Lawrence city commissioners on Tuesday said they believed they'd found a new tool to begin chipping away at the city's affordable housing problem.
Commissioners at their weekly meeting agreed to spend at least $250,000, and perhaps as much as $750,000, to fund a new land trust program.
"I'm excited," Mayor Mike Rundle said. "This is going to allow us to take a bigger bite out of the problem than we have taken in years."
The land trust would be operated by a new nonprofit group, the Lawrence Community Land Trust, which is an offshoot of the city's Tenants to Homeowners program.
A land trust is a concept that creates a unique home ownership arrangement that is designed to significantly reduce the amount of money low-to-moderate-income residents are required to borrow from a lender. Unlike traditional home ownership, people who participate in a land trust own only the house and structures that are on the land. The trust, usually a nonprofit organization, owns the actual land that the home sits on.
Rebecca Buford, associate director of Lawrence's Tenants to Homeowners, estimated that land trusts could reduce the amount a low-to-moderate income resident would be required to borrow from a lender by $40,000 to $60,000 in Lawrence.
"I think this will be a great step toward creating permanent, affordable housing for low-to-moderate income families," Buford said.
In exchange for receiving assistance from the trust, homeowners would sign a legal document limiting how much they could turn around and sell the home for when they move. Currently, Buford said the group was seeking to limit the resell price to 25 percent of how much the house, not including the land, has appreciated from the time the homeowners bought the property.
The program also would place limits on who could buy the affordable home. Only people who make less than 80 percent of the county's median income would be eligible to participate in the program. For a family of four, that income level is $49,750.
Commissioners said the fact the homes would continue to remain affordable was a major improvement over current affordable housing programs in the city. Most affordable housing programs do not limit the resell price of a home. Because of rapid increases in valuation in Lawrence, that usually means the home becomes unaffordable for low-to-moderate income residents once it is sold.
"This really allows us to create a long-term affordability concept for the community," said Margene Swarts, director of the city's community development division.
As part of their decision, commissioners agreed to phase out the city's Homeowners Out of Tenants program and use the approximately $250,000 a year it receives in federal funding to buy property for the land trust.
City commissioners also said they were interested in using $500,000 that is in the city's affordable housing trust fund to buy property for the program. But first, commissioners said they wanted the city's Housing Trust Fund Board to approve of the use of the funds.
With $250,000 in annual funding, Buford estimated the program would be able to help 15 to 20 people in its first year, with the number growing each year because some of the original homes would be resold to other low-to-moderate income residents.
If the project received the one-time allocation of $500,000, the program would be able to help about 40 people in its first year, Buford estimated.
Commissioners will make a decision on the use of the $500,000 once the Housing Trust Fund Board meets. A date for that meeting hasn't been set.