One of the more interesting developments in Seattle’s recent building boom has been the conversation among some residents of the Central District to attempt to organize in the face of displacement. The community is looking to purchase the Mid-Town Center property on the Southeast corner of 23rd & Union. CHS and The Stranger have covered the issue recently. Here’s a quote from The Stranger’s piece, in February:
Among the possible solutions: buying the property. Bangasser has offered to give the Union Street Business Association (USBA)—a small group composed of people who care about the black business community—site control, kind of like a down payment, for just 10 percent of the asking price. (Bangasser is currently the USBA’s director and treasurer, although he said he’s being replaced given his conflict of interest.) And at the community meeting, the total cost to purchase the property was put at $16 million, but Bangasser’s response to that number was, “I don’t know where that came from.”
“The USBA is now trying to come up with the money,” said local architect Donald King, who’s an adviser to the USBA. “If it’s successful, it could be a model for not only other neighborhoods in Seattle, but other neighborhoods across the country.”
CHS adds that “a Public Development Authority or a land trust [are] still on the drawing board.” Indeed, a land trust would be an interesting model for a large, urban site like this. While rent control and zoning restrictions are usually ineffective in combatting housing affordability, and may even exacerbate it, land trusts are a proven model for permanently affordable home ownership.
In a nutshell, land trusts work like this: the trust acquires land. It then enters into an agreement with a buyer (pre-qualified to meet the necessary income requirements) whereby the buyer purchases a house on the land at an affordable rate. When the buyer is ready to sell, they agree to sell to the another pre-qualified buyer, allowing the seller to earn a reasonable return on their purchase. By sharing the cost of purchase, the trust is able to acquire land less expensively, and the buyer knows they won’t be evicted because they “own” the property.
Occasionally entire neighborhoods can be acquired by land trusts, as was the case with the Dudley Street neighborhood in Boston.
In an effort to learn more about land trusts, I spoke with Erika Malone at Homestead, the largest land trust in Washington State. Homestead receives about 300 applications per year from would-be homeowners and has a waiting list of 700. They currently have 2- and 3BR houses within the Seattle city limits for around $200,000. And since they only require a 1% down payment, it can often cost less up front to buy a home from Homestead than it would to put down first/last/deposit on a 2BR rental.
“Some people think it’s a scam,” Malone joked. It may not be a scam, but it is something of a rarity. Homestead had 36 house transactions in 2013. “Our challenge is supply,” she said. “We need capital and land like any other developer.”
On the plus side, the joint relationship between the trust and the homeowner can help keep the property affordable for the long haul. Today’s affordable housing can become tomorrow’s unaffordable housing as soon as it’s sold. Homestead’s renewable 99-year leases keep the property affordable, theoretically in perpetuity.
For a multifamily development, the land trust could be even more powerful. One reason we don’t see more small condo buildings in Seattle these days is that condo owners have an almost routine habit of suing the developer. Developers have generally decided that it’s not worth the risk unless the building is a large tower. In the case of a land trust condo, the developer and the buyer would jointly own the property, thereby making the relationship more cooperative than adversarial.
Like any developer, Malone says they’re attracted to fixed rail because it offers a sense of permanence, which is important when you’re thinking about a 99-year lease. She said they’d like to get more involved in transit-oriented development, but they “aren’t in a position financially” to take advantage of opportunities around LINK in places like Othello Station. One wonders what a land trust might have done with a free piece of land right next to Roosevelt Station.
While Malone stresses that land trusts are “not a silver bullet,” they are a useful tool in the affordable housing belt, preventing displacement and building equity in a sustainable way.