Community Land Trusts A Presentation for the annual PEARLS Symposium and Ideas Exchange Apalachicola, FL

Transcription

1 Community Land Trusts A Presentation for the annual PEARLS Symposium and Ideas Exchange Apalachicola, FL April 14, 2018 Presented by: Ashon Nesbitt

2 Our Thanks to the Florida Housing Catalyst Program Sponsored by the Florida Housing Finance Corporation

3 Meet the Team Gladys Cook Pamela Jo Hatley Jaimie Ross Ashon Nesbitt Ben ToroSpears

4 Community Land Trusts Most familiar and effective form of subsidy retention

5 What is a Community Land Trust? The vehicle of separating land

6 What is a Community Land Trust? from the building

7 What is a Community Land Trust?.. And the nonproft that holds title to the land and leases the improvements subject to restrictions that keep the improvements afordable in perpetuity Gr ou n dl ea se

8 What is the Purpose of a CLT? To provide an alternative to renting through an alternative form of homeownership. To make homeownership more afordable To keep the home afordable forever

9 How Does it Work? A CLT acquires and retains ownership of land for the beneft of the community and sells or rents the improvements to income eligible households Homebuyers purchase the house and have the right to use the land by virtue of a 99 year lease agreement with the CLT

10 Key Benefts for the Home Buyer Price of the home is now more afordable Staying in the community without being a renter means: Mortgage payments instead of rent payments Mortgage interest payments are deductible MORTGA GE

11 Key Benefts for the Home Buyer (continued) Return of equity upon resale Financial stability able to save without fear of rent increases or loss of housing BUT. The buyer of a CLT home is a homeowner, which means he/she is responsible for all homeowner expenses- such as maintenance and repairs.

12 Key Benefts for the Public Permanent stock of afordable housing is created A nonproft is providing stewardship to help the homeowner to be successful Reduces the rental crisis by moving renters into CLT homeownership

13 And.. Reduces the amount of subsidy needed to serve the same number of households Understanding Subsidy Retention Video

14 Understanding Subsidy Retention

15 Key Provisions of the Ground Lease Income eligibility restrictions Use restrictions (primary home) Taxes F.S. Inheritance - yes (with caveats) Ground lease payments CLT right to repurchase

16 And.. Resale Formulas- an agreement as to how the CLT (the nonproft) and the CLT homeowner share in the sales price paid by the next buyer Appraisal-Based Resale Formula Fixed-Rate Resale Formula Indexed Resale Formula {Covered in detail later}

17 CLTs can be used for Rental Permanent affrrability vs expiring LURA Minimum Afordability Periods SHIP/SAIL 15 years LIHTC 50 year other FHFC programs vary HOME 5-20 years

18 Homebuyer Education

19 Homebuyer Education for the CLT homebuyer What are the CLT homebuyers responsibilities? Making monthly lease payment to CLT Making monthly mortgage payment to bank Paying tax bill for land and improvement (on resale restricted value)

20 Homebuyer Education for the CLT homebuyer What are the CLT homebuyers responsibilities? Making repairs no landlord to call Receiving CLT approval before making certain improvements Notifying CLT when they intend to sell.

21 Homebuyer Education for the CTL Homebuyer CLT homebuyer must understand the diference between fee simple and CLT homeownership Specifcally, understanding what money to expect upon resale And that depends on the resale formula So ensure that the CLT homebuyer understands the resale formula that your CLT is using

22 Lending for Community Land Trust Homeownership

23 CLT Lending - Specifcally Major advantages to CLT loans : Extremely low foreclosure rate Right of repurchase Ability to sell on secondary market (FNMA lease rider) Major challenges: Reluctance of lender involvement (lack of understanding and program uniformity) Lack of scale FHA pull-back Portfolio loans

24 Lenders that work with CLTs in Florida

25 Starting a Community Land Trust

26 How to Start a CLT Do you need a new organization? Incorporation of a 501(c )(3 ) Board Composition- What s Best? Membership Organization- Works well

27 Income and Tenure Targeting: What is the an unmet need? Need: Very-Low Income Need: Very-Low Income Rental Housing Potential role of Local Government: Donate surplus land to CLT Potential role of CLT: Serve as developer or hold ground lease for land on which rental is developed Alternate potential role of CLT: Provide homeownership option for lower-income renters to free up rental housing Ownership Housing Potential role of Local Government: Donate surplus land to CLT Potential role of CLT: Serve as developer and hold ground lease for land on which homes are developed

28 Key to the Success of the CLT Partnership and support of the local government Donation of land to the CLT A highly functioning nonproft with the ability to provide a pipeline of qualifed home buyers A fully informed and engaged community of prospective home buyers A fully informed and engaged lending community Financing from federal, state, and local sources

29 Local Government Incubation Example: Bright Community Trust Began as Pinellas Community Housing Foundation, Inc. in 2008 For the beneft of the Housing Finance Authority, who was its sole member Pinellas BOCC authorized HFA to utilize 99-year ground leases Means for HFA to implement 99-year ground lease to create permanent afordability Housed and stafed by the Housing Finance Authority for frst four years of operation, then went independent

30 Existing Nonproft Example: Heartfelt Florida Housing Founded by Habitat for Humanity of South Palm Beach County in 2010 Formed as separate nonproft (separate Board) Housed and stafed by Habitat Membership open to community as well as lessees

31 New Nonproft Example: South Florida Community Land Trust Originally established in 2006 Regionally focused, serving Broward and expanding into Miami-Dade Rental makes up majority of current portfolio Rental income serves as source of operating income for CLT

32 Community Land Trusts in Florida

33 Considerations for Franklin County What are the main barriers to homeownership for low-income renters? Future of Local Economy Zoning and Land Use Existing capacity of nonprofts and potential for partnerships Example: SOS for construction/historic preservation and Franklin Housing for homebuyer education/stewardship Shared Equity Option

34 Community Land Trust as More Than Housing Cooperative homeownership to incubate small businesses Facilitating the build up of new industry Historic preservation Sustainable construction Food production Creativity to attract nontraditional funding Idea: US Dept. of Labor Youth Build Grant Summer 2018 release Between $700,000 to $1.5 MM Requires 25% match of nonfederal funds

35 Florida Community Land Trust Institute Primer Highlights: 2015 update CLT overview and articles Model ground lease Sample SHIP strategy

36

37 The Florida Housing Coaliton s ten offes fover every region of the state

38 FHC Statewide Annual Conference AUGUST 27-29, 2018 Rosen Centre Hotel, Orlando Members Receive $200 Discount To become a member, contact Johnitta Wells at wells@fhousing.org.