July 24, 2006
Home equity | With deep discounts on building supplies, the Maine Housing & Building Materials Exchange helps low-income homeowners keep up with the cost of repairs
By Taylor Smith
The Sanford warehouse for the Maine Housing & Building Materials Exchange is on the ground floor of an old mill building off Main Street, tucked away in a residential area. Up the loading dock stairs from the parking lot, the warehouse space opens up with racks bursting with all manner of construction materials.
Dozens of boxes, each containing a set of new Schlage doorknobs, sit on the shelf of one rack; gallons of paint occupy a room off the main floor. New egress windows in cardboard and plastic wrap line the top row of shelves along the first room of the warehouse. In the second, rows of shower stalls and bathroom vanities are arranged along the floor and hundreds of exterior doors are stacked near the front wall.
It's a bargain hunter's paradise, with price tags advertising staggeringly low prices. An atrium door with long windows on each side is tagged at $80. Dave Zimmerman, the executive director of the BME, as the exchange is called, figures the door would go for $1,500 or more at the typical home improvement store. "Most of [our inventory] is 50% off retail for members," he says.
While bargain hunters might have a field day at the BME, offering cut-rate building materials to do-it-yourselfers is just a small part of the organization's mission. Instead, the nonprofit BME serves low-income Maine residents who might otherwise be priced out of the home construction and repair market by offering a range of discounted building materials, from roof shingles to toilets, gas ranges to bathroom tile. "The Building Materials Exchange right from the get-go was intended to be a repository of building materials and a vehicle for getting good quality, low-cost materials into the hands of low-income homeowners," says Anne Gass, a consultant in Gray who started the BME in 1989.
But since the BME was founded in a Windham warehouse 17 years ago, its biggest challenge has been publicizing what the organization does. As a nonprofit group serving roughly 6,000 regular customers, the BME needs a big inventory of material. That means relying in large part on donations from companies like plumbing distributors or manufacturers ˆ but those companies have to know about the organization. While Zimmerman says the organization has made tremendous inroads spreading the BME gospel in recent years, there's more that needs to be done to boost the organization's visibility. "It's been a huge challenge for us," he says.
Word of mouth has worked nicely, says Zimmerman, but the BME is in the unique situation of being a nonprofit that functions more like a retail store. As a result, the BME faces the challenges many retailers face, including managing inventory, attracting customers and handling competition from other cut-rate materials sellers.
One development that Zimmerman hopes will pay dividends for the BME is a new location. The BME's new home ˆ in addition to its Sanford store ˆ is the former Bradco Chair Co. building in Lisbon, and replaces the organization's Gray location, which shut down earlier this month. With more than twice as much room as the Gray location and a high-profile spot on Route 196 just outside of Lewiston, Zimmerman hopes the new location will help attract new customers to the organization. "As soon as I saw it, I knew it was the right place," says Zimmerman, who adds that the BME has been looking for a suitable alternative to its Gray warehouse ˆ a converted chicken barn ˆ for more than four years. "Being on 196 is going to be huge for us. It's a great opportunity."
Moving inventory
The BME was started in 1989 by Gass, an affordable housing consultant who says she "plagiarized" the idea of a local repository for cast-off building materials from the Loading Dock, a nonprofit group in Baltimore that sells surplus materials to low-income residents.
Gass knew about the Loading Dock through her work on community revitalization efforts in Baltimore, and figured a similar venture would work in Maine after she moved to the state from Baltimore in 1988. "It was like a Goodwill for homeowners," she says of the Loading Dock. "And Mainers are such a handy bunch, so it seemed like it would make a lot of sense up here."
What's more, the U.S. economy in the early 90s was flagging after a prolonged boom in the 80s fueled, somewhat ironically, by a white-hot real estate market. The tough economic climate made it increasingly difficult for some people to afford even the most inexpensive of home repairs. At the same time, those economic conditions meant tough times for nonprofit organizations dependent on grant money and philanthropic donations. As a result, Gass continued thinking about the model of Goodwill Industries International, the nonprofit that runs hundreds of stores nationwide and depends on donated goods it can sell for a modest price. "I was told that if you're dependent on grants, it assures you that you'll never survive," she says.
Last year, the BME recouped nearly its entire $365,000 annual budget through sales of building materials and yearly dues from roughly 6,000 members. What the BME doesn't make from sales and dues, Zimmerman says, it makes from grants and community and corporate support. "We're 98% self supporting, which is unheard of in the nonprofit world," he says.
These days, it's especially helpful for a nonprofit not to rely on fundraising to cover its costs, as a growing number of nonprofits means more competition for every philanthropic dollar. Brenda Paluso, director of public policy for the Portland-based Maine Association of Nonprofits, says a model like the BME's can be liberating for a nonprofit organization. "They're controlling their own destiny," she says.
Case in point: Membership at the BME isn't restricted ˆ its two locations are open to members of the public, no matter what their income level. The best deals are reserved for low-income members, but in order to move inventory and boost sales, the BME allows anyone to join and shop.
The rules are simple: To qualify as a low-income member, or client, a person has to own a house and make less than 80% of the median income in Maine. For a family of four, that annual income threshold is roughly $40,000. Clients' annual dues are just $10. Supporting members, who don't meet income qualifications, pay $25-$40 a year. Besides a handful of products that are reserved for clients ˆ construction staples like insulation, roofing materials, egress windows and exterior doors ˆ the BME's inventory is fair game. Zimmerman says architectural salvage buffs frequently comb through the two BME locations to hunt for items like antique diamond windows.
Expanding the membership has gotten more people involved with the BME while also helping the organization move inventory through its warehouses. But most importantly, it adds another revenue stream to the bottom line. When the BME first started, Gass recalls, the maximum income threshold for members was set at 50% of median income. It turned out to be too low, limiting the number of people who came in to the BME. Moving the threshold higher meant more business, and opening up memberships to the general public meant even more business. "Even though you're a nonprofit, you still have to pay your bills," says Zimmerman.
Second acts
Still, the focus always has been on helping low-income Mainers keep pace with home repairs. Sondra Shields has used the BME for eight years as she's renovated her Kennebunk house and built apartments in an adjacent barn. She's on a fixed income, relying on rent from tenants and the pay from a caretaking job at Pine Grove Cemetery in West Kennebunk. But during the course of the renovations, Shields says she's more than tripled the value of her home. "When I bought this house, it was a dump," she says. "It was appraised at $163,000, and it was appraised out at $600,000 last week."
If retail lumberyards and home improvement stores were her only options, would Shields have been able to afford the renovations to her property? "Absolutely not," she says. "I'd say anything [the BME] carries, I've probably dipped into it. Closet doors, bathroom vanities ˆ my God, they're horrendously expensive, and if you can get one for 40 bucks, who wouldn't do it?"
Shields has been a regular customer at the BME, dropping by as frequently as once or twice a week in search of good deals. (For more on how the BME fills its shelves, see "Surplus and salvage," page 23.) And while the BME's inventory isn't as voluminous as that at places like Home Depot, it's likely cheaper. For example, Shields found an entire kitchen at the BME salvaged from a local remodeling job. The price tag ˆ from cabinets to sink ˆ was $900. "It's cheaper by a third than Home Depot, and it's better stuff," she says. "These rich people down the beach, they come and put in a new kitchen when there's nothing wrong with the old kitchen. Then they donate it to the [BME] and they sell it for nothing."
Reuse and recycle is a common refrain at the BME. The Sanford warehouse has 5,000 doors stacked along a front wall and stored down in a basement area. Each has its dimensions written in black ink on its end so customers can sift through and find the perfect fit for their job. Rather than clogging a landfill, the recycled materials get a second life. "Direct reuse ˆ taking it out of the house, cleaning it up and putting it back again ˆ takes very little energy," says Zimmerman.
While the Sanford warehouse appears to have enough room to handle the BME's varying inventory, Zimmerman says it will be a boon to the organization when it moves into its new location in Lisbon. The move is taking place during July and August, and Zimmerman expects the Lisbon warehouse to open for business in early September. With 14,000 sq. ft. of space, the new location dwarfs the 6,000-square-foot space in Gray, which, as an old chicken barn, was long and narrow ˆ not the ideal venue for storing and selling building materials.
The BME received loans from Wiscasset-based Coastal Enterprises Inc. and Bank of America to pay for the $380,000 building, but Zimmerman doesn't expect the repayment of those loans to hurt his bottom line. He hopes to subsidize a portion of the building's cost through rental income from a house on the property, and plans to create additional revenue by converting a section of the building into studio space that the BME can rent to local artists. "It's not just a great idea for revenues, but also for marketing," says Zimmerman.
Before that can happen, there's plenty to be done in Lisbon, from installing a new sprinkler system to other repairs. Zimmerman, however, isn't fazed by the upgrades the new building requires. "It needs a lot of work," he says. "But at least we have the materials to do it."
Dozens of boxes, each containing a set of new Schlage doorknobs, sit on the shelf of one rack; gallons of paint occupy a room off the main floor. New egress windows in cardboard and plastic wrap line the top row of shelves along the first room of the warehouse. In the second, rows of shower stalls and bathroom vanities are arranged along the floor and hundreds of exterior doors are stacked near the front wall.
It's a bargain hunter's paradise, with price tags advertising staggeringly low prices. An atrium door with long windows on each side is tagged at $80. Dave Zimmerman, the executive director of the BME, as the exchange is called, figures the door would go for $1,500 or more at the typical home improvement store. "Most of [our inventory] is 50% off retail for members," he says.
While bargain hunters might have a field day at the BME, offering cut-rate building materials to do-it-yourselfers is just a small part of the organization's mission. Instead, the nonprofit BME serves low-income Maine residents who might otherwise be priced out of the home construction and repair market by offering a range of discounted building materials, from roof shingles to toilets, gas ranges to bathroom tile. "The Building Materials Exchange right from the get-go was intended to be a repository of building materials and a vehicle for getting good quality, low-cost materials into the hands of low-income homeowners," says Anne Gass, a consultant in Gray who started the BME in 1989.
But since the BME was founded in a Windham warehouse 17 years ago, its biggest challenge has been publicizing what the organization does. As a nonprofit group serving roughly 6,000 regular customers, the BME needs a big inventory of material. That means relying in large part on donations from companies like plumbing distributors or manufacturers ˆ but those companies have to know about the organization. While Zimmerman says the organization has made tremendous inroads spreading the BME gospel in recent years, there's more that needs to be done to boost the organization's visibility. "It's been a huge challenge for us," he says.
Word of mouth has worked nicely, says Zimmerman, but the BME is in the unique situation of being a nonprofit that functions more like a retail store. As a result, the BME faces the challenges many retailers face, including managing inventory, attracting customers and handling competition from other cut-rate materials sellers.
One development that Zimmerman hopes will pay dividends for the BME is a new location. The BME's new home ˆ in addition to its Sanford store ˆ is the former Bradco Chair Co. building in Lisbon, and replaces the organization's Gray location, which shut down earlier this month. With more than twice as much room as the Gray location and a high-profile spot on Route 196 just outside of Lewiston, Zimmerman hopes the new location will help attract new customers to the organization. "As soon as I saw it, I knew it was the right place," says Zimmerman, who adds that the BME has been looking for a suitable alternative to its Gray warehouse ˆ a converted chicken barn ˆ for more than four years. "Being on 196 is going to be huge for us. It's a great opportunity."
Moving inventory
The BME was started in 1989 by Gass, an affordable housing consultant who says she "plagiarized" the idea of a local repository for cast-off building materials from the Loading Dock, a nonprofit group in Baltimore that sells surplus materials to low-income residents.
Gass knew about the Loading Dock through her work on community revitalization efforts in Baltimore, and figured a similar venture would work in Maine after she moved to the state from Baltimore in 1988. "It was like a Goodwill for homeowners," she says of the Loading Dock. "And Mainers are such a handy bunch, so it seemed like it would make a lot of sense up here."
What's more, the U.S. economy in the early 90s was flagging after a prolonged boom in the 80s fueled, somewhat ironically, by a white-hot real estate market. The tough economic climate made it increasingly difficult for some people to afford even the most inexpensive of home repairs. At the same time, those economic conditions meant tough times for nonprofit organizations dependent on grant money and philanthropic donations. As a result, Gass continued thinking about the model of Goodwill Industries International, the nonprofit that runs hundreds of stores nationwide and depends on donated goods it can sell for a modest price. "I was told that if you're dependent on grants, it assures you that you'll never survive," she says.
Last year, the BME recouped nearly its entire $365,000 annual budget through sales of building materials and yearly dues from roughly 6,000 members. What the BME doesn't make from sales and dues, Zimmerman says, it makes from grants and community and corporate support. "We're 98% self supporting, which is unheard of in the nonprofit world," he says.
These days, it's especially helpful for a nonprofit not to rely on fundraising to cover its costs, as a growing number of nonprofits means more competition for every philanthropic dollar. Brenda Paluso, director of public policy for the Portland-based Maine Association of Nonprofits, says a model like the BME's can be liberating for a nonprofit organization. "They're controlling their own destiny," she says.
Case in point: Membership at the BME isn't restricted ˆ its two locations are open to members of the public, no matter what their income level. The best deals are reserved for low-income members, but in order to move inventory and boost sales, the BME allows anyone to join and shop.
The rules are simple: To qualify as a low-income member, or client, a person has to own a house and make less than 80% of the median income in Maine. For a family of four, that annual income threshold is roughly $40,000. Clients' annual dues are just $10. Supporting members, who don't meet income qualifications, pay $25-$40 a year. Besides a handful of products that are reserved for clients ˆ construction staples like insulation, roofing materials, egress windows and exterior doors ˆ the BME's inventory is fair game. Zimmerman says architectural salvage buffs frequently comb through the two BME locations to hunt for items like antique diamond windows.
Expanding the membership has gotten more people involved with the BME while also helping the organization move inventory through its warehouses. But most importantly, it adds another revenue stream to the bottom line. When the BME first started, Gass recalls, the maximum income threshold for members was set at 50% of median income. It turned out to be too low, limiting the number of people who came in to the BME. Moving the threshold higher meant more business, and opening up memberships to the general public meant even more business. "Even though you're a nonprofit, you still have to pay your bills," says Zimmerman.
Second acts
Still, the focus always has been on helping low-income Mainers keep pace with home repairs. Sondra Shields has used the BME for eight years as she's renovated her Kennebunk house and built apartments in an adjacent barn. She's on a fixed income, relying on rent from tenants and the pay from a caretaking job at Pine Grove Cemetery in West Kennebunk. But during the course of the renovations, Shields says she's more than tripled the value of her home. "When I bought this house, it was a dump," she says. "It was appraised at $163,000, and it was appraised out at $600,000 last week."
If retail lumberyards and home improvement stores were her only options, would Shields have been able to afford the renovations to her property? "Absolutely not," she says. "I'd say anything [the BME] carries, I've probably dipped into it. Closet doors, bathroom vanities ˆ my God, they're horrendously expensive, and if you can get one for 40 bucks, who wouldn't do it?"
Shields has been a regular customer at the BME, dropping by as frequently as once or twice a week in search of good deals. (For more on how the BME fills its shelves, see "Surplus and salvage," page 23.) And while the BME's inventory isn't as voluminous as that at places like Home Depot, it's likely cheaper. For example, Shields found an entire kitchen at the BME salvaged from a local remodeling job. The price tag ˆ from cabinets to sink ˆ was $900. "It's cheaper by a third than Home Depot, and it's better stuff," she says. "These rich people down the beach, they come and put in a new kitchen when there's nothing wrong with the old kitchen. Then they donate it to the [BME] and they sell it for nothing."
Reuse and recycle is a common refrain at the BME. The Sanford warehouse has 5,000 doors stacked along a front wall and stored down in a basement area. Each has its dimensions written in black ink on its end so customers can sift through and find the perfect fit for their job. Rather than clogging a landfill, the recycled materials get a second life. "Direct reuse ˆ taking it out of the house, cleaning it up and putting it back again ˆ takes very little energy," says Zimmerman.
While the Sanford warehouse appears to have enough room to handle the BME's varying inventory, Zimmerman says it will be a boon to the organization when it moves into its new location in Lisbon. The move is taking place during July and August, and Zimmerman expects the Lisbon warehouse to open for business in early September. With 14,000 sq. ft. of space, the new location dwarfs the 6,000-square-foot space in Gray, which, as an old chicken barn, was long and narrow ˆ not the ideal venue for storing and selling building materials.
The BME received loans from Wiscasset-based Coastal Enterprises Inc. and Bank of America to pay for the $380,000 building, but Zimmerman doesn't expect the repayment of those loans to hurt his bottom line. He hopes to subsidize a portion of the building's cost through rental income from a house on the property, and plans to create additional revenue by converting a section of the building into studio space that the BME can rent to local artists. "It's not just a great idea for revenues, but also for marketing," says Zimmerman.
Before that can happen, there's plenty to be done in Lisbon, from installing a new sprinkler system to other repairs. Zimmerman, however, isn't fazed by the upgrades the new building requires. "It needs a lot of work," he says. "But at least we have the materials to do it."
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