Crusaders Keep Homes Affordable -- Permanently
By Mark Lewis
Newly graduated from Howard University in Washington, D.C., with a degree in architecture, Tara Seabrook had an appreciative eye for the gracious brick homes that line the streets of many of the city's older neighborhoods. She also knew she could not afford to buy one.
Over the last decade, rising home prices have combined with stagnating incomes to make home ownership difficult for many Americans. Even college graduates like Seabrook often find themselves forced to live in neighborhoods less desirable than the ones in which they grew up.
"My house had been broken into twice," she recalled. "It was kind of scary. I moved out to Maryland."
But her retreat to the suburbs was short-lived. This past January, Seabrook moved into the Lealand, an attractive six-unit cooperative building on 16th Street, near stylish Dupont Circle.
Seabrook was able to afford her new home for one reason -- the work of the New Columbia Community Land Trust.
Community land trusts are private, non-profit organizations dedicated to keeping housing affordable in lower-income areas. When the trusts acquire property, they help people of modest means buy the homes -- but the trusts retain ownership of the land underneath.
The land is leased to the homeowners, who must agree to sell the building back to the trust at a preset price if they ever want to move. If Seabrook, for example, wanted to sell her share of the Lealand co-op, she could -- but within some limits.
"You get what you put into it, plus the improvements, plus some appreciation, but not much," said Ron Holloway, president of New Columbia. As Seabrook put it, "I'll get my share back."
She won't, however, reap the full market value. In other words, she won't make a killing on the house. But that's the point, according to land-trust advocates: The resale restrictions keep the property affordable for the next buyer.
First established in the 1970s, land trusts have tripled in number in the past decade, according to the Institute for Community Economics, a non-profit organization in Springfield, Mass. More than 100 are operating or being developed in 31 states and the District of Columbia, where New Columbia opened for business in 1990.
New Columbia's executive director, Pamela Jones, said the land trust was founded by a number of neighborhood organizations worried about the speculation that can accompany neighborhood revitalization.
"As the neighborhood developed and property values went up, people saw opportunities to make money," she said.
The owners, who often are absentee landlords, would sell out to developers, who fixed the buildings up and put them back on the market at premium prices.
The Lealand, built in 1911, was one of the first black-owned buildings in the area. But by the late '80s it had been targeted by developers for conversion to high-priced condominiums, raising the threat that its long-time tenants would be forced out of the neighborhood.
"Some of the folks have been living there for over 20 years," Jones said.
A free-market developer could have turned the Lealand into condos that would have fetched $225,000 apiece, she said. Instead, with New Columbia's help, the tenants formed a co-op and bought it themselves, at $3,633 per share, with carrying charges of $700 a month.
Historically, government as well as private organizations has used subsidies, such as below-market-rate loans, to help people of modest means purchase homes. The home buyers are then free to sell at whatever price the market will bear.
The land trust arrangement avoids this pitfall, say its advocates. Land trusts keep homes affordable over time so that the subsidies don't have to be provided over and over again, said Julie Orvis of the Institute for Community Economics.
The institute promotes the land trust concept and also maintains a revolving loan fund that lends money to land trusts. Its efforts helped create 468 new landtrust units last year, raising the nationwide total to over 4,000.
A typical institute borrower is the Community Land Cooperative of Cincinnati, which is trying to keep housing affordable in the city's fast-developing West End.
"What's happening is that we've got developers coming into an area where traditionally poor people have lived," said Diane Forte, the associate director. "We're trying to protect what's left."
Since 1980, the cooperative has made 44 homes permanently affordable, and given lower-income West End residents an alternative to public housing. Its clients would not qualify for mortgage loans on their own.
"The people that we deal with, probably banks wouldn't look at," Forte said.
Land trusts have generated some controversy for the restrictions they place on their homeowners, who may not reap the full benefits of owning a home when they cannot sell it at will.
"Its biggest detraction is that if it's not handled properly, the occupant can revert to a renter's mentality," said Don Hinkle, senior loan officer at the Delaware Valley Community Reinvestment Fund in Philadelphia. "The residents start to perceive the land trust as a landlord."
But the very element of the land trust model that gives some people pause -- restrictions on resales -- is how the trusts keep realestate speculators from boosting prices, Jones said. "The idea is to limit what it can be resold for to keep it affordable for the lower-income people who are coming in behind them," she said.
While noting the possible downside, Hinkle said that land trusts often take tenants beyond the passive tenant mentality. "All it takes is organization and a little bit of democracy -- regular membership meetings that build a sense of community."
In any case, the land trust gives people like Seabrook a foothold in the housing market. She hopes in the future to buy a home without going through a land trust, one with no resale restrictions.
"I see this as kind of like a stepping stone," she said, and not just for her. "Future generations can benefit from it, too."
Posted May 20, 1997
Copyright ©1997 American News Service
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