In an effort to make home ownership more obtainable for lower-income families, Elevations Community Land Trust has put a low income housing project in the works. In five years, the goal of 700 new and current homes will be transformed to allow homeowners to profit on the home's value, while the trust maintains profit on the land. Read more below:
700 homes in 5 years: Metro Denver homeownership initiative has raised $24 million to help low-income families
Seven foundations and nonprofits announce start of Elevation Community Land Trust and five-year goalBy JON MURRAY | email@example.com | The Denver PostPUBLISHED: December 7, 2017 at 4:54 pm | UPDATED: December 8, 2017 at 1:26 am
Several private foundations and nonprofits on Thursday gave a more than $24 million boost to an idea that has gained attention from Denver affordable-housing advocates as a promising way to put homeownership within reach for lower-income families in the metro area.
By forming the Elevation Community Land Trust and committing that money, its backers aim to create the largest community land trust in Colorado. Within five years, the new organization could assemble a collection of 700 homes scattered across the city and its suburbs — split between existing houses and new townhomes and condos — using a model that reduces the cost for buyers who fall below income limits.
It would do so by holding ownership of the land under each home in a nonprofit trust in perpetuity, leasing the land to the home’s owner for regular payments. Upon reselling the house, owners would pocket a portion, but not all, of any increase in the home’s value. Future buyers would face similar income qualifications.
Community land trusts “support low-income families in safely bridging the gap between rental housing and homeownership, allowing them to increase their savings and assets, improve their financial literacy and ultimately become more economically self-sufficient,” said Dave Younggren, the president and CEO of Denver-based Gary Community Investments, which has committed $5 million to the effort through the Piton Foundation.
Unlike most income-restricted housing that is made available for homeownership, the restrictions in a land trust model don’t expire within a few decades, which converts homes to market-priced. Instead, the land trust provides permanent affordability.
Many details of the Elevation program, including financial restrictions, remain to be worked out. But its targets for help are families making 55 percent to 80 percent of the metro area’s annual median income, or AMI.
That range spans $36,960 to $53,760 for a two-person household and $46,145 to $67,120 for a family of four.
Early calculations for the program included a model scenario in which Elevation would buy a home that’s for sale for about $260,000, then invest $25,000 in rehabilitation, Gary officials said.
By holding onto the land ownership, the organization would subtract roughly $80,000 in value from the market selling price charged to the qualified buyer.
“This is a proposed financial model that we came up with to make sure that the numbers could actually work,” said Tracey Stewart, the family and economic security investment director for Gary. “But that’s not necessarily what will happen, because there are a number of variables — including, and most important, the variable of what the community is going to decide. Each neighborhood is going to have a say in how homes are purchased (and) how land is donated.”
If successful, Elevation could set its sights statewide.
Seeking public subsidies and other helpThe fundraising announced Thursday will kick off a plan that is estimated to cost about $58 million during the next five years.
The backers plan to seek an estimated $23 million in contributions from local governments. An additional $11 million could come from new private partners as well as donations of public and private property.
They are starting by seeking a commitment from Denver’s new $15 million-a-year local housing fund.
Informal conversations with metro-area government officials have been encouraging, Younggren said.
“There’s a need and a desire to create some permanent affordability, and that’s really missing,” he said.
The other initial financial backers of Elevation are the Colorado Health Foundation, the Gates Family Foundation, the Bohemian Foundation, the Denver Foundation, the Mile High United Way and Chicago-based Northern Trust.
The Urban Land Conservancy is also lending an organizing hand, and a president and CEO for Elevation should be in place within a few months as the land trust launches. It could begin snatching up for-sale homes later in 2018, but Gary officials say those plans will depend on the new Elevation leader’s direction.
At the end of five years, Gary officials say, their financial modeling shows Elevation operating self-sufficiently from revenue that includes land-lease payments and its shares of resale profits.
On Thursday, Younggren spoke to Denver’s Housing Advisory Committee to get discussions rolling with its first potential city partner about subsidies or other contributions for the project.
City officials have made no firm commitments yet, and the request comes amid increasing interest by Denver neighborhood-based groups in forming local land trusts. There’s also heavy competition from various programs for Denver’s limited housing fund.
“How we stitch this all together with the advice and the expertise around this room is going to be the next challenge,” said Erik Soliván, the director of Denver’s housing policy coordination office.
Activists from the northern Globeville and Elyria-Swansea neighborhoods have lined up research and partners and early plans for a community land trust to help keep renters and homeowners in the neighborhood. They again asked for city support at Thursday’s housing meeting but so far have had no success.
Some expressed surprise and disappointment with the Elevation plan, since they had met earlier with some of those same foundations and nonprofits to discuss their plans. They perceived that the Elevation plan’s strong backing and money would push it to the front of the line.
“It’s very confusing to me why the city would invest in funders, versus community, and why the funders wouldn’t invest alongside the city in a community,” said Candi CdeBaca, a community organizer in Elyria-Swansea. “Or why they wouldn’t pilot this to see if it works first, before they go with a 700-unit model.”
A mix of new projects and existing homesBackers of the Elevation plan say they support smaller efforts like the one pursued for those north neighborhoods but want to start a broader program that benefits more areas.
Of the 700 or so homes that could be folded into Elevation’s land trust, Gary officials say, about half would be existing homes scattered in neighborhoods that are considered “cost-burdened” — meaning home prices and rents are rising to the point that many current residents now spend more than 30 percent of their monthly income on housing.
In Denver, think of Westwood, Elyria-Swansea and parts of the city’s southeast, where home prices are fast increasing. It’s unlikely that Elevation would go for homes in more affluent neighborhoods such as Highland, Cherry Creek or Washington Park.
For the remaining half of the homes, supporters envision Elevation acquiring land and then leasing development rights for new townhouse or condo projects. Owners of those new homes also would pay land leases to Elevation and split resale gains.
Community land trusts have been successful in some cities across the country, but their complexity sometimes makes them more difficult to pull off with existing homes than with new-build projects, experts say.
Gary officials anticipate the plan will evolve along with market changes and neighborhood conditions.
“I don’t know, personally, of another initiative of funder collaboratives that has come together in Colorado around affordable housing in this big of a way,” said Meghan Sivakoff, an investment project manager for Gary Community Investments, during an interview.
“Oh, definitely not around affordable housing,” Stewart chimed in.
A half-dozen or so housing land trusts are operating in the state, including the Colorado Community Land Trust, which began in Lowry; Thistle in Boulder County; Rocky Mountain Community Land Trust in El Paso County; and the Chaffee Housing Trust in Buena Vista. The Urban Land Conservancy holds a land lease for an affordable apartment complex near the Sheridan West Line station and plans to lease out development rights for an upcoming project on land it owns near the 38th and Blake transit station.
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