Homestead Community Land Trust News

From the Director: A Smart Investment in the Future

By Sheldon Cooper, Executive Director

Seattle City Council recently voted to place a $145 million renewal of Seattle’s Housing Levy on the November ballot. About 94% of these funds will provide stable rental housing for homeless households and those most vulnerable to becoming homeless. The remaining 6% will support affordable homeownership opportunities.

Seattle Housing Levy funds have been the foundation of Homestead’s Homeownership Program. To date, Homestead has assisted 47 households to purchase their first homes. For most of these households, Seattle Housing Levy funds have been a crucial resource. Seattle has contributed over $1.6 million dollars of downpayment assistance to Homestead buyers to date. These funds have been matched by over $2.5 million from other public and private sources, allowing Homestead to take these homes off the speculative market and keep them permanently affordable for regular working households.

This is a particularly smart investment. Here’s why:

• Permanent affordability. Each home that is added to Homestead will serve an estimated 10 families over the home’s useful life. The 47 homes Homestead has now will be called home by 470 families over time.

• Efficient use of funds. A one-time subsidy investment keeps each home affordable for the long term. The average cost to Seattle is about $4,700 per Homestead buyer served over time.

• Stabilize households and neighborhoods. The foreclosure rate among community land trusts is 30 times lower than the national average. Homestead buyers take out affordable fixed rate mortgages and benefit from education, counseling and ongoing support to help assure their success. Less foreclosure in our communities helps keep homes owner occupied and stabilizes property values for everyone.

Seattle has a proud history of supporting affordable housing for all through its housing levies. Help extend this vital resource for Homestead and the families we serve. Visit www.yesforhomes.com for information on how to volunteer for the Housing Levy renewal campaign.       

Homestead Creating Sustainability in 2009

By Sheldon Cooper, Executive Director

2008 was a fabulous year for Homestead. We added 17 homes during the year, ending 2008 with 38 homes in our portfolio. We moved into a great affordable office in the El Centro de La Raza building and, thanks to conservative budgeting and our thrifty nature, we also significantly grew our cash reserves.

I’m proud to say that Homestead entered 2009 in strong financial shape. This is especially important given the deepening economic recession we find ourselves in today. Foundations that Homestead relied upon in the past for operating support are cutting back on their giving. Times are uncertain and money is tight.

Homestead has been slowly reducing its reliance on operating support grants over the past several years, and will continue this trend well into the future, even after the recession is over. For Homestead to be a strong, stable organization that actively stewards the affordability of its homes for 100 years or more, we need reliable long-term income sources. Earned income from lease and development fees, and direct support from our membership, are the tried and true sources that Homestead will rely upon more heavily this year and in years to come.

While the current economic recession is difficult, it also creates an opportunity to bring more homes into the land trust at more affordable prices. Today we are busier than ever, assisting our applicants to purchase homes and exploring new opportunities to bring more homes into the land trust. We are hopeful that 2009 will be our biggest year yet.

Realizing our goal to significantly expand our portfolio of permanently affordable homes over the next few years, within today’s context of a global recession, will certainly be challenging. I have no doubt that Homestead will succeed through the creativity and generosity of our community, by making every dollar count, and seizing the opportunities this time of change offers.

Change Brings New Challenge & New Opportunity

By Sheldon Cooper, Executive Director

Change is in the air. My 13th month old daughter takes her first wobbly steps across the room. The days grow shorter and the winter rains are back. The housing market cools and the economy sputters. Obama rises to victory on the hopes of change.

Change has come to Homestead as well. The membership elected seven new board members at its annual meeting last month, expanding the board to 12 people. Homestead will use this influx of new energy and talents to help us grow the stock of permanently affordable homes in our communities.

Kristin Bolken (Development and Communications Director) will be leaving Homestead at the end of the year as she moves her family to North Dakota to care for aging parents. We will be hiring to fill her spot in the next few weeks, and we will also be hiring a part time Office Manager to help us keep organized as we grow. Please spread the word to good people who have a passion for our work who might be interested in joining the Homestead staff.

We recently added our 38th home to the land trust, bringing our total to date for the year to 17 homes added. The Low Income Housing Institute just broke ground on the Dearborn townhome project that will add 15 homes to the land trust upon completion this time next year. We also recently added partnerships with Habitat for Humanity and Seattle Housing Authority for more new construction units in the coming years.

The financial meltdown that dominated the news in October has led to an across the board scaling back of 2009 support from some of our corporate supporters. We will need to double our membership and support base in 2009 to keep Homestead strong as we grow to meet the need in our communities.

The challenge that Congress faces to address the financial crisis and reform the lending industry opens the opportunity for a rethinking of homeownership strategies. We’d like to see more emphasis on community stability, less emphasis on flipping to make a quick buck. A deeper appreciation of home as the foundation upon which we build our lives, and a more sober assessment of the risks associated with home as an investment vehicle.

With the foreclosure rate among community land trusts an enviable 1/30th the national average, the individual and community benefit of community land trusts is clearer than ever. Time will tell what opportunities for community land trusts may be born out of the national, local and community responses to our current economic crisis. Today, despite the rain and shorting days, I feel hopeful.            

Ten and Thirty-Two (and counting)

By Sheldon Cooper

My daughter just turned 10 months old last week and is bursting with energy for life. It seems that every day she is acquiring new skills and capacities. The visible and audible joy she consistently expressed when seeing a cat has recently expanded to include dogs, favorite people, phones, cell phone chargers, coffee grinders and metro buses. Yesterday she was struggling to coordinate her arms and legs to produce an effective forward crawl, and today she charges around the room on all fours exploring every nook. Her brain synapses (so I’ve read) are developing at an exponential rate. It’s all her parents can do to keep up with her.   

In many ways, Homestead is in a similarly exciting growth phase.

We’re growing fast. We recently added our 32nd house to the land trust and have five more homes scheduled to be added in the next 6 weeks. At this pace, we’ll double our stock of affordable homes and the number of homes added to the land trust over year.

We’re planning for more growth. We’re almost finished with a business planning process that will guide our future growth, as we strive towards expanding our growth rate towards our eventual goal of adding 100 homes per year to the land trust.

We’re moving. We were outgrowing our old office space just as the building we were in was about to be redeveloped. Our new office at El Centro de la Raza on Beacon Hill gives us a bit of room to grow. We’ll be holding an open house to show off our new office space on September 10, 2008 from 4:30 pm to 6:00 pm. Come by and say hello.

We’re growing up. Holding our first fundraising event (our successful Dinner Auction June 20th), launching our new computer server for safely and securely storing Homestead electronic files, and soon advertising to hire an additional staff person to help us cover our expanding work load, Homestead is laying down the foundation to support future growth.

My role as new parent and director of Homestead keeps me on my toes. I’m excited to see what new phases and capacity will begin to reveal itself as we grow and change throughout this key juncture in our organizational history.

If you're interested in seeing the locations of all current Homestead homes, here is a map showing the homes and condos in the land trust.

Partnerships

By Sheldon Cooper

Two years ago, Homestead’s Board of Delegates held a retreat and crafted a strategic direction for future sustainability. Several key agreements came out of that discussion, including the desire for the land trust to grow much faster, and identifying partnerships as a key strategy for achieving the desired growth.

We quickly realized that if Homestead was to ever hope of achieving the 100 home per year growth rate envisioned, new approaches would be needed. Homestead’s ongoing homeownership program, the Advantage Program was projected to have a maximum capacity of 20 homes per year because of the limitations on available public funding. Rather than compete for limited funding to exclusively run our own program, Homestead would also steward the ongoing affordability of housing produced by nonprofit and for profit housing developers.

Today, we have two partnerships well under way. Our partnership with Habitat for Humanity and the City of Seattle has added two homes to the land trust to date, with five more on the way. See the story about Nurri’s family in this issue to read about the first family that purchased their home through this project. Some of these homes were relocated and renovated, some renovated in place, and one is being built new. They all are on surplus City of Seattle land that is being conveyed to the project at no charge. These homes are reserved for low income families who are selected by Habitat and who provide 500 hours of sweat equity work on the home.

Homestead entered into a partnership with the Low Income Housing Institute this spring on Dearborn Town Homes. It will be a 15-unit new construction town home development at Dearborn and Hiawatha, scheduled to begin construction this summer. This development is also on City of Seattle owned land that will be conveyed at no charge in exchange for all the homes remaining permanently affordable through the land trust. The two bedroom two bath homes will sell for approximately $228,000.

Homestead is also working on a significant partnership opportunity with the City of Seattle on proposed Incentive Zoning legislation. This law is currently under consideration by Seattle City Council and would provide an incentive to developers who agree to build affordable homes within or near to their developments. Homestead would like to steward the ongoing affordability of ownership units produced through this program. Over time, this program has the potential generate hundreds of affordable that would stay permanently affordable through the land trust.

The scale of our affordable housing crisis is too large for any one organization to tackle alone. Through partnerships with housing developers, local jurisdictions, public and private funders, lending partners, our membership, and our homeowners, Homestead will grow its stock of affordable homes over time into the hundreds and then thousands. Together, we can make sure that our communities are vibrant, diverse, stable and strong.      

A Tremendous Year

By Sheldon Cooper

Happy New Year!  2007 was a tremendous year for Homestead and we’ve kicked off an exciting 2008.

Homestead’s accomplishments in 2007 include:

• Doubling the number of homeowners we assisted to purchase land trust homes
• Adding 10 more permanently affordable homes to the land trust
• Adding condos and closing on the first four condo homes
• Creating development partnerships and expanding Homestead Advantage program funding to create a pipeline of 32 homes that will come on line in 2008-2009
• Increasing our staffing capacity to manage our expanded program

Currently we have 23 homes in the land trust, and we’ll be adding many more this year.

As we look to the future, despite the cooling housing market, the affordability gap for modest income households in the Seattle area continues to grow. The local need for permanently affordable homes is not measured in the dozens or hundreds, but in the thousands.

To help meet this need in a meaningful way, we’ve set an ambitious goal of dramatically expanding the stock of homes we steward, the homes that are part of the land trust. Over the next seven years we will strengthen our capacity to land trust 100 homes per year by 2015, and steward a stock of permanently affordable homes that will grow into the thousands. 

Homestead has started a business planning process to guide how we grow and expand our capacity. Over the next seven months, our business planning committee and advisory group will create a detailed plan to guide our growth and help us achieve these ambitious goals.  As part of this process, we will need to your input! Expect a survey from us within the next few months.   

We are working hard to ensure that in the future there is a large and diverse stock of affordable homes in the Seattle area. If we all work together we will succeed in providing real opportunity for modest income households to own a home in the Seattle area and benefit from stability, equity and legacy, while creating community wealth and social capital in the form of diverse, thriving, and equitable neighborhoods.            

Paradigm Shift

By Sheldon Cooper

On September 29th I became a father. As I make the adjustment to thinking of myself as “papa”, I realize that my location in our family tree has fundamentally changed. Once the outermost leaf, I have become a limb. My job now includes supporting new growth of the next generation of my family.

This is, of course, as common as rain. It is built into the natural order of things: to receive and give support, to be part of a continuum, to live constantly holding hands with the past and future. This is what being part of a family means, and by extension, to be part of a community.

Recently, two new reports came across my desk that touch on this topic through the lens of affordable homeownership. In Retention or Recapture: A Comparison of Two Seattle First-Time Homebuyer Subsidy Programs, Heather Burns details the balance of community and individual wealth creation promoted by Homestead CLT and the City of Seattle Office of Housing downpayment assistance program. In this analysis, Burns shows that the Office of Housing approach allows individual homebuyers to capture three times the gain of Homestead buyers at resale. This individual gain comes at a cost to future generations, because for the second generation, Homestead can assist 22 families into homeownership for the same cost as assisting one second generation family served through the Office of Housing loan program. The Office of Housing’s program privileges individual wealth creation for this generation (at internal rates of return for subsidized homeowners above what unsubsidized homeowners can expect) far above preserving the same opportunity for future generations. 

The Seattle Office of Housing’s approach is standard across the country, as the fall issue of Shelterforce details in Tim McKenzie’s The Case for Plan B.  Here McKenzie calls for jurisdictions to shift from the historically favored “Plan A” and create permanently affordable homes (not temporarily affordable homes via affordable payment schemes.) A shift to Plan B would require that jurisdictions directly face the issue of how much individual wealth building is appropriate and consciously limit equity in order to create permanent affordability.

Burns’ study shows a hypothetical HCLT homeowner building approximately $100K through our limited equity resale formula over 10 years, while an Office of Housing buyer gains over $300K during the same time. Is the $100K profit too little? Is the $300K profit a windfall? How do we balance today’s equity building against the cost to future tax payers to provide homeownership opportunities to future generations of modest income residents? It is time for Seattle to ask and find answers to these fundamental policy questions, so that we can begin to build a stock of homes that everyone can afford, from generation to generation.

Homestead has always consciously and carefully limited the equity of this generation of our homeowners, so that the opportunity to become homeowners is preserved for future generations. Homes are about more than wealth creation. Family security, a stakeholding place in the community, legacy, - these benefits go beyond the bottom line at resale.

As my mother beamed when seeing her granddaughter, what comes around goes around. That is how family and community are strengthened.                   

The Quiet and Important Work of Stewardship

By Sheldon Cooper

One of the perks of my job is the great feeling I get each time we help a new household achieve their dream of homeownership. The homebuyers are so excited, and that excitement is contagious. However, when asked what’s the single most important thing that HCLT does, my answer is stewardship.

The term stewardship is often associated with caring for the environment, but it’s rooted in a broader concept that references the careful and responsible management of something entrusted to one's care. In Homestead’s case, we are entrusted with stewarding the affordability of the homes in the land trust, assuring that they stay affordable from one buyer to the next. We steward the public and private investment that made our homes affordable. Now that we have our first resale in progress, I have a concrete example of our stewardship function in action.

Back in 2005, Shelter Real Estate Developers donated the land under one of their new homes to HCLT, allowing us to sell the home at a $150,000 discount to a low-income family. Today, that family is moving away from Seattle, and selling the home. The resale formula in our ground lease set the selling price at $195,000, low enough for another modest-income household to buy it without additional public or private subsidy. Because our stewardship has preserved the affordability, two modest income households are served for the price of one.

And it doesn’t stop there. Through our stewardship, this house could easily be a first home for 10 generations of modest income buyers during its useful life, all for that original $150,000 subsidy investment. Multiply that by the 18 homes we have now, or the hundreds of homes we are working to bring into the land trust during the next 10 years, and the value of stewardship begins to shine.

Just as it takes active stewardship to assure a healthy ecosystem for future generations, it also takes active stewardship to assure a healthy mix of housing options for our communities. Homestead is proud to be an active steward of a growing number of affordable homes for Seattle’s future modest income buyers.   

Local & Regional Community Land Trust Movement Growing

By Sheldon Cooper

The sun has returned, days are longer, warm breezes blow. Tulips are up, my grass needs mowing, nature is bursting and growing.  It must be spring!

I recently returned from the Northwest Community Land Trust Coalition’s spring gathering in Corbett, Oregon.  Fifty-five people from 24 community land trusts (CLTs) from Washington, Oregon and one from California spent the weekend learning and sharing best practices of how to create permanently affordable homes in our region. This was by far the largest of these meetings, and sold out far in advance. The small group of us who have been attending these gatherings for the past eight years found ourselves surrounded by new faces. New CLTs are springing up around the Northwest, and existing CLTs are growing the scope of their projects and ambitions.

The Washington State legislature recently allocated $200,000 to growing the capacity of young CLTs around the state. At this recent regional gathering, 11 Washington CLTs were identified that could take advantage of this assistance. The Northwest Community Land Trust Coalition has proposed that it create a year long professional development course for these eligible CLTs combined with technical assistance tailored to each organization. This relatively small dollar investment will dramatically increase the capacity of CLTs across Washington, nurturing the current growth of the movement and setting the stage for greater growth in the future.

Homestead Community Land Trust (HCLT) is also experiencing a significant growth spurt. As you will read in these pages, we have hired two new staff members, dramatically increasing our capacity to serve more homeowners. We have been adding to our stock of affordable homes at a rapid rate. We have added four homes in the last six weeks, bringing our total to 15. Four more homes will close in the next six weeks. These include our first townhome, condos, and Habitat partnership home.

Collectively, our four most recent homebuying families have African, Asian, Native American and European ancestry, seven children, include recent and long established immigrants, and people for whom English is a second and third language.

This spring brings HCLT new growth in many directions. New homes, new housing types, new family demographics, new partnerships! No wonder I haven’t had time to mow my lawn!
            

Letter from Sheldon Cooper, HCLT's Executive Director

By Sheldon Cooper

These are interesting times. It seems that every week there is an article in the paper that showcases a personal struggle to acquire affordable housing. Behind these individual stories are some daunting numbers. According to the Housing Development Consortium, King County will need 155,000 more affordable homes by 2015 to meet local need. The nonprofit sector, working at current capacity with funding that keeps pace with inflation, will only be able to meet about 17% of that need. The for-profit sector has largely walked away from building affordable homes. Clearly we won’t meet our affordable housing needs with business as usual. We need bold new approaches if we are going to adequately house all of us.

One powerful new approach currently within Seattle’s reach is Incentive Zoning. These policies would require that all housing developers include affordable units in their developments, in exchange for increased zoning density. Seattle will grow denser to accommodate its share of regional growth, support vibrant pedestrian oriented business districts and public transit, and limit sprawl. Incentive Zoning would assure that this growth will include housing affordable to a diversity of income levels including modest income households otherwise not served by the marketplace. Requiring developers to provide affordable units in exchange for the ability to build bigger projects could generate large numbers of affordable homes per year at no public cost. If all these homes were then required to remain permanently affordable, so that many generations could benefit from this resource, Seattle and the region would begin to gain real traction on its affordable housing deficit.

In order to build up a stock of permanently affordable homes that is relevant to the demonstrated need in Seattle, HCLT is working hard to increase the pace at which it brings homes into the land trust. We are expanding our partnership with Habitat for Humanity, pursuing partnerships with other nonprofit and for profit housing developers, and working with the Housing Development Consortium to help advance Incentive Zoning in Seattle. With such an array of efforts on our plate, 2007 is shaping up to be an interesting (and very busy) year for HCLT.