The 3-bedroom home will sell for around $250,000, far below the average sale price for homes in Sitka. (KCAW photo/Robert Woolsey)

It may be the cheapest route into a brand new family home in Sitka. But interest so far has been slow.

The Sitka Community Land Trust is ready to break ground on a new house in a quiet neighborhood. It will have two-stories, three bedrooms, a yard, and off–street parking. It will be among the most energy-efficient buildings in Sitka.

It has just about everything, in fact, except a long list of people eager to buy it.

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Randy Hughey at the building site, which was previously platted as a “pocket park.” (KCAW photo/Robert Woolsey)

It’s a cold, wet day in late February and I’m standing in a vacant lot on Lillian Drive with Randy Hughey, a board member of the Sitka Community Development Corporation, and an evangelist for the Sitka Community Land Trust, which now owns this site.
I asked Hughey for a tour of the site, but the rain chases us inside the cab of his pickup truck.

Truck door slamming, engine starting.

A community land trust has been in the works in Sitka for several years. The assembly donated the lot last May, and the blueprints have been drawn up. But even though there’s the political will to move ahead with the project, there’s a problem.

“We need a buyer qualified to buy this house before we can proceed. We don’t have the means to finance this. We’re a little shoestring nonprofit.”

That buyer may have turned up finally. It’s a family of four — and we’ll go into how that family qualified in a minute. But this deal has been available literally for months. The sale price is $250,000 — that’s $165,000 below the average sale price for existing homes in Sitka last year — a discount of 40-percent.

But there’s a catch: You’re only buying the house — not the land. And you won’t be cashing in on the slow-but-steady growth in Sitka’s real estate market.

“When you sell the house, you don’t get to keep all the money. In order to preserve affordability across time, since land-home ownership tends to escalate in value far higher than incomes, when you sell this house you get to keep 25-percent of the difference between appraisals.”

The working idea behind a community land trust is that this 25-percent share of the equity in the home — if you live in it for a few years — should be enough to springboard you into the regular housing market. And the selling price of the house you’re leaving behind will be low enough for a family earning the Area Median Income — which currently stands at $78,000 — to buy its way in.

Simple, eh? But it’s not really taking root yet.

“It’s a mystery to us, frankly. We thought by the time we had a house like this — at a price like this — we’d have people lined up, and we just don’t.”

The SCDC’s requirements are not particularly strict: It wants a Sitka buyer — someone who already lives here, or is moving back to Sitka, or is moving here and plans to stay. And there’s also a financial threshold. A Community Land Trust home is not low-income housing in the traditional sense, and it’s not for the super rich. A family of four can’t have an income greater than $94,000.

Putting these pieces together — plus bank financing — took a while. But Hughey says this is perfect for professionals — like nurses or teachers — who might otherwise be stuck in Sitka’s pricey rental market.

“This is a way out of that. It doesn’t take federal funding and programs, or state housing or programs. It’s a totally local and simple model.”

And a model that the Sitka Community Land Trust would like to grow into a portfolio of affordable properties. Hughey envisions a neighborhood of small houses on the old city shops land along Halibut Point Road, with a common parking area, and a community building where residents can store bikes or clean fish. The Rasmuson Foundation has backed the idea with a planning grant. Once the SCDC has plans, they’ll ask the assembly to donate this site also.

But much like the vacant lot on Lillian Drive, that vision will only become reality if Hughey finds buyers who believe in this version of affordability as much as he does.

The board of directors of SCDC would like to thank City and Borough of Sitka Assembly for their support of the donation of the small pocket park lot on Lillian Drive to the Sitka Community Land Trust program.

The CLT was recently formed through a grant from the Rasmuson Foundation, with the support of their grant administrator Chris Perez, and the hired consultant Michael Brown of Burlington Associates in Community Development. The diligent, tedious work of preparing legal documents and making difficult decisions was admirably performed by the CLT Committee: Maegan Bosak, Cleo Brylinsky, Randy Hughey, James Poulson, Michael LaGuire, and Mim McConnell.

The SCDC board would also like to thank Stephen Courtright for sharing his story at the Assembly meetings, and the following community members who have generously made donations: Daniel & Mae Dunsing, Bonnie Brenner, Will Swagel and to all those who purchased and or donated items at the Building Reuse Center.

Thank you to the following businesses and agencies for their generous donations: Hames Corporation, First Bank, First National Bank, ALPS Federal Credit Union, Wells Fargo, Ludvig’s Bistro, Silver Bay Seafoods, National Community Land Trust Network, State Division of Economic Development, National Philanthropic Trust, US Coast Guard Spouses & Wives Association, ASRC McGraw Construction, Sitka Vision Clinic, Allen Marine Tours, schmolk Mechanical Contractors, and Venneberg Insurance.

Thanks also to the following agencies for their support of the CLT solution to permanently affordable housing: Greater Sitka Chamber of Commerce, USDA Rural Development, Baranof Island Housing Authority, Alaska Housing Finance Corporation, and to the University of Alaska Sitka campus for the use of their classrooms for our many teleconferences and web meetings.

The next steps for SCDC are to approve a house design, select a qualified prospective home owner according to the CLT process, coach the home owner through financing, select a builder for the home on Lillian Drive, oversee the building project, and then choose our next project.

The opinions expressed in commentaries on Raven Radio are those of the author, and are not necessarily shared by the station’s board, staff, or volunteers.

Michael Brown.

It works because buyers purchase only the structure they live in, and agree — in advance — to divide any gains with the trust. That formula is the key to maintaining affordability over time.

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When you start talking about providing affordability, or low-cost housing, in a community, there’s always a little pushback. Not In My Backyard comes to mind, along with resistance to anyone’s tampering with the open market.

Michael Brown, with Burlington Associates in St. Joseph, Minnesota, says CLT’s don’t deserve either.

“It’s a criticism that is levelled — I would argue — pretty unfairly against community land trusts.”

Community Land Trusts use a combination of public and private resources to subsidize the construction of — or acquisition of — homes at full market prices. Then, two deeds are drawn up — one for the home buyer and one for the trust, which retains ownership of the land.

Home buyers lease the land, but the rest is up to them.

“The expectation from the outset is made very clear with homeowners, that they own their homes. They must operate as homeowners, which means that the CLT is not the landlord.”
The Community Land Trust, in the form of an executive director, does keep an eye on the property, and stay in contact with the homeowner. Maintaining the home at the standard of the neighborhood is part of the purchase agreement between a CLT and a buyer. Brown says in the vast majority of CLT purchases, the buyer is delighted to be able to buy a home he or she might not otherwise be able to afford, and upkeep is never an issue.

Once in a while, a trust might have to intervene, to enforce the agreement. Anything from mowing the lawn to terminating the lease.

“It’s very much a last resort initiative, but it’s there as a protection not only for the CLT homeowner, but also the neighborhood. It doesn’t happen very often, but it does.”
Brown says there’s no way to tell a CLT home from neighboring properties. It’s not a low-income housing project. It’s also not designed as an anti-poverty program.

“Given the cost of housing in a market like Sitka, to make a home affordable to a household that’s extraordinarily low-income, that’s poor — to bridge those gaps is not likely to happen.”

Brown says Community Land Trusts support the social fabric of neighborhoods and communities by creating an ownership opportunity for people who are on their way to the open market, but not quite there.

“Third-grade teachers, to social workers, to people that work in local factories, local businesses. People who are working who by definition are moderate income, but when they go to the bank they’re $30- or $40- or $60-thousand short of being able to qualify for a mortgage.”

Home ownership has long been regarded as a way to build wealth. In Sitka, a relatively stable market has done just that for many people. Brown says a Community Land Trust is also about sustainability.

“The question I often ask is, What about your children? What about your grown children? Will they be able to afford to buy a home in the community in which you live? I would also ask the questions for homeowners lucky enough to own their own homes, Would you be able to afford to buy your home right now, at the price that it is? So when we take a look at it that way we begin to realize that there are lots of productive members of our community who, based on their income, and income alone, simply can’t afford to buy a home. And that’s typically who a community land trust tries to serve.”

The Sitka Community Development Corporation is planning to create a Community Land Trust under its existing structure. Brown, who has family in Juneau, has put in a bid on serving as the SCDC’s trust consultant.