Last night was a disaster at our board meeting for Habitat for Humanity. We had been feeling pretty proud of ourselves recently. We had five partner families in the queue for new houses and we had ten lots to work with. We had been focusing on raising funds and coalitions to build the houses. Then it happened. Due to local crime issues(e.g. people getting shot) our mortgage chairman recommended that we not build any more houses on a street we already have five houses on. He brought in the past mayor to talk to us and she agreed. Since I had the real estate appraisals by the county available, I looked up the appraisals on that street. Three of the houses are worth less now than when we built them. Habitat houses are transforming tools. It is tough to imagine that the house will transform the family in a positive way if the family loses money on the house. In our entire mortgage portfolio we have four home owners with negative home equity. Most of our home owners have built up quite a nice nest egg due to rising real estate values. I could not help but agree with the others that we postpone building on that street for at least a year. Ouch, there goes four lots!

Then our construction chairman comes in with higher development costs for four lots in another part of town. This project was on shaky ground because of high development costs. His figure indicated that the lost cost would go up an additional $5,000 per lot. I do not think we can cancel the project since we have already taken federal funds to buy the land and build the infrastructure. It looks like the federal funds will only cover half of the development costs. Our original plan was that the federal grant would cover the land and most of the development costs. Cash flow is a serious problem.