Land Trusts: The New Strategy in Palm Beach County’s Affordable Housing Push

From the South Florida housing market all the way to San Francisco, a lot of people have been feeling the housing price squeeze.

And it hurts.

While many cities and counties, including Palm Beach County, are adopting policies requiring developers to build more affordable homes, a growing number of communities also are looking toward an innovative tool to create affordable housing on a large scale:

The community land trust.

There are 30 land trusts in Florida either formed or under discussion, says Jamie Ross, affordable housing director for public interest firm 1000 Friends of Florida and president of the Florida Housing Institute. Several of the trusts are in Palm Beach County.

“That’s a huge number when you look at other states,” Ross said.

In Palm Beach County, property values have jumped by nearly $104 billion during the past decade. In Lake Worth, they jumped 32 percent last year alone. That makes for a severe affordable housing crunch.

With those kinds of numbers, Adopt-A-Family of the Palm Beaches decided to start a land trust and on Friday unveiled its latest project, a nine-unit complex of affordable rentals in Lake Worth. The 23-year-old non-profit helps the working poor, homeless and those on the brink of homelessness.

“Our program has always focused on the whole family. How do you not just focus on paying the rent this month, but what is the real underlying problem,” said Wendy Tippett, the agency’s chief executive.

“We began to look at different models and where we go next. How do we get families into permanent housing?” said Tippett, who looked at models in Burlington, Vt., home to the nation’s first community land trust, as well as one in the Florida Keys and Portland, Ore.

The concept is fairly simple.

The idea is to create a permanent stock of affordable housing in fast-appreciating areas. The trust purchases the land and then provides buyers with a 99-year lease on the house. The buyer has to qualify only for the cost of the home, not the land, which remains in the trust. By taking the land out of the equation, the price is significantly reduced and a Florida mortgage becomes attainable.

If the homeowner decides to sell, there is a limit to the amount of profit that can be made. For Adopt-A-Family it’s 5 percent above the sale price for the first five years, capping out at 25 percent. Adopt-A-Family has right of first refusal to buy back the house.

For the home buyer, it’s a wealth-building tool. Tippett said most families walk away with between $17,000-20,000 in their pocket, which they can put toward the purchase of another a home in the form of a down payment on a Florida home mortgage. This is an investment that will pay off over time.

“It was important to me that a home could not be sold for market value and that it remained affordable in perpetuity. That’s what this does, it locks folks in,” Tippet said.
To fund the trust, Adopt-A-Family needs $1.9 million. Its “Hope Begins With a Home” capital campaign got a jump start from philanthropists Tim and Jayne Donahue, who provided a $100,000 challenge grant toward the goal. Tim Donahue is outgoing chairman of the board of Sprint Nextel Corp.

To be eligible families have to earn less than $60,000 a year. Adopt-A-Family is working with the Family Empowerment Coalition - a group of 13 not-for-profits whose goal is to provide services that promote family stability and self-sufficiency - to select eligible families.

The organization is focusing on Lake Worth because its community resource center is located there, allowing families to receive much-needed support services. The agency has found that for those who receive such services, the foreclosure rates are less than 1 percent.

For those who don’t, it jumps to as high as 10 percent.

While progress is slow, it seems PBC is on the right track with the concept of trusts. No matter what happens with the real estate market, history has shown that community land trusts will remain a viable way to provide affordable housing, Ross said.

“Even if the market were to completely flatten out. We have already got the massive gap between what people earn and what they can buy,” Ross said.