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Forever Affordable in Florida

Forever Affordable in Florida

Habitat for Humanity Affiliate Adopts New Model for Permanent Affordability

By Stacie Jones

Since 1976, Habitat for Humanity has built thousands of affordable homes for families in need across the globe. The non-profit organization has made homeownership possible for those who thought it wasn’t, providing more than 9.8 million people shelter and hope for a brighter future.

Habitat’s impact is great and far-reaching. And now, some Habitat for Humanity affiliates are discovering that community land trusts could help them grow that impact even more.

The Habitat for Humanity of South Palm Beach County in Florida is one of them. The Habitat affiliate began investigating the land-trust model in 2007 when the real estate boom sent housing prices in Florida – and throughout the nation – soaring.

“We observed that several of our Habitat properties’ values had gone crazy. Families were selling their Habitat homes for prices that were no longer affordable in the income category that the homes were originally built for,” said Mike Williams, associate executive director of Habitat for Humanity of South Palm Beach County.

At the time, the Habitat affiliate had no control of the resale values of their homes, which meant the thousands of subsidy dollars and volunteer hours in constructing the homes were lost when the homes were priced out of the affordable housing inventory. Habitat needed to find a way to keep the homes they built affordable well beyond the home’s first residents moved on.

“After the real estate meltdown, we wanted to make sure all energy and efforts that went into producing those affordable homes wasn’t going to be lost again,” Williams said.

The Solution: CLT

In 2010, the Habitat for Humanity of South Palm Beach County – with insight and technical assistance from Grounded Solutions Network – formed the Heartfelt Florida Housing of South Beach County Community Land Trust, a separate 501(c)(3) organization that would keep the Habitat homes permanently affordable for generations of low-income families.

When a Habitat home is built under this new model, the Habitat affiliate, Heartfelt CLT and the homeowners all enter into an agreement. The affiliate conveys the land on which the Habitat home is built to the CLT. Qualified buyers purchase the home but not the land. Instead, the homeowners agree to pay a monthly ground lease fee to the CLT. The family can still build equity in their home, however, when they decide to sell, they sell only the house to another income-qualified buyer at an affordable price that is determined by the CLT ground lease resale formula. By separating ownership of the land from the price of the house, low-income buyers can purchase the home at a more affordable price than they would pay on the open real estate market.

The Heartfelt CLT also provides stewardship to help the homeowners keep their houses well maintained and avoid foreclosures. The organization uses Grounded Solution’s software tool, HomeKeeper, to track and manage the resale restricted homes.

Another valuable benefit of the CLT, said Williams, is the opportunity to include actual homeowners in the organization’s efforts.

“Our CLT’s board of directors includes three residents of the homes themselves,” he said. “This helps keep families engaged in what we’re doing and allows them to play an active part in the CLT’s stewardship efforts and to contribute to important decisions that make an impact on the community. That’s a really cool thing.”

Since 2012, all Habitat homes built in the south Palm Beach area have gone into the CLT. To date, the Heartfelt CLT manages 38 homes that were built by Habitat.

“So far, we haven’t had any resells, which is good. We also haven’t had any foreclosures…that has been great,” Williams said.

Additionally, by separating the house value from the property value, the CLT model protects homeowners from rising home insurance premiums and skyrocketing property taxes as the Palm Beach housing market continues to heat up.

“We have seen that families who own Habitat homes in the land trust, compared to Habitat homeowners who purchased their homes prior to 2012, are saving about $1,000 or more per year on their real estate taxes,” Williams noted.

Overcoming Barriers

The Heartfelt CLT is proving to be a success, but the shift to the land-trust model didn’t come without challenges. When the plan was initially proposed, the Habitat affiliate experienced push back from community and city leaders who were skeptical about the idea of homeowners buying houses but not the land underneath them. The habitat worked with its community partners, including the Housing Leadership Council and other land trusts in the area, to educate the public and municipalities about the land-trust model and the positive effect it could have on preserving affordable housing in the area.

“We realized early on we needed to spend significant time educating people on what this CLT thing was and to help them understand that  this was an opportunity to make homes affordable and keep them affordable into perpetuity.”

Williams said a key to receiving municipality support was helping them realize how a CLT could maximize the city’s investments in affordable housing.

“One of the big benefits of the land-trust model for municipalities is that it preserves the subsidies that the cities provide for lower-income families well into the future,” Williams said. “Once they provide a subsidy to help a family purchase a CLT home, that same subsidy will continue to support families well past the time the first residents were there.”

Williams encourages other Habitat affiliates to explore how the land-trust model could help them achieve permanent affordability in their communities. While the Habitat of South Palm Beach County established its own CLT, Williams noted that other Habitats could have opportunities to partner with existing land trusts in their communities.

“It’s just a good thing to do,” Williams said. “It’s more affordable for the families Habitats are trying to serve, it protects subsidies – whether they are coming from the affiliate or municipalities – and it ensures that affordable housing remains in the affordable housing inventory in perpetuity.”

For more information on how Habitat for Humanity affiliates can help build permanent affordability in their communities, view the 2017 Habitat for Humanity Shelter Report, a collaborative effort between Habitat for Humanity International and Grounded Solutions Network.

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