Oregon is facing a housing shortfall of about 100,000 affordable units. A Eugene-based nonprofit says that need won’t be met by the private market, so they’re taking matters into their own hands. St. Vincent de Paul of Lane County plans to build its own manufactured homes in an old American Steel facility. We talk with Terry McDonald, executive director of St. Vincent de Paul of Lane County about the endeavor.
The following transcript was created by a computer and edited by a volunteer.
Dave Miller: This is Think Out Loud on OPB, I’m Dave Miller. Oregon is in the middle of a housing crisis, we are short something like 100,000 affordable units, but a Eugene-based nonprofit says private developers are not going to make up the difference. So they are taking a very unusual step in trying to solve this particular problem themselves. With help from the Oregon Legislature, they’re going to be building and selling manufactured homes. Terry McDonald is the President of Hope Community Corporation, which will build the homes, and the Executive Director of St. Vincent de Paul of Lane County, which will sell them. Terry McDonald, welcome to Think Out Loud.
Terry McDonald: It’s a pleasure to be here.
Miller: It’s great to have you on. Before we get to your plans going forward, what role have manufactured homes played in the work that you’ve done at St. Vincent de Paul over the last few years?
McDonald: Well, St. Vincent de Paul does provide affordable housing in many different levels inside of the state and one of those levels is mobile home parks. So St. Vincent de Paul has been acquiring older mobile home parks throughout the state over the last decade or so, and rehabilitating those parks so that they can continue their place in the affordable housing ladder.
Miller: How has that worked? And the economics of mobile home parks are manufactured homes, How has that led you to where you are now? What have you seen?
McDonald: What we know about older mobile home parks is that they’re, you know, when they go on the market, they’re going to be sold, they’re often going to be taken out of use as affordable housing or else, have an opportunity to be gentrified out. And of course, we don’t want that to happen, we want to continue to be there. But often these older parks have very bad infrastructure. So St. Vincent de Paul has been going and purchasing these parks that are not going to end up in resident owned communities to preserve that housing stock, but also have noticed during that period of time, that many of the units in these older parks are well past their usable life. And that’s really led us to where we are today.
Miller: What role do you think manufactured homes should play in solving Oregon’s housing crisis?
McDonald: Manufactured housing is one of the essential parts of our ladder of housing that we have for people in the cities or in the communities and throughout the state. So they’re often the affordable housing that a person or family can buy, especially in rural parts of the state. They’re often the most attractive way to get into a rural place and build a home for yourself. But also they’re often the housing stock for people on fixed incomes that have very few other options available to them.
Miller: What is the average price difference between the construction of a manufactured home and a stick built or site built home?
McDonald: If you’re in the private marketplace, of course, it’s probably about 70-80% of a stick built home, when it’s landed and put on the site and fully plumbed and so forth. What we’re proposing is to drive that price point down quite a bit.
Miller: It’s one thing to say that manufactured homes represent a key piece in creating more affordable housing in Oregon. It’s another to say that your nonprofit will actually be the entity or create a new entity to actually manufacture those homes. Why take this on?
McDonald: Well, the frustration we have, of course, is that the market can’t keep up with the demand for the product. So, while St. Vincent de Paul has many parks throughout the state, we’d like to purchase more mobile homes to replace ones that are going out of service because they’re too old. But the backlog on purchasing the units is so long that it’s probably over a year before we could see any product. And the price point is rapidly increasing. So it seemed prudent for us to take advantage of the skills we have in business development, to develop a manufacturing facility that would be a not for profit organization that could manufacture specifically for this target market.
Miller: Why is it that the private market doesn’t see a market here, doesn’t see a sustainable business model?
McDonald: The private sector, the manufacturers of mobile homes throughout this region are just vastly overtaxed, in terms of backlog for existing orders. What we know is that as there has been wildfires throughout the West and the cost of affordable housing has gone up so much, that the demand for this product just continues to increase. So I think that the private sector is doing the best they can to address what they believe is their market, which is the regular market rate of mobile homes. But the demand is so great that they just can’t keep up with anything else other than the ones that they’re currently doing.
Miller: Can you tell us about the factory that you were able to purchase, that you plan to retrofit? What is this?
McDonald: Well, it’s an industrial building in the west part of Eugene at 88 Garfield Street. It used to be the old American Steel building and it’s about a 96,000 square foot warehouse that is set up for industrial purposes. It used to be a manufacturing fabrication facility years ago, and we were fortunate to be able to acquire that building just after the Legislature agreed to fund this program, so we needed to have a site for that, and this building came on the marketplace and we were able to purchase it.
Miller: I’ve read that you have coveted this particular building for years. Why?
McDonald: Well, it’s an ideal manufacturing facility. It’s got very wide bays, it’s got sufficient power associated with its on almost five acres property. It’s right in the heart of West Eugene on busline and transportation corridors. So for my purposes for manufacturing and business development, this building is just ideal for a variety of applications. This just happens to be the application that we’ve decided on.
Miller: Can you tell us about the homes that you plan to build there?
McDonald: Yes, we plan on having two designed products. One is a 770 square foot single-wide mobile home-two bedroom, one bath, that would be very fire resilient, come with need  certified heat pump and envelope and trying to make it as affordable as possible for families to purchase or else to sell for nonprofits or community at large. The second product is a 1,260 square foot, three bedroom, two bath, double-wide to serve more of that home ownership, that starter home/replacement home, that people would like to have that would be affordable to them.
Miller: How many of these homes when you’re fully up and running do you think you’ll be able to make each day?
McDonald: The goal is to have four boxes put out a day. So if it was four single wides, that would be four units. If it was double wides, then it would be two units per day or a combination thereof.
Miller: A new report to the Eugene City Council by a sustainability consulting firm found that per square foot, manufactured homes or older mobile homes have a higher carbon footprint than conventional homes, largely because they’re so inefficient in terms of losing heat or losing cool. How is what you’re hoping to build going to be different?
McDonald: Well, as I said, these are going to be extremely energy efficient units with heat pumps and very tight envelopes, so they’ll either perform or outperform any stick build housing out there. And the report was quite correct. The pre-76 mobile homes that are in many of the older parks around the state, really are energy hogs and they are vastly inefficient and they’re well past their useful life. So that report is absolutely accurate and the faster we find replacement product for that very old product, the more likely we’re going to decrease our carbon footprint.
Miller: You said at a recent press conference that you want to keep the cost of these units down by quote, vertically integrating the entire process from beginning to end. That sounds like good business speak, but I don’t totally understand what it means in the context of building manufactured homes. So what’s it actually going to look like?
McDonald: So a manufacturer of mobile homes, manufacturers a product, but they generally do not market the product, they use dealers to do that, they don’t move the product in their factory, they’re not a moving company and they don’t set up the product on the site once it’s there. The plan we have, the Hope Community Corporation will manufacture the product and that product will then be sold to single people, say in Lane county, and the St. Vincent de Paul will then sell that product out into the marketplace, acting as the dealer for this product. We’ll also be using St. Vincent de Paul’s trucking fleet to go ahead and move the product to where it’s going to be finally set up, and then contracting in every region of the state through St. Vincent de Paul to have the setup of the product at the other end of the state. So by doing that, St. Vincent de Paul will be the buyer and the mover and the one that contracts for the set up around the state and Hope Community Corporation will be the manufacturer, keeping basically entirely under the envelope of not for profits.
Miller: Who do you envision to be the final buyers, the consumers of these new homes?
McDonald: This bill was put forward by Representative Marsh from Ashland down in Southern Oregon, and her District of course, was the one that was so badly devastated by the fire a couple of years ago. So her hope and our hope is that a significant portion of this product, at least, the initial portion of it will head on down to Southern Oregon, either as home ownership or replacement for rental units that were down there and were burned out. We also anticipate that not for profit organizations like St. Vincent de Paul or Housing Authorities scattered around the state that want to go ahead and take advantage of this product, are likely to be buyers as well as families and individuals under under 100% of median income.
Miller: How would you, or other folks, be helping people buy these homes or get loans for them or get access to the land to put these homes on?
McDonald: Well, the access to land I think is not really the big issue since so much of the, so many of the units that are being… that we’re planning on putting out there are going to be replacement units for either burned out or else very old units. The financing of course depends on whether it’s going to a Housing Authority or not for profit or a public entity of some sort, that would be financing that would of course come through those organizations. Individuals and families, we’re looking at finding a way to keep the price point on these sufficiently low that they can afford to purchase the product, especially if they were going out of an older unit that was so energy inefficient that often that the delta between what you were paying previously for utilities and the cost of the debt service associated will the product will be pretty close to each other.
Miller: Can you give us a sense for the price point that you’re actually envisioning, how much might either the two bedroom single wide or the three bedroom double wide? How much might they cost on the open market?
McDonald: Of course, what we know is the cost of per square foot for units out there is approaching, in the current marketplace, landed and set up, it’s getting close to $200 a square foot. We’re hoping to come in pretty dramatically under that price point.
Miller: What does that translate to in terms of the cost of the home itself? Which I think is really the number that people most often think about as opposed to the cost per square foot?
McDonald: Sure. If you think of a two bedroom, 770 square foot unit, that would be around $140, 150,000 on the open marketplace today. We’re hopefully keeping that under 100.
Miller: So I’ve seen you say in the past that you don’t feel like you are going to be competing with the private sector. And you said earlier on our show that they’re just, they’re doing what they can, but they’re just barely keeping up with the demand. But if you are creating energy efficient, good quality homes that are cheaper than what’s currently being offered by the private sector, how are you not competing with them?
McDonald: Because we’re targeting public entities, not for profit entities, Housing Authorities and families that are under 100% of median income and as such, that’s a marketplace that is really not available to the private sector.
Miller: Because they couldn’t have that pencil out? I mean, are there structural reasons why it’s not available? Or is it just that they’ve chosen not to market to that particular market?
McDonald: The private sector…any manufacturer will sell to anybody that can get out there, you know? That’s one of the wonderful, glorious, and I mean that, good things about the private sector and the capitalistic system is that you want to sell, you want to sell to everybody, you possibly can. But when the demand so outstrips capacity to produce, then you go to where the most profit is going to be generated – and the most profit is not generated at the lowest possible price point, but at the upper levels.
Miller: Do you see this for yourself, for the nonprofit systems that you’ve been setting up? Do you see this as a self sustaining business or one that can only get by with ongoing public help, public funding?
McDonald: The intent is to have this be a self supporting operation.
Miller: What is the timeline right now?
McDonald: So we’re currently starting the rehabilitation process on the building itself. And we’ve done some of those upgrades to electric and sprinkler systems. We are currently looking at getting into the permit process sometime in September with the hope that we will have our permits coming out somewhere in December, so that we can then do the reconstruction of the facility, the necessary cranes and hoists and so forth, and have that done in the, sometime in the second quarter of next year with a target of starting construction either in the mid-summer or late summer.
Miller: …Of next year. So, ideally if all goes well, one year from now, you’ll be up and running building manufactured homes at that site?
McDonald: That’s correct.
Miller: How many people do you hope to employ when you’re fully up and running?
McDonald: Somewhere between 110 and 120 in the facility itself.
Miller: What does the labor market look like in Lane County, right now?
McDonald: It’s a nightmare. It’s a nightmare everywhere on the West Coast, probably throughout the country. Getting qualified labor is extremely difficult, which is one of the reasons why we’re early on in this process, trying to make alliances with the training programs through the high schools and community college and others to find an apprentice program to train people in the manufacturing facility to help fill that gap in labor.
Miller: Do you see it as a nightmare? Or could you also see it as an opportunity, that you’re going to be creating more than 100 jobs that require skilled labor, that you can then give people?
McDonald: Well, of course that’s the goal is to start building that train, or that skilled labor force, instead of trying to bring it in from other places to train and grow that labor force from our own young people that we have in this community in this area. I think that’s probably a model that we’re all going to be looking forward to in the future, is that those types of apprentice programs are going to grow substantially, very like that, they used to be associated with high schools and community colleges 50-60 years ago.
Miller: What do you think the biggest challenges are going to be in making this successful
McDonald: Supply of materials, and price point, well, and the labor market, those two are probably the biggest issues.
Miller: You previously helped start a mattress recycling business with St. Vincent de Paul in Lane County. Now you’re starting a whole new industry. How would you describe your life’s mission?
McDonald: Well, my life’s mission is of course working at St. Vincent de Paul, doing social justice work to try and help low income people and the way that we’ve been able to do that is through social entrepreneurship. So whether it was refurbishing mattresses or deconstructing mattresses or doing CSC recovery and, you know, a car lot or glass factory or whatever it is, we have found niche markets that we have been able to get into, that create jobs and opportunities, but also creates profits that can be plowed back into the charitable purpose of the organization.
Miller: Do you also see that- the work itself, as beneficial, aside from the money that you can then generate to pay for programs, I mean in your mind is the work itself, its own end?
McDonald: Work is one of the things that we gain value as who we are. I mean, many people identify themselves as what they do, but more importantly, the ability to contribute back to the community through what you do, I think is an important part of just being human. It’s kind of the idea that if you give more than you take in life, you’re going to create a better world out there and this kind of labor that things that you do, it helps, helps to make a better community and better world.
Miller: Just briefly, I’m not aware of other nonprofits embarking on a project like this. Have you heard interest from other places in this model?
McDonald: I think we’re creating the model.
Miller: Have you heard of other people saying that, ‘We might want to copy you?’
McDonald: I hear that quite a bit from a lot of places. So St. Vincent de Paul has been doing consulting work throughout the United States as part of the Cascade Alliance for the last decade or so, and whether it’s a waste based business or retail thrift or other venture, we’re often tapped to give advice and support. And this is one of those areas where people are very interested in it.
Miller: Terry McDonald, thanks for your time today. I appreciate it
McDonald: It’s a pleasure. Thank you.
Miller: Terry McDonald is the Executive Director of St. Vincent de Paul Society of Lane County.
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