Trust to tie Parramore affordability, neighbors
Will a new land trust boost the number of homes that long-time residents on the west side of Orlando can afford to buy or rent? That’s the trust’s goal for the historic African-American area known as Parramore; many long-timers find themselves displaced (forced to move), priced out of the only neighborhood many have ever called home. To learn more about The Central Florida Land Trust and what it plans, the Sentinel sought out Mark Brewer, president of the Central Florida Foundation, who helped spearhead the land trust. For a complete transcript, go to OrlandoSentinel.com/Opinion.
Can you briefly explain what a land trust is and how it will work in Parramore? Community land trusts are nonprofit, community-based organizations designed to ensure stewardship of land and used to ensure long-term housing affordability. To do so, the trust accepts land from jurisdictions or acquires land and maintains ownership of it permanently. Home buyers enter into a long-term renewable lease (of the land) instead of a traditional sale — they own everything above ground. When the homeowner sells, the family earns only a portion of the increased property value. The remainder is kept by the trust, preserving the affordability for future low- to moderate-income families. A land trust can ensure residents are not displaced by land speculation and protect homeowners and renters from downturns in the economy because people are not overextended. As a result, foreclosure rates have been significantly lower for land-trust housing.
An existing neighborhood advisory council made up of residents and experts in issues like health, education, safety, employment, and affordable housing generated by the land trust will provide advice and play a role in the governance of the land trust.
While the work will begin in Parramore, there are neighborhoods across Central Florida with the same affordable-housing issues, so the work in Parramore will be the first step in establishing a Regional Housing Trust.
Why was Parramore chosen as a neighborhood that needs a land trust? A group of cross-sector community leaders (public, private, nonprofit, and representatives of residents of Parramore) gathered for more than a year to think through and identify both the positive impacts and challenges of the coming economic and demographic shifts for the neighborhoods of Parramore.
As the Univeristy of Central Florida and Valencia College prepare to host students at a new downtown campus in Parramore, the new ACE school begins to grow, and economic development brings new business and entertainment opportunities to the neighborhoods, the need to create affordable housing for low- to moderate-income residents without displacing families made Parramore the best place to start the work of a Regional Housing Trust.
During that quest, it became clear that a systemic approach was needed to create a strategy that both reduces the cost of rental and homeownership, but also provides opportunities for a sustainable neighborhood.
How is this land trust similar to the one in Hannibal Square in Winter Park? It is similar. All land trusts (there are approximately 250 across America) provide similar structures to separate the ownership of land and housing to ensure long-term affordability of housing. The Hannibal Square Community Land Trust was one of the first of its kind in our area and provided advice and assistance to the community leaders building this regional strategy. The Regional Housing Trust will add the life success amenities (health, education, safety, and employment) to the basic services that all land trusts provide residents and be regional across jurisdictions bringing the opportunity to scale faster and develop more affordable housing in neighborhoods.
Why are land-trust homes more affordable than those purchased in the open real-estate market? By separating the dirt from the structure, housing costs are lower, qualification of buyers is easier, a construction dollar goes further, and long-term affordability is locked in.
Wouldn’t residents be better served to try and come up with the financing to purchase a home with land so they could buy the entire property and not just the house? There are many programs that help with qualification and down-payment assistance. These are expensive because they help the first buyer qualify, but the home will not be affordable again as the value rises with the market. Moreover, a falling market can also leave a buyer who stretched to make the purchase upside down. People who own houses in a land trust share in the increased value of the home, but at a lower level to allow the home to be affordable forever.
What happens when the owner of the house sells? How will the trust ensure the house stays “affordable”? A land trust provides permanently affordable housing by owning the land and selling the home on the land to an income-qualified buyer. The homeowner then leases the land from the trust through a 99-year, renewable ground lease. The homeowner is connected to the community and to keeping the house permanently affordable by including a resale formula that determines the home’s sale price and the homeowner’s share of the house’s increased value at the time of sale. This mechanism helps the initial investment made in the home by public and private subsidies remain with the home, so it remains affordable to subsequent, income-qualified buyers.