Could land trusts help solve Denver’s affordable housing woes?
Author: Adam McCoy - May 10, 2018 - Updated: May 10, 2018
In the face of a housing crisis — prices too high; availability too low — Denver wants to explore a creative way of boosting its affordable housing stock: land trusts.
This week, the city began the process of fielding proposals for community land trust concepts it hopes would help alleviate the city’s high cost of housing, which is squeezing some out of Denver neighborhoods.
The bid for proposals will enable city officials to study land trusts ideas and gauge the city’s level of investment or partnership.
“Given the impact and duration of such a model, we want our review of different land trust approaches to be wide and inclusive,” Eric Hiraga, executive director of the Denver Office of Economic Development (OED), said in a statement. “Innovative land trust models that achieve perpetual affordability are being explored here in Denver and across the nation. The right concept and managing partners could make a significant difference for Denver’s residents for decades to come.”
A community land trust typically includes a nonprofit or private organization buying a parcel of land and using it for the benefit of the neighborhood, including creating affordable housing.
The organization could then build a home on the land, retaining ownership of the land while selling or leasing the home. The idea being that separating ownership of the home from the land reduces home appreciation, keeping the housing affordable in perpetuity.
A recent land trust effort, launched by a philanthropic group known collectively as the Elevation Community Land Trust, raised some $24 million in private capital to help create 700 affordable homes, according to Westword. However, discussions stalled with Denver and the group has instead sparked the interest of cities like Aurora, Westminster and Adams County.
Denver recently unveiled a proposal to double its Affordable Housing Fund annually – from $15 million to $30 million – and generate an additional estimated $105 million in funding for affordable housing over the next five years. The city would in part pay for the plan through a proposed increase in the marijuana sales tax from 3.5 percent to 5.5 percent.
Created in fall 2016, Denver’s current affordable housing fund has promised an estimated $150 million be dedicated to affordable housing efforts, including development and preservation, over a decade.
But in the midst of Denver’s housing woes lies a quagmire with its affordable housing program. Recent numbers show that nearly a quarter (300 of 1,302 homes) of its affordable housing stock is out of compliance with requirements under its program. The city could force residents to move out due to noncompliance with the program requirement including income limits on those who can purchase these homes, restrictions on annual appreciation and short-term rentals.
There are about 225 land trusts around the U.S., including cities like Austin and San Francisco, according to the Wall Street Journal.