Archive for Monday, May 24, 2004

Affordable housing program limits resale profits

May 24, 2004


The skyrocketing costs of home prices in Lawrence can be profitable for sellers but painful for buyers.

It's with an eye toward buyers that Tenants to Homeowners is sponsoring an affordable housing development designed to rein in resale costs.

The six houses planned for Third and Alabama streets would be affordable now and, perhaps, forever.

"It would remain affordable that second and third time" the house is sold, said Rebecca Buford, associate director of Tenants to Homeowners.

Tenants to Homeowners would retain ownership of the land through a "community land trust" while selling the homes to low-income Lawrence residents. The home buyers would agree to limit their resale profit as a condition of leasing the land their house sits on.

It's the first time the land-trust concept has been tried in Kansas.

"It hasn't been tried very frequently in the Midwest, but it comes from New England where I understand there's been a great deal of success," said Don Brake, a policy and planning associate with Kansas Housing Resources Corp., a state agency.

Burlington, Vt., has had a community land-trust program for two decades. Officials with the trust did not return calls to the Journal-World, but the organization's Web site said 370 owner-occupied single-family homes and condominiums have stayed affordable under the program.

"I think that the concept is excellent," Brake said.

Tenants to Homeowners' plan has also drawn praise from city officials, who are looking at it as a possible model for future affordable housing projects.

They also acknowledge the concept may be counterintuitive when -- thanks to those skyrocketing sales costs -- buying a home in Lawrence is often seen as much as an investment as finding a place to live.

But those sales costs are out of reach of many low-income residents. Tenants to Homeowners' new homes, meanwhile, will be made available to low-income working families, single parents and Lawrence residents with disabilities. After subsidies, the houses will cost their owners a maximum of $60,000.

"It's a balancing act," Margene Swarts, the city's community development manager, said of the tension between profitability and affordability. "You don't want to penalize people for getting ahead and making it work for them. By the same token, you don't want to keep putting sand down the funnel."

Buford said homeowners would make some profit when they sell -- a percentage of the gain in value, plus whatever equity has been added to the house.

The emphasis, however, is on keeping the houses affordable.

"It's a great opportunity for the community," Buford said. "We're at a point in the market where we need to make some decisions now. Are we going to let prices increase and keep people of a certain income out of the market?"

Buford said there was no timeline for building and selling the houses.

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