Sweat-equity home program feels recession's squeeze

<p>The small house going up near downtown Sebastopol is a bright sight in a gloomy landscape for Habitat for Humanity, the nonprofit that helps low-income families build homes.</p><p>Habitat's operation in Sonoma County is struggling to raise money as long-reliable donors cut back on charitable giving, forcing staff layoffs and pay cuts.</p><p>Donated labor and materials from the construction industry already were in short supply.</p><p>Despite the progress on its first Sebastopol project, Habitat has fallen behind on others there and in Healdsburg.</p><p>Yet Habitat officials and the group's supporters aim to regain momentum that was building before housing slumped and the recession hit.</p><p>"If we make it through this year and the next, we're going to be fine," said Diane Estrin, executive director for Habitat for Humanity of Sonoma County.</p><p>Much as builders strive to survive the deep housing downturn, Habitat has cut costs while continuing to plan projects so they are ready to go when the sector turns up again.</p><p>"They have to do it with contributions and that's a tough row to hoe right now. You postpone when it's hard economic times, but that doesn't stop you from planning," said Dick Dowd, a Habitat board member and co-owner of Pinnacle Homes in Santa Rosa.</p><p>Habitat has been forced to scale back far more than planned over the past year. The decline in corporate giving has been deeper than expected.</p><p>Heading into the budget year that ends June 30, the group budgeted for $888,000 in contributions from banks, insurance companies, real estate firms, builders, service groups and others. But through the end of May only $548,000 had come in, Estrin said.</p><p>"They are still giving to us, but not at the past levels," she said. "It's not that they don't want to. It's not in their budget."</p><p>The shortfall, a stark reminder of the toll the recession has taken on the local economy, forced Estrin to make a series of difficult decisions.</p><p>Habitat's special projects coordinator and its community outreach worker were laid off. Salaries for the five remaining staff, including Estrin, have been cut 18 percent.</p><p>"I saw the recession kicking in and I was fearful of the impact of the drop in contributions," she said.</p><p>Enough funding was available to go ahead with building the two homes Habitat has helped a pair of families put up on Johnson Avenue in Sebastopol. The first of the 1,200-square-foot, three-bedroom homes was completed in May. The second should be ready for occupancy by the end of July, Estrin said.</p><p>But a second pair of homes in Sebastopol has been put on hold because of a lack of funding, she said. Those houses will be part of the 13-home Litchfield Terrace subdivision Pinnacle Homes has planned. Pinnacle donated the lots to meet a Sebastopol affordable housing requirement. The builder has put in all streets and utilities, but construction won't start until early next year at the soonest, Dowd said.</p><p>Habitat hopes to start building its two homes ahead of that timeline.</p><p>"We have to build these houses. The families have now been waiting for three years to get the homes built and we need to raise the money to get the houses built," Estrin said.</p><p>Two homes planned for Healdsburg also have been delayed by the funding crunch. Construction on the 1,200-square-foot, three- and four-bedroom residences originally was planned to start a year ago, but won't begin until at least the end of this summer, Estrin said.</p><p>The project stayed on track after the Healdsburg City Council this month agreed to lend $134,000 in redevelopment money to Habitat for permits and site improvements.</p><p>Habitat needed the help because state funding has been held up by the state budget problems, and now will be used to repay the city, officials said.</p><p>"We want to keep this project moving forward. This will ensure that progress will not be stopped," said Mike McGuire, a City Council member who led support for the loan. "This was a no-brainer. Healdsburg wants to ensure that it's the first Habitat project in the north county."</p><p>Leveraging such support could boost fund-raising efforts, Estrin said.</p><p>Habitat's longstanding appeal is the centerpiece to its model for building homes.</p><p>Families must contribute 500 hours of so-called sweat equity for the down payment on their home. To be eligible, they must live in substandard housing and earn no more than half of the median income for a family of four in Sonoma County, or about $40,000.</p><p>"We support it because we feel the whole philosophy of Habitat for Humanity is not a hand out but a hand up," Dowd said.</p><p>Habitat has helped low-income families rehabilitate and build single-family homes in Sonoma County for 25 years. The group renovated 18 homes and built two in Santa Rosa between 1984 and 2000.</p><p>Its building program gained momentum in 2003 with the planning of a six-home subdivision in Santa Rosa that was completed in 2007.</p><p>The first two homes in Sebastopol would be followed with 11 more planned in Sebastopol, Healdsburg, Cotati and Sonoma.</p><p>"The only thing holding us back is money," Estrin said.</p><p>You can reach Staff Writer Michael Coit at 521-5470 or mike.coit@pressdemocrat.com.</p>