COMMENTS - PLEASE ENTER PROGRAM NAME IN SUBJECT LINE

THE COMMUNITY LAND TRUST: 

AFFORDABLE HOUSING WITH A KICK!

By Niel Moser

Like most Rotary Club members, volunteering in my community is important to me.  Rotary members around the world volunteer their time to different organizations to help make their communities a better place to live. I belong to the Rotary Club of Madison, Wisconsin.  My place to volunteer is on the Board of the Madison Area Community Land Trust, a non-profit developer of sustainable affordable homes for people below 80% of the medium income level.

So, why talk about community land trusts and what is that “kick” they have?

Chances are you may not have heard of a community land trust before.  Actually, they are little giants in the world of affordable housing developers.  They are making their mark on the housing scene in America. There are only about 200 community land trusts in the country and most are small in size but big on accomplishment.

First, the bragging rights: The top four out of five affordable hosing projects in the Homeownership Project category in the 2008 Home Depot Foundation’s national Awards of Excellence for Affordable Housing Built Responsibly were developed by community land trusts.  As Kelly Caffarelli, president of the Home Depot Foundations said, “The projects being recognized… are among our nation’s most outstanding examples of affordable, sustainable communities that bring real savings in energy, transportation and maintenance costs to families.”  For more detail, go to www.homedepotfoundation.org.

The first place award this year went to the Madison Area Community Land Trust in Madison, Wisconsin for their Troy Gardens Condominium town home project.  This is a mixed community of 20 affordable and 10 market rate homes located on a 31-acre parcel including walking trails, community gardens, open prairie, and an organic farm, all within the City of Madison and on public transportation routes. The homes are one and two stories, two and three bedrooms, with full basements and were all built to the Energy Star standard rating, are fully accessible to persons who use wheelchairs, have solar hot water and photovoltaic systems, and use the highest quality building materials.  Yet, these homes were priced for people within the 60% - 80% of the county HUD (Housing and Urban Development) medium income range. The actual average income for homebuyers at Troy Gardens was 65% of median income.  Now that’s affordable!

This award was not the only recognition that Troy Gardens and the Madison Community Land Trust received.  It also won the Livable Communities Award for 2007 from AARP and the National Builders Association for its environmental, accessibility, and intergenerational focus, and has been featured in the Wall Street Journal and other publications around the country.

OK, now for that “kick” that the community land trust brings to affordable housing.  Conventional affordable housing development keeps the cost low by using grant money and long-term loans from local, state and federal government.  Community land trusts do this, too, but they also have figured out a way to reduce the home sales price by an additional 30 – 40%.

The secret extra “kick” is simple: Don’t sell the land.

Land is generally about 30 – 40% of the cost of a home.  But with the community land trust home, the homebuyer only buys the house. The land is held in trust by the community land trust for a period of 98 years and renewable thereafter. The buyer leases the land and pays a monthly ground rent fee.  This results in a lower sales price, less money down, and a much lower mortgage and mortgage payment.  Furthermore, the mortgages are further reduced by down payment assistance grants from various agencies and organizations. (First time homebuyers with income below 80% of medium income are usually eligible for down payment assistance.)

Community land trusts can develop affordable housing in any market in the United States by refurbishing existing homes or new construction of single family homes or condominiums.  To keep the property perpetually affordable, resale must be to homebuyers with the same income restrictions as the original buyer. Also, equity accumulation is restricted to 25% of the appreciated value (and, of course, any mortgage pay down) with the remainder of the appreciation being retained in the home to keep the resale price lower for future buyers. 

One last point of fact.  In 2007, the national foreclosure rate for community land trust homes was 0.06%, which was 30 times lower than the national foreclosure average. The community land trust provides homebuyer and “home keepership” education and stays involved over the entire term of the land lease. If the homeowner runs into loss of income or hard times, the community land trust stands ready to step in to buy the home or assist in solving problems.

I’m a believer that the dream of home ownership should be achieved by more people. That means working to see that there are more high quality, energy efficient affordable homes available to more people and that those homes stay affordable for generations to come. 

Now don’t stop here.  The future of affordable housing and the community land trust is up to all of us.  To find out more about community land trusts, check out the National Community Land Trust Network’s Website at www.cltnetwork.org.  You can find out more about the Madison Area Community Land Trust at www.affordablehome.org.

About the author: Niel Moser is a member of the Rotary Club of Madison. His company, Home Mortgage Solutions, LLC, is a licensed mortgage broker in Wisconsin and works primarily with credit unions in Wisconsin to provide mortgage origination and credit counseling services to credit union members. He is also works with the Wisconsin of Housing and Economic Development Authority and with non-profit organizations.