This week marks the end of KCAW’s Building Solutions series, a special look at affordable housing solutions in Sitka and Southeast Alaska. To conclude, KCAW’s Erin McKinstry circles back to the Sitka Community Land Trust and talks with Co-Executive Directors Mim McConnell and Randy Hughey. The organization has started an affordable cottage neighborhood with a unique model to help new homeowners enter the market.
KCAW I just wanted to start off by talking about what exactly a community land trust is and specifically how it works in Sitka for someone who might not be familiar.
RH The model of ownership is that land is acquired and placed into a trust. A trust is a legal mechanism that holds assets for beneficiaries. So the land itself is in this trust. A house is built on the land, and the deed of the house is separated from the deed of the land, and the buyer purchases only the house. That in Sitka saves the cost of a lot, which can be $100,000, just like that. Then the house that we build is very small. So as far as the initial affordability, it’s only that there’s no land cost, and the house is small.
That affordability is protected over time by a profit-taking limitation at resale. So if a person buys the house at it’s appraised value, then at a period in the future, it’ll be appraised again. And the difference between those two appraisals, they will take 25 percent of the increase in that appraised value. So if they bought it at 200,000 and 10 years later, it’s appraised at 300,000, they get $25,000. And then we sell the house at $225,000. So we’re always selling the house at less than the appraised value. This way, the house does not inflate more than incomes are inflating. So a person at the same income level, let’s say they were at 80 percent of the area median income when they bought it, someone at the 80 percent of area median income 10 years later can still buy that house.
KCAW Yeah, thanks. Thanks for explaining that. So both of you have been involved with this project for a long time since the beginning, basically of the Sitka Community Land Trust back in 2014. And then even before that for you Mim, and I guess I just would love to know from each of you like what exactly made you want to get involved with this kind of work?
MM Well, I just kind of slid into the affordable housing area of life. But it wasn’t anything, that’s not anything I was trained in or…Mostly it was through getting involved with issues locally. And I got on the Long Range Planning Economic Development Commission, which no longer exists. One of the things that the commission worked on was the long range plan for the community. So we wanted to pick a topic that would benefit from a new way of doing a comprehensive plan. We picked affordable housing because we knew that was the big issue. And it just seemed like identifying some solid steps with action plans and everything would really help move that forward, rather than just talking about ideas all the time. And there were other people in the community that ended up getting involved in that process. And that just kind of led to more and more interest and activity. And that’s when a community land trust idea came up, that’s when the cottage neighborhood idea came up. So this group just kept pushing on it. And that’s 2010. So that’s when I got more involved in it, and the more I learned that it just seemed like a really good thing to put my energy into. And I really liked the idea of the community land trust, and I started attending conferences, national conferences and trying to learn more. And that’s where I met the guy we ended up hiring, the consultant, for helping us create the community land trust. We were going to try and do it on our own. But the more I looked into it, the more overwhelmed I got. And the more I realized, we didn’t know and we’re going to have to learn. So fortunately, we were able to hire Michael Brown and so he helped us create this organization or this project is what we were calling it at the time.
KCAW And Randy what made you want to get involved with this kind of work?
RH Someone from the organization called me and said your name came up with someone that might be interested in helping us work on affordable housing and I said ‘okay.’ It was really quite without deep consideration. Housing has been a problem in Sitka for the 30 years that I have been here. It’s a tremendous problem. In 1990 when we arrived, there were zero places to rent. And I mean, literally zero, we couldn’t find one. We wanted to rent, we didn’t know if we really like it here. And then there were two houses on the market that we could afford to buy, so we bought the better of the two. We didn’t want it. We didn’t like the house, we weren’t sure if we liked the town. We were in the fortunate position at least of having enough money for a downpayment. And so we just bought a house. And every single year, housing is a crisis, sort of it’s a tremendous problem: availability, quality of the stock, affordability. There aren’t enough buildings, they cost too much, and there’s way too many buildings that people shouldn’t be living in. That is at least a 30 year problem, but everyone I’ve ever talked to who was here before says that was has been there. The place where I saw affordable housing to be a crisis was serving on teacher hiring committees over the decades that I worked for Sitka School District, and having people say yes to a job, look around for a house and call us in two weeks and say we’re not moving there. You know, because there was no way that it worked. And they couldn’t possibly afford to buy what was on the market. And many employers can echo this story.
KCAW Yeah. And just sort of more generally, Randy, you talked about the fact that affordable housing has been an issue in Sitka as long as you can remember. And I just wonder, like, what are some of the reasons that you think that is like, like why do you think affordable housing is such a big challenge here?
RH Well, the driving thing is that there isn’t much land, right? We’re stuck between the Tongass and the Pacific. If we were surrounded by you know, 100,000 acres of privately-owned land, the free market of the United States economy would be much more at work. But because there’s such a powerful constraint, there’s the artificial constraint of land scarcity, it is common in Sitka to buy land and have someone build a house and the amount that you spent on the land and the house to exceed the value of the home that you create, that you’re in a negative position when you get done building it. So you have a small amount of land, a small labor pool, excessive costs of shipping, adding on top of the cost of building materials in the United States. So all of those things are absolutely beyond our control.
KCAW Yeah, absolutely. I was wondering if the Sitka Community Land Trust has any plans beyond the cottages that you’re working on right now? Are there other projects in the works or other like long-term goals associated with the organization?
MM Our corporate documents say that we can work outside of the community to help with affordable housing in the region. The idea with that was to help other outlying small villages that might need some help. So we’ve had some inquiries over the years. But the farthest that’s ever gone to the point of having an actual Zoom meeting with residents was with Tenakee Springs. So it’s just at the very early stages of conversation and, and that came about through representative Jonathan Kreiss-Tomkins, and he had been in Tenakee and heard their issues about affordable housing and gentrification that’s going on there and thought of us. And so he connected us with some of the residents there. So we’ve just started talking about how we can help.
KCAW Sure yeah, that makes sense. I mean, I think if we have issues with affordable housing here in Sitka, a lot of these smaller places definitely do too.
MM Especially in Tenakee, they have a lot of Juneau residents that have second home there. And so it makes it challenging to find a place to buy and to find something that’s affordable. There’s not much for making income there. And they’re having a hard time hanging on to younger populations of people and they seem pretty interested in what we were sharing with them about how the CLT works.
KCAW Yeah, that’s really cool. Randy, do you have anything to add as far as that’s concerned?
RH Locally, so we intend to keep building houses. We, you know, is the intention, the organization to complete this neighborhood that we’re involved in now, move on to other parcels. And you get to…well, the city owns a large amount of land. And so if it wants to continue to put land into the trust and enable us to develop, there are some large parcels that whole neighborhoods could be developed in. Also, there are little bits and pieces of land scattered all throughout Sitka, that are potentially able to be developed just to house here and a house there or a cottage here and there kind of thing. And the advantage of these little parcels is that the utilities are nearby. So there’s water, sewer, electrical and telecom infrastructure close. If you take a large undeveloped parcel of land somewhere that the city owns, and you’ve got to start by putting in the roads and the water and the sewer, you know, you’re half a million in the hole before, you know, even get started or more. So, you know, kind of the short answer is we hope to continue to build houses after this whole neighborhood is done. By we, I mean, some other younger people besides Mim and I. We’re of an age where this torch will be passed. And it’s just not that long. And so I would love to pass it off at a point where everybody knew what the next step was, there was some work to do immediately in front of you. Like Hemingway always said about writing, at the end of the day, stop only at a place where you know what you’re going to write in the morning and see keep the organization moving forward like that. But that that point still not that far away.