Case Studies

South County Housing Corporation

Affordable Communities

California-based South County Housing Corporation (SCH) is a not-for-profit organization that provides affordable housing as a private developer/builder. From headquarters in Gilroy, the company provides central California with top-notch service.

Johny Van Dyke, director of construction at SCH, has been with the company for over a decade. According to Van Dyke, there is a lot more to affordable housing than low-income apartment buildings. “Affordable means different things in different circumstances,” he explains. “It could be $330,000 townhomes with down payment assistance to families earning 80 to 90 percent of average median income (AMI) for the county. Or it could be a family apartment complex for farm workers earning 60 percent AMI.” And that is the SCH difference.

It’s a very cool business,” Van Dyke says. “There’s pressure in this business, but it’s not the same that you get working for a market rate developer or general contractor.”

The developer focuses on building healthy, sustainable, mixed-income communities. Housing in these communities include: single and multifamily housing units – both rental and homeownership – structures, as well as childcare facilities, assisted-living centers and temporary living shelters for families and individuals. Van Dyke says he was attracted to putting his skills to work to help other people since the beginning. “It’s a little more human, and I knew I could do a good job in this industry,” he explains.

Putting the Savings to Work

SCH is a unique organization, but Van Dyke says there are a lot of developers performing similar work. “We’re one of the few that actually do our own general contracting,” he says. “Most serve only as developers and hire outside contractors.”

According to Van Dyke, the common model for hiring a general contractor is skewed and creates an adversarial relationship. The owner wants, and needs, to keep costs down, while the general contractor is motivated to keep the cost higher because the compensation is based on a percentage of the final costs. “In the long run, the compensation plan for a contractor is not motivating them to save money,” says Van Dyke. “It really just takes food out of their mouths.”

By performing the general contracting in-house, SCH is able to keep projects under budget, often leaving room for design improvements with any savings. “We have a partnership approach with our key subcontractors, most of which have been doing business with us for the last 12 plus years,” says Van Dyke. “They know the more value we can create with our projects at an affordable rate the more work we can generate for everyone. They are motivated to help us succeed because while the housing/building market has been soft over the last several years we have continued to have steady work, and 2012 is scheduled to be the single largest year in our history.”

In 2011 SCH completed a housing project that was budgeted at approximately $10 million. “When I bought out the project, it looked like the budget was based on some historical and solid numbers from past projects,” says Van Dyke. “I reworked it with some value engineering and other things and came out with a savings of over a $1 million.” Instead of giving back the cash, Van Dyke and his team upgraded the housing project with an enormous photovoltaic system, as SCH is a green builder as well.

“It is the largest privately held solar energy system in San Benito County,” he adds. The solar energy panels completely offset the building’s power costs as well as the electrical energy bills of the residents and for Van Dyke that was a huge success. “This project was designed to house seniors with low, fixed incomes,” he explains. Eliminating energy costs has left residents with a little more financial flexibility every month.

The company was certified in 2006 as a Build It Green (BIG) builder, and has since adopted state-of-the-art green technologies in each SCH development. “The great thing is we’ve been doing green for a long time, so the certification process didn’t add any substantial costs to our construction,” says Van Dyke. “We build green because we think it is the right thing to do, not because of some new energy or building code.”

Building Community

SCH offers several programs to help both new homeowners and tenants afford and maintain housing. One example is self-help opportunities, which offer low and very low income families – based on area median income levels – to use Sweat Equity as a down payment on a new home that might otherwise be outside their financial means.

“The families help to build their own homes,” says Van Dyke of the initiative. “It takes about a year. We put a group of families together and build 10 to 15 at a time.” The future homeowners help with every step of the construction process, including framing, roofing, siding, finish carpentry, painting and landscaping. “No one gets their keys until everyone gets their keys,” he says. “It’s a fantastic block party on key release day.”

Each site is assigned a supervisor, whom Van Dyke says is basically a journeyman carpenter. The supervisors organize crews and oversee training. “They have to put in a minimum of 40 hours per week as a family,” he explains. The hours can be spread out and shared between family members or friends. “It’s like a bank,” he says. “If you get behind you have to make up those hours.”

The program has been hugely successful, and according to Van Dyke SCH has built over 500 homes through self-help programs. “It’s not a handout,” he says. “These people are earning that down payment. It’s a win-win, and nobody can fault that.” Van Dyke says that through building their homes together, these families get to know one another better than they normally would. “They know each other; they know each other’s kids. It’s an instant community,” he elaborates. “These projects are very sustainable because when homeowners help to build their own homes, they have a better understanding of the value.”

Van Dyke and his crew are still expanding the company’s portfolio. SCH’s services are in high demand due to rising housing costs in California. “We’re breaking ground in a few weeks on a 26-unit single resident occupancy building,” Van Dyke says. “They’ll be studio apartments for formerly homeless individuals.” The housing complex is designed as a safe haven for chronically homeless people, who are often left on the streets because of issues like mental illness. “They would really never be able to get into a traditional housing complex otherwise,” explains Van Dyke.
The building will have permanent office space for caseworkers, meaning that counseling sessions will be readily accessible and close by. Van Dyke says space has been made for a small medical office for check-ups as well.

SCH’s biggest challenge has always been funding. Because of the public nature of the company’s work, local and federal agencies sometimes just can’t find the money for affordable housing. Even on the smallest budgets, Van Dyke and his team value engineer proposals to give the most possible for future residents. South County Housing Corporation is a truly unique organization that will continue to employ hard work, a sense of community and leading ingenuity in affordable housing projects all over central California.

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Spring 2018



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