can opt-in to receive email alerts regarding new attainable home opportunities as they become available. With more than 20,000 subscribers, the e-newsletter is our strongest communication tool. In 2016, we will provide more emails tailored to the preferences indicated in the website registrations, which will result in more targeted and relevant information for our followers.

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2016 BUSINESS PLAN | www.attainyourhome.com

Stakeholder relationsOn the housing continuum, we’re not the only game in town. We have developed relationships with organizations including Habitat for Humanity Southern Alberta, Momentum, Horizon Housing, Calgary Housing Company and others. By deepening relationships with other organizations we can deepen our collective impact on the entire housing continuum. For this reason, we will continue participating in the Community Housing Affordability Collective meetings.

To free up more affordable homes and relieve some pressure on waitlists in the city, we offer discounted fees to tenants living in subsidized rentals, we provide tailored information and materials, as well as holding special information sessions. We have already seen examples of tenants transitioning from Calgary Housing Company and Horizon Housing to attainable home ownership. We expect more great success stories in 2016.

Community consultationWe have strong working relationships with community associations around the city. We’re often warmly welcomed into established communities because we have a good reputation and there is a solid understanding that many Calgarians are struggling to save a down payment.

Community meetings, open houses, letters, signs and the website are ways we keep in regular contact with residents while planning future developments. While we must be mindful of cost when considering community feedback, we are committed to addressing and respond-ing to all concerns and ensuring our designs reflect the values of the neighbourhoods we are in.

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FINANCIAL STRATEGYAHCC has matured to the point where we can see the original assumptions regarding our homegrown business model are becoming a reality. Of the people who have decided to exit the program, the average length of ownership has been 2.62 years and we’ve seen gains on the five percent equity loans. That money goes back into the business so we can pursue new opportunities and serve more families.

Paying it forwardOur business model will be optimized when a higher volume of units exit the program, unlocking a share of equity that we can use for capital expenditures and development costs.

We expect more units to exit the program when the five year fixed mortgages are ready for renewal. Approximately 16 percent of the current portfolio are at the 75 percent participation rate after three years of ownership, so these Calgarians may be considering their next move.

Based on the Housing Price Index, the total value of attainable homes in our portfolio may have increased by more than $9.2 million since the homes were originally sold. Not only will this appreciation assist our program, the value represents thousands in property taxes for The City of Calgary and it suggests that many home owners may be able to use their share of equity to move up the property ladder again.

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number of units that exited the program

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35

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2012 2013 2014 2015

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2016 BUDGETSuccessful completion of developments and the possession of units ensures that we secure revenues. In 2016, based on current projects and velocity of sales, we anticipate 176 possessions (compared to 208 in 2015) which is reflected in the budget.

The small margin that we are able to achieve on units acquired from industry is what funds operating expenses. In a soft market, we may have opportunities to achieve greater margins for new projects. However, we will be required to swiftly outlay cash for builder deposits to secure these opportunities. Our board of directors will assess and approve new project opportunities as they arise throughout the year.

As a nonprofit, we always run on a lean budget and we are committed to carefully managing and monitoring operating expenses. Through historical experience, we know our fixed costs remain relatively consistent when delivering between 170 and 230 possessions a year, so our focus this year is ensuring that we apply our cash in the most cost-effective and efficient ways possible to remain nimble and able to pursue new opportunities.

The budget assumes increases in the cost of sales and inventory carrying costs as we expect our conversion rate will be impacted by diminished economic confidence.

Key Performance Indicators will continue to be monitored on a monthly basis and the board’s audit and accountability committee has made a commitment to work with the finance manager to recast the budget, if necessary, throughout the year.

Risk managementAHCC plans conservatively, operates prudently, and continues to live within its means. The organization will continue to monitor the changing economic conditions that impact the Calgary real estate market. If conditions warrant, AHCC will quickly reassess our position in relation to our financial model and make any adjustments necessary.

The board and management have discussed AHCC’s financial risks and made the following conclusions regarding the 2016 budget:

• The budget was developed to operate at minimal expenditure while having enough resources to achieve the vision of the organization. It reflects the unit pipeline we currently have to achieve 176 unit possessions.

• Projected cash outlays and inflow from possessions have been assessed on a month-by-month basis and the cashflow profile is reasonable.

• To ensure AHCC can remain vigilant to changing circumstances and opportunities throughout the year, a monthly dashboard of key performance indicators will be provided to the board of directors regarding margins, sales, cash flow and balances, the unit pipeline, and any significant overhead variances. The board will closely monitor the program and the budget as necessary.

• Reforecasting will be undertaken throughout the year and the board and management will reallocate funds on a tactical basis, if necessary, particularly in the area of marketing with an increased focus on promoting projects to meet sales targets.

• In spite of the volatile market in 2016, the board is excited with the prospect for AHCC to be able to procure additional inventory for the future.

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48,555,932

3,360,000

208,137

292,963

45,000

282,000

52,462,032

272,500

150,166

68,000

44,071,181

35,000

47,385,763

1,325,643

75,000

991,773

114,500

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-

$5,076,269

2015 BUDGET

REVENUE

Sales

Sales - land

Realized gain on equity receivables

Equity income

Other revenue

Marketing and sales

Professional fees

Occupancy expenses

Interest expense

Cost of goods sold

Amortization of tangible capital assets

EXPENDITURES

Salaries and benefits

Inventory carrying costs

Cost of goods sold - land

General and administrative

Loss on impairment of assets

Unrealized loss on equity receivables

OPERATING SURPLUS

55,646,676

3,360,000

34,465

618,031

63,101

284,418

59,722,273

435,302

121,067

74,933

50,468,614

32,533

57,340,462

1,081,595

74,044

4,265,893

106,545

96,150

299,368

$2,381,811

2015 ACTUALS

46,705,304

2,600,000

50,000

-

78,431

271,913

49,433,735

264,800

130,133

56,158

42,367,696

24,084

47,977,302

980,631

128,564

3,350,000

103,323

-

300,000

$1,456,433

2016 BUDGET

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THE CALGARIANS PAYING IT FORWARDMore than 700 families have bought attainable homes all around the city with $2,000 down payments. When each of the owners decide to sell or refinance their homes, a portion of the equity will be shared with us and those funds will go straight back into the program to help even more Calgarians achieve the dream of home ownership.


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“OWNING MY OWN HOME IS GOING TO GIVE MY CHILDREN AND I STABILITY, WHICH IS SOMETHING WE’VE NEVER REALLY HAD BEFORE.”

– SHAUNA, CITYSCAPE

“EVERY DAY I WALK INTO MY CONDO WITH A SENSE OF GRATITUDE, ACCOMPLISHMENT AND RELIEF. THIS IS MY HOME. MY SPACE. MY SANCTUARY.

I WOULD NEVER HAVE BEEN ABLE TO DO THIS ON MY OWN, BUT ATTAINABLE HOMES PROVIDED ME WITH EXACTLY WHAT I NEEDED.”

– ELISE, 51 OAK

“WITHOUT ATTAINABLE HOMES IT WOULD HAVE BEEN SEVERAL MORE YEARS UNTIL I COULD AFFORD TO BUY MY OWN HOME, IF EVER.”

– SHANE, 51 OAK

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Cranston townhouses2016 BUSINESS PLAN | www.attainyourhome.com

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OUR PARTNERS AND SUPPORTERS

LawyersBennett JonesBrian Lester LawGorman Gorman Burns & WatsonKahane Law OfficeKH/Dunkley Law Group

Program mortgage providersAlberta Treasury BranchBank of Montreal (BMO)Canadian Western BankFirst Calgary FinancialRoyal Bank of Canada (RBC)

Mortgage insurersCanada Mortgage and Housing CorporationGenworth Canada

Volunteer Board of DirectorsAdam Legge (Board Chair)Councillor Brian PincottElizabeth HuculakLisa Oldridge (Chair Audit and Accountability Committee)Mayor Naheed NenshiSano Stante (Chair Corporate Performance and Governance Committee)

Volunteer Advisory CommitteeBob Jablonski, RealtorJill Lassaline, Home ownerKäthe Lemon, RedPoint MediaLeslie Evans, Federation of Calgary CommunitiesMarg Pollon, Bridges of LoveMartina Jileckova, Calgary HomelessFoundationSarah Woodgate, Calgary Housing CompanyVivien Lok, Immigrant Services Calgary

Builders and developers

Phone: 403-265-9935Address: 1010 6th Avenue SW Calgary, AB T2P 0V8Email: [email protected]: www.AttainYourHome.com

Follow us on social media for up-to-the-minuteprogram news and updates! AttainableHomesCalgary AttainableHomes AttainableHomesCorp AttainableHomes

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business plan - attainyourhome.com€¦ · sales centre, completing our education session, and...

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