ICCF plans land trust to encourage low-income home ownership MIBIZ FILE PHOTO

ICCF plans land trust to encourage low-income home ownership

BY Sunday, December 02, 2018 04:00pm

GRAND RAPIDS — A Grand Rapids nonprofit is beginning efforts to create a land trust that will allow for low-income home ownership in the city’s core neighborhoods.

The Inner City Christian Federation (ICCF) received $150,000 from the Grand Rapids-based Frey Foundation as part of its inaugural Housing Innovation Award last week. With the funds, ICCF plans to create a Community Homes Land Trust to support low-income families.

“The ability to own a home in particular has become more of a challenge for low-income individuals,” said Ryan VerWys, president and CEO of ICCF. “How do we help get people in a situation where they can begin to build generational wealth, but don’t have enough cash to compete in the housing market?”

The foundation’s grant was given to “support structures designed to create and preserve affordable housing homeownership and rental opportunities” for the population of people known as asset limited, income constrained, employed (ALICE), a measure of the so-called working poor.

These populations earn more than the federal poverty level ($12,140 for a single adult and $25,100 for a family of four in 2018), but less than the basic cost of living in Kent County. According to United Way’s 2017 report, a household survival budget in the county is $18,708 annually for a single adult and $56,460 for a family of four.

About a quarter of households in Kent County fall under the ALICE threshold, according to a 2017 report from the United Way. The largest contributor to that group was the city of Grand Rapids, which had 51 percent of its households included under the ALICE threshold or below the poverty line.

With its Community Homes Initiative, the ICCF bought 245 homes to set aside as affordable rentals. As part of the new land trust, the organization now hopes to sell 50 percent of the homes over the next 10 years.

A new model

The homes would be sold at below-market prices to income-qualified households who cannot afford to buy on the open market. Upon resale, a portion of the home’s appreciated value would be used to ensure the purchase price stays affordable to successive low-income buyers.

The land trust helps homeowners build equity as they pay off the principle on their homes over time. Agreements at the time of purchase show the homeowners’ share of any appreciation of that home going forward.

Under the land trust model, the homeowners purchase the house, but not the land, which is leased from the land trust, thus making purchasing the home more affordable.

VerWys said specialized loan products are available for land trust homes. ICCF is working with local lenders to offer mortgage loan products specifically designed to work with the land trust.

“Land trusts like (Community Homes Land Trust) exist all over the country so there are mortgage products available that can work with (the land trust), but these loan products are new for West Michigan,” he said. “ICCF will connect qualified applicants in this program with qualified mortgage lenders.”

ICCF’s plans are different from a land bank, VerWys said, because the land is not being held for future development. Homes already exist on the properties, and the trust is in place to keep them affordable.

The nonprofit has been modeling its land trust after several similar programs around the country, including in Madison, Wis. The Madison Area Community Land Trust sells homes to first-time buyers who are at or below 80 percent of the area median income.

Combating redlining

The majority of these homes are located on Grand Rapids’ southeast side, which has experienced “a significant amount of oppressive disinvestment,” VerWys said.

Historically, he said, there has been a pattern of disinvestment in this neighborhood, often referred to as “redlining,” or systemically putting services like mortgages out of reach for residents of certain areas based on race or ethnicity.

Now, with a development boom spreading across Grand Rapids, residents who have remained in the core neighborhoods are being priced out.

“Housing prices have gone up way faster than people’s incomes in our community,” VerWys said.

The Frey Foundation in September issued a call for innovative proposals to address housing challenges for the ALICE population in Kent County, as MiBiz previously reported. The $150,000 grant award was intended to boost the efforts of a range of community partners already working on the issue.

“We have so many capable players in our community who are working toward the same thing,” Frey Foundation President Holly Johnson said at the time. “If we can kind of jump on and continue what a lot of other really good people are already doing, then we just think we might be able to accomplish some of our goals even quicker.”

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