Hotel Bruce

It’s often said that homeownership is a part of the American Dream. The image of a perky Colonial with a grassy yard comes immediately to mind. Yet, home ownership is still out of reach for many. One organization in the city, the Cuyahoga Community Land Trust, has a new take on creating more homeowners.

You buy the house. They keep the land.

While Mayor Jane Campbell may be pushing to get more middle- and upper-income buyers to move to Cleveland, this two-year-old nonprofit organization has a somewhat different idea about how to stimulate investment in Cleveland neighborhoods. Formed under the Ohio City Near West Development Corporation before going solo in 2003, the group assists people in becoming homeowners, while ensuring that the property remains affordable for future owners.

The organization achieves this balance using a land trust model developed by similar groups across the country.

The Land Trust sells the home while continuing to own the land. The owner still holds the deed to the house, and pays all of the property taxes. Retaining ownership of the land allows the group to offer a more affordable price because the community retains control of the land. The group hopes that the homes will act as a stepping stone for buyers entering the traditional housing market.

When the home is re-sold, the seller receives twenty percent of the increase in the value. The remaining increase is ‘recycled’ to provide a subsidy for another buyer.

The group is also dedicated to finding a buyer who earns 50 to 75 percent of the county's median household income. This ‘community control’ ensures the home’s affordability for the next generation of buyers.

So far, the land trust idea in Cleveland has been “a tough sell because it’s hard to imagine housing prices rising” in depressed city neighborhoods, says director, Marge Misak. Despite this, Misak argues that the model works.

“This is one of the answers to sustaining affordable housing,” she says. “We want to preserve the public investments that we make in these homes as a community value. The difference between a land trust house and a traditionally subsidized home is the affordability, and the fact that the subsidy stays with the house, and does not go with the buyer when he or she decides to sell the home.

"This will help solve the problem of buyers taking the appreciation out of the house and the city if they leave.”

The Land Trust has its origins in Ohio City, an area hailed as an urban success story for its redevelopment. Although this is good news for many, some advocates feel that affordable housing is being left out of the mix. Rising home prices and higher-end developments caused them to search out a new model for creating such housing.

“In Ohio City, there are many places where the market is happening on its own,” says Misak. “Look at John Avenue—there are four or five houses being rehabbed privately right now. We need to use public resources to create and sustain affordability.”

The time has never seemed more perfect, especially in light of the recent debate about the role of public money in development. Councilman Mike Dolan made headlines when he announced plans last week to introduce a bill that would limit tax abatement to new properties under $100,000 or $150,000 in value. The plan has some urban developers, many of whom are lured by the city’s policy of offering full, 15-year tax abatement on all new construction housing, steaming mad.

Though Dolan’s plan has struck many others, including housing advocates, as reactionary and hasty as well, Misak argues that the time may be right to re-evaluate abatement in areas where the market is functioning.

Misak argues that the tax abatement giveaway has led to “a sense of entitlement” among developers. “Some developers want free second mortgages for $400,000 townhouses!” she says. “We should look at what’s happening with the tax abatement that is ending after the fifteen year period—are people still buying these units? If so, can we look at taking away abatement where we no longer need it, or lessening the amount?”

In the end, the Land Trust provides an affordable housing model that seems intended not so much to contradict the city’s investment in high-end housing, but rather to complement it, through investing in affordable housing. Thus far, the Land Trust has completed two houses in Ohio City, both of which are occupied and it has a memorandum of understanding with OCNW to complete a total of ten new homes.

Down the road, Misak would like to expand the Trust’s service area by forming collaborations with other community development groups. “Look at the St. Clair Superior neighborhood, just east of downtown,” says Misak. “The CDC looks at this area as the next Tremont or Ohio City. If we build Land Trust homes here, the appraisals would offer the ability to build upon the market in that area. I think the Land Trust has the potential to create value where the market is not there yet.”