Q&A with Chris Coleman and Cathy Lawrence of Habitat for Humanity

About 4,000 volunteers will join staff from the Twin Cities nonprofit Habitat for Humanity this week to build 30 homes for future low- to moderate-income homebuyers at The Heights, an environmentally sustainable housing community on the 112-acre former golf course site Hillcrest is set up on the east side of St. Paul.

It is the largest nonprofit project to date in the Twin Cities metropolitan area, sponsored by the Jimmy and Rosalynn Carter Work Project. The Work Project – an annual home building initiative launched by former President Jimmy Carter in 1984 – brings together corporate donors, lawmakers, faith leaders and business executives for a week of home building.

Participants include country stars Garth Brooks and Trisha Yearwood, who have been involved in the construction work since 2007, as well as Jonathan Scott from the reality show “Property Brothers”.

Twin Cities Habitat for Humanity helped new homeowners purchase a record 139 homes across the metro area in the last fiscal year, about half of them built by Habitat and the other half purchased on the open market. The Work Project built homes in St. Paul and North Minneapolis back in 2010.

The following interview with Twin Cities Habitat President and CEO Chris Coleman, a former mayor of St. Paul, and his chief of staff Cathy Lawrence, this week’s project manager, has been edited for clarity and clarity.

Q: How did you get involved with the Jimmy and Rosalynn Carter Work Project? Did you have to work hard for this?

CC: No, in order to be able to realize a project of this size, you have to have a lot of capacity. And so we’re obviously one of the larger subsidiaries in the Habitat world. And so they approached us and asked us if we would be interested in hosting this year or next year. They came out and kicked the tires. We talked a lot about what St. Paul was involved in and how it differs from 2010. The Hillcrest golf course was just a muddy hole and we didn’t own the land at the time. Just the amount of work that has been put into us since the Carter Work project was officially awarded…

Q: But now you own the land and some preparations have already been made for the location?

CC: We poured foundations. We have some of the larger units, the four plexus units, that have already been completed and we will be doing internal work on them. It will probably be next spring before the first families can move in. That’s pretty typical. When we are able to close a unit and then let loose what we call our “winter warriors,” people who volunteer year-round, they come in and take care of the completion (even before a homeowner is lined up).

Q: Habitat’s old “sweat equity” model was for volunteers to come and work on their future home, right? And you turned that around a little bit.

CC: We really moved away from this concept of sweat equity for a lot of different reasons, but one of them was that it became really, really difficult for a lot of our families to buy. When you have three children and don’t have ready access to free child care, when you have no or limited time off from your job, volunteering for 300 or 400 hours was a huge burden. When we looked at our work through the lens of equity, we found that this was often cited – particularly in the African American community, the fundamental Black community – as a reason why they didn’t work with Habitat for Humanity.

Q: When did you make this change?

CL: The official commissioning took place a year ago last April, i.e. the start of the final construction work. Since COVID, we haven’t had any future families with us. So obviously everything was closed. This allowed us to take a really close look at the program because it was on pause, and as Chris mentioned, we take a very introspective look at the barriers that we unintentionally created for people, and that was one of them. Then we worked through COVID, and then our board approved it in February of this year and we started rolling it out. This is the second construction season that we are running the Volunteer and Learn program instead.

Q: How is Volunteer and Learn different?

CL: Our volunteers are incredibly important to us. This is how we achieve our mission and treat our potential home buyers and homeowners equally. So you have the opportunity to volunteer. We believed that “Sweat Equity” was a good partnership model and we believed that it would be beneficial to learn a few things about your home. I’ve been a homeowner four times. I never built any of my houses. I think I was a pretty good homeowner, but did anyone teach me how to change a filter? Yes. So it’s much more focused on making them successful homeowners. But if they want to come out and learn how to make plasterboard to finish their basement, we will host such an activity for them – it’s not a requirement at all.

Q: Did it make a difference?

CC: We assumed that 8% of our families who successfully completed the homeownership journey were core Black households. Now this value was officially 22% last year. That’s a big part of it, but it’s about how we’ve engaged in the community, who we’ve partnered with and the partnerships we’ve created have really focused on the opportunities for Black households from the founding class to expand, to buy houses.

Q: There was a slowdown in housing construction across the city, if not nationally, as well as at Sherman Associates and the JO Companies at the Heights. A lot of this has to do with things like interest rates and tighter credit markets, but it appears Habitat has been able to move forward.

CC: They simply have different considerations, such as the current problems surrounding rental apartments. They are simply different challenges. The challenge for us was certainly interest rates. It has simply widened the gap between what a family can afford and the potential cost of housing. So this is where we really had to work very closely with partners, both philanthropic funders and government partners, to close this gap for families.

CL: In my opinion, Sherman and JO Companies have a fairly typical development plan. We didn’t do it because the Carter Work Project was coming up. We really sped it up, and that had its own set of circumstances, and we plowed through it. I don’t know that we probably would have been on site until next spring if we hadn’t really pushed hard this year because of the Carter Work Project.

Q: Did this free up funds to have the Carter work plan here?

CC: We needed to raise an additional amount of money to carry out the project, so we raised cash and in-kind donations, approximately $12 million, including $2 million from Habitat International. We had partners like Andersen Windows who donated all of the windows for the work project and we can thank GAF for all of these solar shingles. That’s one of the things we like to brag about too – on this site, sustainability is going to be really, really comprehensive and far-reaching. Instead of installing solar panels, the actual shingles on the roof become solar panels. There are no gas pipes on this site. It’s pretty unique.

Q: You are not just a home builder. Habitat has become an official mortgage lender, right? What does this mean for Habitat and your customers?

CC: Because of the partnership with Bremer Bank, our interest rate was below market, but we were at 2% and now we’re just over 5% after interest rates just went down. So we’re still below market value, which helps. But that three percentage point increase was quite significant. It just means that we need to work to set the family’s mortgage price at 30% of their household income, and that amount has not increased significantly. Families’ salaries are not rising nearly as much as housing costs or interest rates. So that just means we have a bigger gap to close.

CL: We need to rely more on philanthropic resources and, in some cases, public funds. The Legislature and the Governor made major investments in housing construction a few years ago as part of the Housing Act. A large portion of these funds went toward the down payment that our families are eligible for. It’s one-time money that we got.

Q: How will you market these homes?

CC: Well, that’s a good question. We’ve actually been working on this from the beginning because we’re creating a new neighborhood on the East Side and so we’re working very closely with the East Side district councils. They have been a great partner for us. We’re working with a marketing company that will step in to get the word out. This will be something we’ve never done before, but we may even have a model unit on site for people to come and look at, perhaps even before the units are finished.

CL: One of our challenges for years is that our brand can sometimes get in the way. This is why people often think that they are not a candidate to become a Habitat homeowner. We don’t give away the houses. People pay a below-market mortgage tied to 30% of their income. Our clients’ household incomes generally range from $50,000 to $100,000. There are school aides, bus drivers and many healthcare workers. And for several years we have been working with employers who, in our opinion, employ exactly this target group. That’s why we worked with Alina and HealthPartners. It could be their call centers, it could be any number of places. In addition, there are places where truly significant maintenance facilities operate. It’s not necessarily aimed at their customers. It actually targets their employees.

Our 139 closings last year weren’t just Habitat-built homes. People have the opportunity to work with their own real estate agent, find a home in the community they want to live in, and use our programming and our mortgage to close on that home. Through the partnership with Bremer we were able to expand this. And it has been a game-changer for families. And you know, it’s faster. Today, many families still want our Habitat homes because they are brand new and in the neighborhood they want to be in. But the free market is also very attractive.