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C H R A C O N G R E S S | 2 0 1 9

I M P A C T I N V E S T I N G A N D A F F O R D A B L E H O U S I N G

our mission_

We are a community development tool. In cities, we offer an ethical housing choice for the middle class in urban neighborhoods. In rural settings, we are an attraction tool to combat demographic decline.

We help low to moderate income households become homeowners without a down payment while ensuring the perpetual affordability of our homes.

our main partners

Non for profit social enterprise created in 2012.

why we chose this model ?_

HOMELESS-NESS

EMERGENCYSHELTER

SUPPORTIVE HOUSING

SOCIAL HOUSING

AFFORDABLERENTAL

MARKET RENTAL

MARKET HOMEOWN-

ERSHIP

AFFORDABLE HOMEOWNER-

SHIP

1. Carve a more sustainable alternative to homeownership in the housing continuum

2. Adress the unmet housing needs of an increasingly large portion of middle class families and households .

Credits : CMHC

22 676 $ 31 942 $ 39 200 $ 81 000 $59 822 $Household AMIQuebec AMI

VIVACITÉ_ FOR HOMEOWNERS

SHARED EQUITY : HOW IT WORKS _ Accessing homeownership

Property value : 200 000 $

Vivacité invests a 20% down payment : 40 000 $

Future owner pays a 1250$ transaction fee and takes out a mortgage representing 80% of the property value : 160 000$

Both parties sign a deed of covenant to ensure perpetual affordability (equivalent of a ground lease). Vivacité holds a second mortgage.

Monthly payments are 839 $/month (3,5% mortgage rate, including 40$/month membership fee)

SHARED EQUITY : how it works _ Resale

Resale after 5 years, with a 2 % annual market appreciation

Market appreciation : 20 000 $New property value : 220 000 $

Vivacité finds new owners who meets meet the qualification requirements.• Households around AMI• Owner-occupant• Property features

« Market appreciation : you didn’t build that. »

SHARED EQUITY : how it works _ Sharing the market appreciation

Amount disbursed for the initial purchase

25% of the market appreciation

Added value linked to renovations

160 000 $

5 000 $

0 $

Total paid 165 000 $

- Balance of the mortgage - 137 711 $

Owner’s net gain at resale 27 532 $Savings made on monthly payments (5% down payment - CMHM prime) 8 378 $

Gains 35 667 $

When there is a resale, the household keeps...

25%

SHARED EQUITY : how it works _ Sharing the market appreciation

Amount disbursed for the initial purchase

- Depreciation

Added value linked to renovations

160 000 $

- 10 000 $

0 $

Total paid 150 000 $

- Balance of the mortgage - 137 711 $

Owner’s net gain at resale 12 289 $Savings made on monthly payments (5% down payment - CMHM prime) 8 378 $

Gains 20 667 $

When there is a resale, the household keeps...

25%

10 000$ DEPRECIATION (190 000$)

SHARED EQUITY : how it works _ Perperual affordability

With 75% of the market appreciation (15 000 $), Vivacité...

Reinvests 4000 $ to maintain a 20% downpayment for the next owner.

(44 000 $ for a 220 000 $ property)

+Uses 11 000 $ to make new developments

and remunerate its investors.

VIVACITÉ_ for investors

Julien Durocher8 years old

getting started_

intital cycle of development : 240 units within five years

7 projects spread accross Quebec

Need in investment : 5 M$

rural markets_

10 % 40 % 50 %

• Rural areas

• Low market values

• Low median incomes

• Suburban areas

• Average market values

• Median incomes close to national average

• Central neighborhoods

• High market values

• Incomes slightly above national average.

MeTROPOLITAN markets_

URBAN markets_

portfolio approach _ Building territorial solidarity

73,5%

2,5 %

24 %

owner’s transaction fee

PRIVATE investment

vivacite’s developers’ margin

funding the down payment_ Social economy at work

« The difference between the project costs and the market value : you didn’t build that. »

55 M$ 84 M$asset : 11 M$

asset : 17 M$

portfolio value _ 240 initial units after 25 years

240 households 850 households

INVESTMENT PARTNERSHIP _

EQUITY NEED_

5 M 15 yrs

patient capital_

6%+

RATE OF RETURN_

THE PROCESS_ lessons learned

Kent Monkman The Daddies

LESSON #1 _

Money produces reality

“ Power produces; it produces reality; it produces domains of objects and rituals of truth. ”

- Michel Foucault

LESSON #2 _

Impact investing is not about innovation

“ And when we dream it, Let’s dream it, we’ll dream it for free, Free money, free money, free money. ”

- Patti Smith

LESSON #3 _

There are no rules

“ As long as the structure of the group is informal, the rules of how decisions are made are known only to a few and awareness of power is limited to those who know the rules. Those who do not know the rules and are not chosen for initiation must remain in confusion, or suffer from paranoid delusions that something is happening of which they are not quite aware. ”

- Jo Freeman

LESSON #4 _

Housing should not be about innovation

“ The idea of progress views time as constructive. Time is our ally. It makes things grow. Whereas the rhetoric of innovation views time as corruptive. It deteriorates things. Innovation presents itself as what needs to be done so that the world does not undo itself. It is an imperative to repair the corruptive passing of time. ”

- Étienne Klein