In Park Heights, A New Tool For Creating Permanently Affordable Housing
In Park Heights, A New Tool For Creating Permanently Affordable Housing
Community land trusts are, ultimately, pretty darn clever. The basic idea: you take a house out of the unregulated market (with its speculative bubbles, catastrophic crashes, and general indifference to human suffering) and you make it permanently affordable, with a non-profit community organization overseeing the resale of the home to make sure that owners who got an opportunity to purchase an affordable home pass that chance along to the next buyers. Residents build equity instead of pouring their paychecks into rent payments, and the community as a whole benefits with stable, affordable housing.
If the idea of a community land trust is so clever, then, why aren't there more on the ground in Baltimore? The answer lies in the technical details of how the community land trust model—developed in the 1960s to help black farmers in the South and brought to bear on urban areas in the 1980s—manages to hack real estate law so that it can guarantee that houses purchased get resold at a similarly affordable price. The simple and elegant solution: the trust holds onto the land while the home buyer purchases the house, with the right to use the land passed along via an obscure and rarely used legal device: ground rent. And that's why Baltimore isn't full of community land trusts: unlike just about everywhere else in the country, Maryland real estate was riddled with ground rent contracts, confusing and counter-intuitive historical remnants which MD lawmakers have been assiduously working to eliminate. The rise of the community land trust, as a tool for the development of affordable housing, was taking place more or less exactly as Maryland was trying to get ground rent redeemed forever. The result: so much legal uncertainty around the land trust's basic mechanism meant that creating one anywhere in the state was pretty much off the table. That is, until 2010, when the Community Development Clinic at the University of Baltimore (UB), under land trust advocate Jim Kelly, spearheaded legislation (the Affordable Housing Land Trust Act) to cut through the uncertainty and make community land trusts possible in Maryland for the first time.
And now this startingly sensible tool for keeping housing affordable is getting its debut in Baltimore, thanks to the New Park Heights Community Development Corporation (CDC). For Will Hanna, president of the CDC, the land trust is a way to encourage real estate development in a way that “preserves culture and deals with the fear of gentrification.” The structure of the land trust ensures that residents are not displaced by skyrocketing home prices when redevelopment succeeds and an area is revitalized.
And Park Heights is certainly in need of redevelopment and revitalization. There are, according to Hanna, 2300 vacant homes in Park Heights—and a real unemployment rate of close to 30%. According to the Baltimore Neighborhood Indicators Alliance, in Southern Park Heights—a neighborhood where 95% of the residents are African-American—one third of all families with children are living in poverty. Clearly something isn't working, and for Hanna, getting a land trust off the ground to stabilize Park Heights' neighborhoods is one part of the solution.
Vacant homes on Reisterstown Road in Park Heights. Photo by Casey McKeel.
The seed for the idea of the Park Heights land trust was planted in 2008, when Hanna caught a presentation at Sojourner Douglass College by the Dudley Street Neighborhood Initiative (DSNI), a long running and celebrated urban community land trust and organizing project in the Roxbury neighborhood of Boston. Famed for winning the right of eminent domain from the city in order to save their community by tackling chronic vacancy, the DSNI's success in keeping low-income residents in their homes, even in the depths of the foreclosure crisis, has attracted many new converts to the land trust model, including Hanna.
When the New Park Heights CDC began the process, it was at that point still more or less impossible to do a community land trust in Maryland; happily, the UB effort saved them a couple of steps, and they're getting ready to roll out the first batch of affordable homes over the course of the next year. Already, they have secured a donation of 100 vacant properties, transferred into the land trust and ready to be redeveloped. Their plan: renovate the houses at a cost of $60,000 each, using green—and more cost effective—construction techniques to completely rebuild the gutted houses from the inside out using prefabricated panels. These homes—essentially new—will be then sold for between $75,000 and $125,000, with the new residents agreeing to a resale formula pegged to the median income of the surrounding area, so that the property stays affordable, forever.
Where does the $6 million needed for the renovation of these 100 homes come from? Here's where the land trust model starts to get really clever: because this is affordable housing aimed at low-income residents, there's a tax credit that can be passed along to investors in the project, mitigating their risk and helping keep the purchase price low.
Hanna also highlights the other end of the process—the residents who will be buying into and living in the newly refurbished homes. A large part of the success of land trusts is that they develop property with an explicitly non-profit focus; unlike a traditional real estate broker or bank, to whom foreclosure is just another business transaction, a CLT exists in order to keep people in stable homes, where they can build equity and help rebuild their neighborhoods. The Park Heights project, for instance, is already preparing neighborhood residents for home ownership, with debt counseling courses operating in partnership with existing financial literacy organizations: there's a class of 30 prospective home-buyers who'll be first in-line for the houses under the trust's care. The aim of the Park Heights land trust will be to get people into homes they can afford for the long haul, regardless of whether a traditional lender would see them as a lucrative prospect for a mortgage. To that end, it plans to explore other ways of getting folks into the homes they'll eventually buy if a bank isn't willing to make that happen right off the bat. They're thinking about seller financing, with the land trust lending directly to the new homeowners, as well as figuring out ways to let people lease their house for a year far below market rental rates, getting themselves on stable financial footing so they're ready to take the plunge into home ownership.
The New Park Heights CDC and its community land trust has its earliest roots in a house very close to Will Hanna—the home on the 3700 block of Reistertown Road where his mother has lived for the past 29 years. This block was part of a pilot project by Mayor Schaefer. Yes: Schaefer. Although it didn't use a land trust approach, the pilot still aimed to use affordable housing to help stabilize the neighborhood; for Hanna, looking at the comparatively idyllic block, where many of the residents have lived for decades, the approach worked, and should have been extended.
Homes on the 3700 block of Reisterstown Road. Photos by Casey McKeel.
Just one block down at the corner of the 3600 block of Reisterstown Road. Photo by Casey McKeel.
Hanna's life after high school drew him away from Baltimore—serving in the military, he was shot twice in combat during Desert Storm. (He jokes: “So I can handle Park Heights.”) He went on to work with the Justice Department, and in private business in San Antonio. On his return in 2008 to the city where he grew up, however, he was dismayed at the state of his old neighborhood: “There'd been no progress...they built Harbor East, but they didn't fix what needs fixing.” Frustrated with a city that seemed too focused on downtown development to even implement its own Master Plan for Park Heights, he jumped into neighborhood politics, becoming president of the Park Circle Community Association, then head of the Park Heights/Reisterstown Southern Team, an umbrella of community groups in Southern Park Heights, which, under Hanna's direction, reinvented itself as the New Park Heights CDC in 2009.
Hanna's vision for the neighborhood doesn't end with these first 100 houses. I spoke with him the day before the city was slated to close another recreation center in the neighborhood: 2 out of the 3 centers in the area, home to 12,000 children, are now closed. Hanna finds this inexcusable, especially in Park Heights, where there's a guaranteed stream of earmarked neighborhood income from State gambling revenues—$500K/yr—due to the presence of Pimlico.
So the strategy is to forge ahead without the city's help, and rebuild Park Heights from the grassroots up. The current homes in the land trust is are just one piece of the puzzle: Hanna hopes to use the land trust to fight the foreclosure-induced blight of vacant properties. He figures he can convince mortgage lenders burdened with toxic assets to unload them to the trust for just around $25,000 a piece. Then the trust can turn around, do the minimal rehab these homes need to be livable, and get a resident and new owner in there for just $50 or $60,000.
The land trust, in other words, helps the community act for itself at scale, whether it's a matter of negotiating with the banks or saving money on construction and renovation. And that construction is part of the plan for Park Heights, too: the renovations and rehabs are jobs that will go to residents. To help make this happen, Hanna and the New Park Heights CDC are turning an old school building near Cold Spring Road into a workforce development center, and he's partnering with the VA to help retrain veterans there to rebuild their own neighborhoods. They're developing an integrated model of community economic development: those 100 houses in the land trust will be served by a new $7 million dollar supermarket and shopping center, also spearheaded by the CDC. In other words, it's not just home ownership that matters (a lesson learned in a devastating way in the foreclosure crisis): the goal is home-ownership, combined with good jobs and a stable community, planned in a systemic fashion to benefit its residents.
For Hanna, this is an approach that can work across Baltimore City; for starters, he hopes to establish a city-wide land trust as an outgrowth of the work in Park Heights. When asked why the city wasn't, for instance, using a land trust approach as a part of the “Vacants to Value” strategy, Hanna was candid: while land trusts can be tremendously effective as a sustainable affordable housing strategy, there's something that an official used to being in control of subsidies might not like—a land trust “is governed by the community themselves.” And according to Hanna, when the people who are used to being in charge face that loss of control “things become political that should just be about people.”
Near the location where the city is planning to spend millions to rebuild the Park Circle Roundabout. Photos by Casey McKeel.
Hanna, as our conversation wrapped up, offered another useful example of how City Hall's business as usual approach to redevelopment can sometimes lead to some questionable allocations of scarce resources. According to Hanna, the city is planning to spend about $11 million to rebuild the Park Circle Roundabout, which once functioned as the interchange between Park Heights Avenue, Reisterstown Road, and Druid Park Drive. But right next to the site of the once and future roundabout, there's a block of around two dozen abandoned homes. If the first phase of the new community land trust goes as planned, Hanna's all-volunteer New Park Heights CDC, for just a little bit more than half the cost of the new traffic circle, will have put 100 families into permanently affordable housing, eliminating 100 vacant properties and building the city's tax base in the process. It's this kind of thinking, practical, creative, and far-sighted, that we need more of in Baltimore.