Several private foundations 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 underneath 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’s made available for homeownership, the restrictions in a land trust model don’t expire within a few decades, but instead provide permanent affordability.
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Metro-area housing costs have been rising for years, and well beyond Denver’s boundaries. October figures from the Denver Metro Association of Realtors showed that the average price of a home sold was $490,525, up 11.6 percent year-over-year.
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.
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Source:: The Denver Post – News