The Developer

John Hodge is executive director of the Brunswick Housing Authority, which operates the Greater Brunswick Housing Development Corporation.

Garrison Grove is a 14-unit subdivision developed by the Greater Brunswick Housing Development Corp. These single-family homes were developed to meet the growing demand for affordable homes for first time buyers.

When we started developing this project, the median cost of a home in Brunswick was about $182,000, while a home price affordable to a median-income buyer was $120,000 to $130,000. Our organization saw the need to develop first-time starter homes that would be affordable to working families. In 2004, the prices of homes being built ranged from $250,000 to $400,000. The developers weren’t building smaller, reasonably priced homes for first-time home buyers. Our goal was to meet a need in the private sector for homes that were below market rate but attractive and met a need in the community.

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we decided to begin developing that parcel an abutting 1-acre parcel came on the market, which we purchased to give us a total of 2.7 acres to develop the housing. We used some of our own assets to purchase the first parcel of land.

In 2003, we began in earnest to work with the surveyor and engineering firm to put together plans.  We had an informal workshop with the Brunswick Planning Department and initially showed a plan with 12 lots. We submitted the plan under an open space ordinance because it allowed for smaller lots and waivers on setbacks.

Under the open space ordinance a developer typically needed to have 25 to 30 percent open space. Our initial 12-lot plan had 25 percent open space, but one member of the planning board said the open space in our plan had no real public benefit and we should build 14 instead of 12 homes on the site given the need for affordable housing. That was music to our ears. So we returned with a 14-house plan with three percent open space. But three of the six members of the board said we needed more open space under the open space ordinance and voted against the plan.

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affordable housing. The ordinance gives density and fee incentives to developers based on the number of units targeted as affordable. It also targets growth areas so it has a smart growth, anti-sprawl component. We went back to the planning board with modifications to our earlier plan and received approval.

We sold the first home in December 2004 and the last in October 2005. The average price for the homes was $120,000, but some cost as little as $86,000. We sold two for $148,000. That broad range allowed us to target people with various incomes, families ranging from 50 percent to 120 percent of the area median income. We wanted a good mix of incomes, a range of people with diverse skills and lives.

We also wanted the buyers to have some tie to Brunswick, to either live here or work here.  In addition, the buyers had to qualify for a mortgage. Bath Savings Bank, which is the member bank we work with, prescreened the applicants to determine if they were eligible for a mortgage. Only after they signed a purchase and sale agreement would I contract with the builder to build the house. We didn’t build the 14 houses and then sell them.

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Designing the Homes

We began building in earnest in 2004. One of our first tasks was to decide on the house designs.  To keep the houses affordable we had to make tough choices, and one was to forego an architect. That’s not to say we didn’t use architects. We used them but in a different way. We went on the internet and found a site called houseplans.com, where architects from across the country list their house designs and plans.

We were looking for three-bedroom houses with 1,100 to 1,200 square feet. We looked at home designs we thought would be suitable for Maine – capes, ranches, and cottages.  We selected four designs:  a cape, a bungalow (basically a ranch), and two types of cottage. We purchased the plans from the Web site, which didn’t include monitoring and visits to the construction site. We bought the plan but not services such as coming on site to monitor construction. We spent $2,000 on house plans for a $2 million development. If we had hired an architectural firm I think it would have cost about $200,000.

We looked at both stick-built and modular construction. The modular came back a little more affordable, but we wanted to build homes for individuals and decided on stick-built homes because they would give us more control and allow us to work with the home owners during construction.

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The home owner had a lot of choices to make as the houses were being built. They could choose the flooring, kitchen cabinets, appliances, lighting, and the color of the house. We had four colors and they couldn’t pick the same color as their neighbor.

The best investment we made was to hire a landscape architect. We asked the architect to site the four house designs on the various lots. So if someone came in and said ‘I like the cape.’ We would say, ‘OK, we have three capes,’ and they could pick which cape house they wanted. But they couldn’t choose where they wanted their homes. That was a critical step for us because it helped us make the housing look like a neighborhood rather than a project. We didn’t want to have three capes in a row. We also created front porches on all of the homes. Many new houses today are built with a little front stoop and a huge back deck with a fence around it. You’re not going to get to know your neighbor that way.

Finally we went out and got builders to give us quotes for each home. We really went out of our way to select a builder who believed in what we were doing and was willing to work with us to make sure we accomplished our goals. We hired Portland Builders, and they were great people to work with. They held their prices throughout the process and also held back their requisitions so we didn’t have to draw down a construction loan. A lot of people had to buy into what we were doing to keep the costs down. 

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This was a roughly $2 million project. We got $312,000 through the AHP, which helped pay for road, utilities, and site work. We got a $100,000 grant from MaineHousing for land acquisition. So we had a little over $400,000 in grant financing that doesn’t get passed on to the home owner. The rest of the financing came from home sales.

We were very fortunate to keep costs down and sell the homes at a price people could afford. We ended up reimbursing ourselves for land costs and overhead so that we would be able to do the next project. We couldn’t lose any money on this deal. If we did we wouldn’t be in business. I like to say we’re not for deficits.

Each home costs about $150,000 to build, and we sold them on average for $120,000. So there was about a $30,000 subsidy for each home. This is the model that MaineHousing is looking at now. A $30,000 subsidy for each unit made this affordable. I think if we can do more housing like this, with less subsidy, then these limited resources will go a lot further. Just $30,000 per unit made this affordable. 

Video: Tour Garrison Grove with developer John Hodge >>

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About the Housing Authority

John Hodge: About 10 or 15 years ago most local housing authorities began to create development corporations. The Brunswick Housing Authority was no exception. We formed our organization, the Greater Brunswick Housing Corporation, in 1998. We set it up as a nonprofit, but we operate it as a public entity. All of our meetings are open to the public.

The rationale for doing this was twofold. One, there was a need for housing development in the community, and we were filling that need. And two, federal resources have been shrinking for the core programs -- public housing and Section 8 -- for which most local housing authorities were formed. We didn’t have the ability to raise revenues in those programs because the rents are set. We were seeing increasing energy and insurance costs without increasing revenue. We realized we needed to diversify our revenues or risk jeopardizing our programs. The corporations help us meet our affordable housing needs as well as strengthen our organization by diversifying our revenue stream.

(Photo right: Children playing at Garrison Grove)

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About Brunswick, Maine

John Hodge: Brunswick is a pretty diverse community. We have a number of major employers. We have Bowdoin College, one of the best private liberal arts colleges in the country, and Bath Iron Works, which builds Navy ships and has good paying jobs. That industry has been on edge lately, but it seems to be holding its own. One of the bigger employers was the Brunswick Naval Air Station, but that is scheduled to close in 2011, which is causing some concern in the community.

But other than those larger employers, we really rely on our service sector for jobs. We have our Wal-Mart, Home Depot, and Lowes, our supermarkets and small service-sector retail jobs that provide decent pay but not enough to support a family. Not too long ago we found that to rent an average two-bedroom apartment in this housing market you had to earn $13.50 an hour. So if you’ve got a job and are working 40 hours a week but are making only $8.50 an hour, you ‘re not going to be able to make ends meet.

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The Numbers

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The Member

John Marsh is senior vice president/commercial lending and community reinvestment officer at member Bath Savings Institution in Bath, Maine.

The Garrison Grove subdivision was the culmination of several years of land acquisition by the Greater Brunswick Housing Corporation (GBH).  Bath Savings Institution became involved initially through the financing of the various parcels of land cobbled together to develop the subdivision. 

Bath Savings Institution provided a revolving construction loan to build the fourteen homes, using a $500,000 line of credit that was advanced many times over as the homes were built and sold.

Infrastructure was substantially financed with the direct subsidy from FHLB Boston’s AHP.  In addition to providing construction financing, Betsy Harrington, vice president and assistant CRA officer at Bath Savings Institution, provided pre-approval services to Garrison Grove applicants.  There were no strings attached to our pre-approval service. One home site was reserved for a Habitat for Humanity-built home and one home site was reserved for a market-value sale. (Photo right: John Hodge and home-owner Julia Belling at Garrison Grove)

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Our pre-approval gave the green light to GBH to initiate construction for the home owners, who then obtained financing at banks of their choice. Bath Savings Institution financed about half of the homes, all to first time home buyers.

Bath Savings Institution is committed to providing safe and decent housing to income-eligible families seeking homeownership.  Many home owners fit into one of our first time home-buyer programs, which provide grants for closing costs, down-payment assistance, reduced closing costs, and fixed rates for the full term of the loan. The $300,000 AHP grant was leveraged into more than $700,000 in long-term financing for home owners at Bath Savings Institution.

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The Residents

Home owners at Garrison Grove include a teacher, a day-care provider, and a worker in the service center of an auto dealer.

"One of the nicest success stories," says John Hodge, "was a resident who came from public housing. He came to us about 15 years ago. His wife had left him and he had three small children. He came into public housing because he really needed some stability in his life. We were able to give him a nice apartment. He was able to wipe out some debt and get his life back in order. He ended up getting a nice job in a seafood factory in Bath. He put some money away and he became one of our home owners."

Another new home owner is Julia Belling, a single mother who works part-time, attends school, and cares for her two daughters.

Video: View an interview with Julia at home at Garrison Grove >>

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