The land trust mechanism has been used in Burlington for the past 20 years, and is considered a success.
"This model supports affordable housing in several ways. First, homebuyers have to meet low-income requirements. Second, the buying price of the home is reduced because it does not include the price of the land. Third, the trust works with lenders to reduce the cost of the mortgage by using the equity of the land as part of the mortgage calculation. This reduces the size of the down payment and other closing costs and eliminates the need for private mortgage insurance. In all, the trust can cut the cost of home ownership by at least 25%."
But not everyone shares that view. A finance lawyer-blogger notes problems in Florida, and Dean questions whether a $300 thousand contribution will really make a difference. I'll let him explain his reservations in his own words.
"I have substantial concerns about the scale we can achieve with this approach. In addition, I am concerned by the decision to include spec houses built by commercial developers. According to my notes, the $300,000 requested for the Land Trust approach would provide for only 10 homes (4 with Omega, 2 with Community Action and 4 with Selvaggio Enterprises). This works out to an average of $30,000 per home and certainly does not provide the scale needed to make any sort of impact on the affordable housing issue. With a great many families struggling to make their mortgage payments do we really want to devote $300,000 to helping just 10 families? In addition, my opinion is that the inclusion of the spec houses from Selvaggio complicates this even more. The Selvaggio homes are 1,800 square feet, have 3 bedrooms, 2 baths and 2 half baths.
"The homes were originally priced at $209,900 and are currently on the market for $195,900. I can’t reasonably see how we can say that our answer to providing affordable housing in Lehigh County is to take $100,000 of County money to put 4 families into $200,000 townhouses that are priced higher than the median price for homes sold in Lehigh County last year."
Browning will meet Lehigh County officials today to discuss his concerns.