MARCO ISLAND — A private firm’s proposal for the city to oversee a for-profit employer assisted housing fund needs work, Marco’s council decided Monday.
Representatives of the private, for-profit, national firm, Data Researching Handling, which has a Marco Island office, says the City of Marco Island will not be managing the housing program nor entering the housing industry per their proposal.
Rather, they said, if council agrees to the program, the city would be paid for overseeing the accounting of a proposed statewide employer assisted housing program.
The city is to lend transparency and accountability to DRH’s program by having the firm’s books open to the public with the city’s right to audit them. The city will be compensated 1.5 percent of all mandatory development fees paid by home sellers in the proposed statewide employer assisted housing program.
“We’re a for-profit, private business. We don’t have to open our books, but we are going to open our books,” said Suzanne Henry of Data Research Handling, which opened its Island office in the Regency Bank building about one year ago.
Vice Chairman Frank Recker questioned why they needed the city to open their books and Henry said she believed it gave credibility to the new business, which is seeking similar programs in seven other states.
“My only concern is this is not our business. I don’t think anyone on this council, other than perhaps Mr. Popoff, is that close to real estate,” said Councilman Bill Trotter.
Chairman Rob Popoff said he wasn’t particularly familiar with the details of the program either, but was impressed with the idea.
“It’s an economic stimulus program from the private sector ... Fundamentally, I think it’s an ingenious program, what I understand of it.”
Jonnie Sturges, of My Generation U.S.A., a firm partnering with DRH to offer education on home buying and ownership, particularly to buyers, along with Henry and Sheri Riddle, of DRH, presented how the program works.
An employed person wants to buy a home and has the resources to do so. Their employer chooses to join the YES Organization and offers their employees employer assisted housing benefits at no cost.
“YES stands for Your Economic Stimulus. Sellers are economically gardening their community,” said Sturges.
A fund is set up from private businesses and organizations interested in investing in the program and this fund offers the employee/prospective buyer 3 percent of a home’s cost to use as a down payment, to go toward closing costs or other expenses.
The seller pays YES/DRH a “mandatory development fee” of $40 per $1,000 of property sold. This mandatory development fee is allocated as follows: 1.5 percent goes to the city for compensation of their overseeing the fund; 10 percent goes to DRH; 75 percent stays in the self-perpetuating fund and 13.5 percent goes into “economic gardening” of the community, said Henry.
Economic gardening, she said, is money that stays in the community where the home was sold.
The city's 1.5 percent is also considered part of the economic gardening, Riddle added in a follow-up.
“We’re a health care PPO for the real estate industry,” Sturges added.
“We bring an alternative to this dead market. We bring it to the buyers and the sellers.”
The city’s involvement would be to remove the skepticism and distrust caused by “the Bernie Maddoff’s that are out there,” Henry said.
Gabriel questioned whether the city oversight could bring a financial opportunity to the city that outweighed the risks. He said he was not yet satisfied with the contract proposed, but was working on it with the proponents.
Among the concerns, he said, were hashing out insurance and the risk of an audit costing the city more than their potential earnings if the program were not successful.
Henry said she is confident the proposal can be amended to iron out these concerns.
She said about 11,000 homes sold in Florida in May. If YES were to account for a mere .25 percent of those sales, the city could earn about $40,000 annually.
Henry says it’s likely that YES could sell that many homes just by filling the void of three other firms who targeted a smaller market of low income home buyers and no longer provide any down payment assistance as of October 2008. These firms used to account for .25 percent of the sales and currently no one is filling the void of now defunct programs such as SHIP, AmeriDream and Genesis, Henry said.
“What I liked about it is that all three of these women are Marco Islanders and they chose Marco Island to benefit their community,” Popoff said.
Two Marco residents, Phil Kostelnik and Fay Biles, who spoke on the issue at council, were not convinced.
“It’s obvious this won’t pass tonight. I think we should at least investigate,” Popoff said.
Council directed Gabriel to move forward with negotiating a contract with DRH and to come back to council with more information at a future meeting yet to be scheduled.