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Creating Permanently Affordable Owner-Occupied Housing with Community Land Trusts

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For more than 40 years, communities have organized Community Land Trusts (CLTs) to create and preserve affordable owner-occupied housing. CLTs acquire residential land and retain ownership of the land in perpetuity. CLTs then sell the homes on the land at affordable prices to low- and moderate-income (LMI) households and lease the land to those households. The terms of the ground lease include a resale formula that restricts future sale prices of the house to an affordable level while preserving the opportunity for the owner to build equity through price appreciation and mortgage amortization.

This panel will share lessons learned from local organizations that have established or are in the process of launching a CLT. Panelists will discuss why they chose a CLT as a tool, what they hope to achieve, and how they have implemented their CLT strategy.

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Creating Permanently Affordable Owner-Occupied Housing with Community Land Trusts

  1. 1. AIA Pittsburgh Provider Number - A207 Creating Permanently Affordable Owner - Occupied Housing with Community Land Trusts April 12, 2018 Course Number - CLT:1-4 Wanda Wilson Oakland Planning and Peter Brewton Development Corporation Ed Nusser Lawrenceville Corporation
  2. 2. Credit(s) earned on completion of this course will be reported to AIA CES for AIA members. Certificates of Completion for both AIA members and non-AIA members are available upon request. This course is registered with AIA CES for continuing professional education. As such, it does not include content that may be deemed or construed to be an approval or endorsement by the AIA of any material of construction or any method or manner of handling, using, distributing, or dealing in any material or product. _______________________________________ ____ Questions related to specific materials, methods, and services will be addressed at the conclusion of this presentation.
  3. 3. For more than 40 years, communities have organized Community Land Trusts (CLTs) to create and preserve affordable owner-occupied housing. CLTs acquire residential land and retain ownership of the land in perpetuity. CLTs then sell the homes on the land at affordable prices to low- and moderate-income (LMI) households and lease the land to those households. The terms of the ground lease include a resale formula that restricts future sale prices of the house to an affordable level while preserving the opportunity for the owner to build equity through price appreciation and mortgage amortization. This panel will share lessons learned from local organizations that have established or are in the process of launching a CLT. Panelists will discuss why they chose a CLT as a tool, what they hope to achieve, and how they have implemented their CLT strategy. Course Description
  4. 4. Learning Objectives 1. Recognize the value proposition of CLTs for community development efforts and understand the trade-offs between other affordable homeownership strategies. 2. Discuss the basic legal framework that governs CLTs, including the ground lease, resale formula, and governance structure. 3. Understand how communities with different market characteristics adapt the CLT model to their particular needs. At the end of the this course, participants will be able to:
  5. 5. Community Land Trusts: A (Brief) Overview • Challenge: Access to affordable homeownership • Typical response • CLTs • Ground Lease • Permanent Affordability • Resale Formula • Key comparative points
  6. 6. The Challenge • Homeownership is often unaffordable for many working families • In many housing markets, affordability gaps are growing • Displacement is a destabilizing event and can be difficult to prevent
  7. 7. Typical Responses • Assistance is provided to limited-income homebuyer - to bridge affordability gap or value gap (or both) as: • Grant to homebuyer or • Forgivable or deferred loan to homebuyer • No long-term protections are put in place to preserve, over time, the initial affordability assistance provided
  8. 8. Community Land Trusts • Preserve affordability over time • Protect & leverage subsidies invested to create these community assets • Help residents, occupants and users of these community assets become and remain successful
  9. 9. How They Do It: Ground Lease • CLT separates ownership of land from improvements • Local community retains ownership of land • Improvements (the home) are owned by individual(s) • CLT leases land to owner of improvements Improvements Land
  10. 10. Permanently Affordable Homeownership • CLT homeowners, by signing the ground lease: • Agree to share with future homebuyers the affordability that was initially created for them • Agree to a resale formula that will be used to determine the price at which they can sell their homes
  11. 11. Resale Formula • The key tool that allows CLT to maintain permanent affordability and simultaneously allows homeowners to build equity • Typically one of three models • Fixed Rate of Return • Inexed Model • Shared Appreciation Model
  12. 12. Comparison to Typical Homeownership • Key Differences: • Restrictions on use and resale value • Requires permission prior to making some improvements • Different mortgage is required • Key Similarities • Responsible for all property taxes • Eligible for all tax benefits of traditional homeownership • Fully inheritable
  13. 13. The Lawrenceville Community Land Trust promotes, expands, and preserves permanently affordable housing opportunities. Lawrenceville CLT
  14. 14. Median Home Sale Prices ’00-’16 $25,750 $27,000 $26,000 $35,000 $66,000 $30,000 $123,500 $115,000 $52,500 $251,521 $244,172 $182,534 Lower Lawrenceville Central Lawrenceville Upper Lawrenceville 2000 2007 2012 2016
  15. 15. Lawrenceville CLT Outgrowth of the 10th Ward Community Plan
  16. 16. Regional Planning • 2014 – Regional CLT Feasibility Study is funded • 2015 – Regional Study comes back with a two fold recommendation: – CLTs are feasible and NEEDED in the greater Pittsburgh area – Find a project and a place to prove the model
  17. 17. Lawrenceville CLT – The Project
  18. 18. CLT Phase 1 Planning • Q1 2016 – Finalize Site Acquisition • Summer 2016 – Design Development • Fall 2016 - Zoning Approval • Spring 2017 – Financing Assembled • Summer 2017 – Ground Break • Jan 31, 2018 – 1st CLT Unit in Western PA Complete • February 9, 2018 – 1st CLT Homeowner in Western PA
  19. 19. Setting the Standard for the Future • Equitable Design Choices • Monmade & Local Economy • Created CLT Design Guidelines for future phases
  20. 20. Building the plane as we fly it… • January 2016 – Lawrenceville Corporation and Lawrenceville United seat Lawrenceville CLT Advisory Board • August 2016 – CLT Priority Populations Established • September 2016 – Major decisions in Ground Lease finalized • November 2016 – Application form and process finalized
  21. 21. CLT Application Process • Submit Intake Form • Meet 1 on 1 with CLT staff • Submit Full Application – Requires pre-qualification letter from lender & proof of income (pay stubs, tax returns, etc.) • CLT Advisory Board reviews all full applications and makes selections for home buyers based on established priorities
  22. 22. Questions?
  23. 23. Oakland Community Land Trust inclusive and equitable development, community empowerment, and neighborhood stability in one time-tested, nationally-proven tool
  24. 24. Oakland CLT Goals • Maintain permanent affordability • Ensure CLT homes remain owner- occupied • Help elderly homeowners age-in-place • Create permanent community control of CLT properties through community representation • Develop a supply of homes separate from rental and investor market so that there are homes available for homeowners to purchase • Help balance the market and stabilize the neighborhood
  25. 25. Key Features of the Oakland CLT • The home may be used for residential purposes only and the homeowner must occupy the home as their primary residence. • CLT homes will be sold to homeowners earning at or below 80% of the area median income (AMI). • In 2017 80% AMI was $58,100 for a family of four or $40,700 for one person. • CLT homes will be priced affordably, so that an 80% AMI homeowner is spending less than 30% of their income on housing. • OPDC will raise funds from public and foundation sources to subsidize the costs of renovation so that houses can be sold at an affordable price. • The resale formula will be based on AMI.
  26. 26. Community Land Trust Committee • The Oakland Community Land Trust Committee is a standing committee of the OPDC Board of Directors • The CLT Committee is responsible for the stewardship of the CLT and ensuring that the CLT meets its mission to provide and maintain affordability and homeownership in Oakland. • reviewing policies and procedures • reviewing leaseholder requests • networking, outreach, and promotions • Consists of 9-18 members • OPDC board members (no more than 1/3) • Community Stakeholders (no more than 1/3) • CLT leaseholders (no less than 1/3)
  27. 27. OPDC Home Renovations • Move-in Ready • New or updated building systems • HVAC, plumbing, electrical • New energy efficient appliances • Stove/oven, refrigerator, dishwasher • New moderate finishes for modern appeal • New flooring, paint, light fixtures, kitchen cabinets and counters, etc. • Safe and energy efficient • Structural repairs, roof repair, step repair, new doors, weatherization, etc.
  28. 28. Why Now? • Oakland has a low proportion of owner-occupied properties. • Aging homeowners getting ready to sell as a batch. • Oakland has experienced a dramatic increase in investor speculation. • Homebuyers, especially low-moderate income buyers, cannot compete in an investor-dominated market. • New market-rate, high-density apartments • Creation of an innovation district along the Fifth-Forbes corridor and the development of the nearby Hazelwood Green.
  29. 29. Oakland CLT Goals • 50 CLT properties in 5 years, and ultimately, 100 CLT properties • 50% owner-occupancy in target areas • Increase in home sales to owner-occupants and decrease in home sales to investors • Decrease in nuisance and blighted properties • Decrease in code violations and quality of life complaints • Greater diversity of income levels for new homeowners • Increased financial wealth and stability for CLT homeowners • Increased neighborhood stability
  30. 30. Target Areas • OPDC has identified five target areas for the Oakland CLT. • These areas are consistent with the recommendations from The Oakland 2025 Master Plan. • They have strengths to build upon, such as existing homeowners, OPDC-owned land, attractive architecture, and nearby amenities. • Our goal for all the target areas is to increase owner-occupancy rates to 50% in each target area. Target Areas Current Owner- Occupancy Oakland Square 33% South Oakland – Parkview 43% South Oakland – Ward/Frazier 51% West Oakland 40% Coltart Ave 33% Oakcliffe 28% *based on 2016 homestead exemption
  31. 31. Target Areas
  32. 32. CLT Pipeline OPDC CLT Pipeline Vacant Land Controlled by OPDC OPDC Rental Properties Previous OPDC sales to Homeowners Potential CLT houses OPDC offices Target areas 1 house for sale 2 houses under renovation 4 other houses in pipeline 5 potential CLT houses 18 vacant lots for new developments
  33. 33. homeowner sells property to CLT OR leaves property to CLT in their will Paths into the CLT blighted or vacant property homeowner sells or donates land to CLT, signs CLT lease, and remains living in their homeCLT acquires property and repairs / rehabs house as needed + subsidy funds CLT sells house at affordable price to income-qualified buyer who signs CLT lease homeowner leaves house to heirs in their will homeowner sells house to CLT OR leaves house to CLT in their will homeowner sells house at a market rate to a buyer who takes over CLT lease
  34. 34. Where Are We Now? • Our first CLT lease with an Oakland homeowner will be signed this month! • We will be signing a sales agreement soon for our first renovated CLT house at affordable price to a low- to moderate- income buyer. • Two other West Oakland homes are under renovation to be sold as part of the CLT. • There are more than 20 other properties in the CLT pipeline. • We are actively fundraising for capital and operating funds from Oakland institutions, foundations, and other partners. • We are continuing to reach out to residents to spread the word about the CLT.
  35. 35. Thank you! www.opdc.org
  36. 36. Questions and Discussion
  37. 37. This concludes The American Institute of Architects Continuing Education Systems Course AIA Pittsburgh Presenter Contact Information: wwilson@opdc.org peter.brewton@bnymellon.com ed@lawrencvillecorp.com

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