Plan for Low-Cost Housing in Orange County Unveiled

Ken Karlstad lived in Orange County for 17 years before he learned that there are families living without homes or in substandard dwellings. What’s more, he learned that most of these people are not lazy, footloose or irresponsible.

“Many of the adults have steady jobs,” he said. “They just can’t make it.”

So now Karlstad, a former aerospace engineer, is dedicated to helping those people obtain decent and affordable housing. As chairman of the Orange County chapter of Habitat for Humanity, Karlstad and two Orange County developers Friday unveiled a program to help the area’s working poor help themselves.

Would Build on 2 Acres

The program, with the support of The Fieldstone Co. and Santa Margarita Co., will team up with lower-income families to build 48 condominiums on two acres in the planned community of Rancho Santa Margarita. The qualifying families, who will help build the structures, can then buy the units for $300 to $400 a month.

The project is the largest ever undertaken by Habitat for Humanity, an international Christian housing ministry whose most prominent member is former President Jimmy Carter. And it represents the first major commitment made by developers to lower-cost housing in Orange County, which has among the highest housing costs in the nation.

The condominiums are expected to be completed by January of 1991 and sold to low-income families headed by working parents who agree to make a down payment equivalent to 1% of the selling price and to contribute 1,000 hours of labor.

To be eligible, the families must be homeless or live in substandard housing and earn in the range of $12,000 to $24,000 a year for a household of four.

Dave Langlois, director and senior vice president for Fieldstone, the state’s 10th largest housing developer, said his firm and the Santa Margarita Co, the master developer of Rancho Santa Margarita, will donate the land.

Grading Has Begun

The plans call for six Mediterranean-style buildings, each containing eight condominiums. Langlois valued the gift of land at between $1.2 million and $2 million. Grading of the site has already begun.

Langlois said Fieldstone has formed a nonprofit arm that will supervise the construction and provide a $2-million no-interest construction loan for 18 months. Also, he said the company will seek private lending institutions to provide “zero interest” mortgages for buyers of the homes.

Fieldstone’s goal, Langlois said, is to solicit enough volunteer labor, materials and cash contributions to build one- to three-bedroom condominiums that will sell for $45,000 to $53,000. The monthly mortgage payments, including taxes and association dues, should not exceed $400, officials said. In contrast, the lowest priced new condominiums for sale today in Rancho Santa Margarita are $90,000. And The Marketing Department, a real estate research firm in Irvine, found that for the first six months of 1989 the average price of a new condominium in the South County was $193,900.

Gene Crumley, associate director of development for Habitat for Humanity, which is based in Americus, Ga., said the project is the largest ever undertaken in the group’s 12-year history. The ecumenical charitable organization has built 1,500 homes in the United States and 3,500 overseas.

He said the project is also “precedent setting” in that no other developer in the country has committed land, financing and construction expertise to a project. “This is the first time in the country that we had a major developer pull all of the pieces together,” Crumley said.

Karlstad began organizing the local Habitat for Humanity about a year ago. Last April he quit his job as a engineer for Ford Aerospace in Newport Beach to devote all his time to the task.

Appeal to Builders

The group, Karlstad said, has made a “broad appeal” to builders and developers in the county to help sponsor affordable housing projects. But so far, he said, Fieldstone has been the only one to step forward.

Karlstad said he was approached by Fieldstone officials after a presentation he gave early this year at Mariners Church in Newport Beach.

County Supervisor Gaddi H. Vasquez, whose district includes Rancho Santa Margarita, said Fieldstone apprised him of tentative plans for the project several months ago.

Vasquez said he expects that the county will agree to waive some building fees on the project and will move the project plans “as expeditiously as possible” through the county approval process. He said there is increasing demand for the county to be responsive to the needs of the homeless and those unable to purchase their own homes.

“The county intends to be as supportive as it possibly can” to the efforts of Habitat for Humanity, he said. “I hope and trust it is only the beginning of a relationship.”

Karlstad said Habitat for Humanity will establish a group of local volunteers to screen prospective buyers. He said the organization will begin to take formal applications in February and in June will announce which families have been selected.

Must Contribute Work

To be eligible, he said, applicants must have steady employment and still agree to contribute 500 hours of “sweat equity” to the Santa Margarita project and 500 more hours to other Habitat for Humanity construction projects in the county or to service projects in Rancho Santa Margarita.

To prevent buyers from immediately making “windfall profits” by immediately reselling the condominiums at market price, Habitat for Humanity will administer resale controls, Fieldstone’s Langlois said.

Langlois said that during the 20-year life of the mortgages, the religious organization will limit the amount of profit that the seller can realize. After 20 years, he said, the families will be free to sell the condominiums at full market rate.

Santa Margarita Co. officials outlined the plans to community leaders of Rancho Santa Margarita, who also expressed support of the project. And Fieldstone officials met with the company’s subcontractors Thursday night to solicit volunteers to serve as lead foremen on the project and to donate materials. He said there was an “outpouring” of positive response.

Mary Hendrickson, Fieldstone’s manager of charitable contributions, said 20 to 30 subcontractors have agreed to donate their services and building materials ranging from windows and drywall to doors. But more is needed, she added.

Bob Mallough, director of computer design at the Irvine office of Berkus Group Architects, said he as well as two architects and a production manager at the firm have donated their services to produce architectural drawings.

“We felt there is definitely a need and this is an excellent cause,” Mallough said. “I’m sure there are a lot who could and would be willing to help.”

RANCHO SANTA MARGARITA’S NEW HABITAT PROJECT: A self-help condominium neighborhood for lower-income housing.

NUMBER OF UNITS: 48 in six buildings.

LOCATION: Two acres in Rancho Santa Margarita.

PRICE: $45,000 to $53,000 .

ELIGIBILITY: Families headed by working parents with annual income in range of $12,000 to $24,000.

DOWN PAYMENT: 1% of the purchase price.

SWEAT EQUITY: Buyer must contribute 1,000 hours of labor.

MONTHLY PAYMENTS: $300 to $400, which includes taxes and dues to homeowner associations.

SPONSORS: Habitat for Humanity, The Fieldstone Co. and Santa Margarita Co.

Source: Habitat for Humanity