AURORA | An affordable housing model that aims to reduce the cost of becoming a homeowner is taking hold in Aurora for the first time. Elevation Community Land Trust plans to make eight homes available for purchase in the coming months.
“The beauty of the land trust model is that we can retain the affordability,” said Elevation President and CEO Stefka Fanchi. “We reduce that purchase price, the family has a bridge into ownership, and in exchange they (the buyers) agree to pay it forward.”
In most typical community land trust models, an outside group buys land with either existing homes on them, or develops the homes themselves. Then a buyer who meets income restrictions purchases the home, but the land is still owned by the trust. Instead of owning the land, homeowners enter into a long-term lease, in a lot of cases 99-years. That allows a home that is valued at a market rate of $300,000 to be purchased at a much lower rate, closer to $200,000.
Buyers in Aurora will have to meet certain income requirements: at or below 80 percent of average median income, according to city documents. That translates to a household of four making about $74,000 annually.
When the homeowner decides to sell the home, they will be able to do so, but after the sale the owner agrees to take only 25% of appreciation profits. The remainder goes back to the land trust to help fund other projects and administrative costs.
In Aurora, a house that would sell for $350,000 may be sell under a land trust for about $250,000. The cost is driven down by the lot lease and other factors, such as a subsidies from local government and private investors.
Elevation differs from typical land trust models in that it’s not just looking to build on a plot of land, it’s also renovating existing homes in Aurora that would still meet the other land trust standards.
“We’re not just purchasing homes, and we’re not just developing land and into single family homes. We’re doing both,” Fanchi said. “If we can do both of those things, then we can have real impact. We’ll also be able to develop townhouses, which we hope to do in Aurora. Those will share a piece of land.”
That flexibility also allows Elevation to meet another goal many advocates often highlight: bringing affordability to neighborhoods across the city.
“If we can purchase scattered sites, then we can also grow that affordability throughout the community,” Fanchi said.
The first home Elevation plans to make available will be in Aurora at the end of June. Fanchi said Elevation would like to see 20 in Aurora by the end of the year. The group, which also just made an agreement with the city of Denver, wants 60 homes there within the next few years, and, in total, 700 across the state.
Last month city council members agreed to honor a memo of understanding with the company that outlines their common goals of providing opportunities for individuals and families that have been priced out of the growing Aurora market. Many real estate websites put Aurora’s average home value at about $325,000, which has been steadily growing since the end of the 2008 recession.
The city is contributing to the affordability of those homes through the $1.1 million city lawmakers dedicated from oil-and-gas-related property tax to aid affordable housing measures. The 2020 budget already tentatively includes $1 million for affordable housing from the oil revenues, too. Deputy city manager Jason Batchelor said that amount could go up in the future as production increases.
In September, the city’s Citizens Advisory Budget Committee recommended that the city use the $1.1 million to buy land for community land trusts along with another affordable housing study.
Aurora Mayor Bob LeGare said he’s a proponent of the new program, especially in light of all of the affordable housing programs aimed toward renters in the city.
Aurora will contribute approximately $40,000 to each land trust home in the city, and that will be able to be used in a variety of ways, according to Batchelor. It may be applied several ways, he said, off the top of city-owned land in some cases or in cash in others.
Elevation has been able to garner about $25 million in private investments to launch the community land trust.
LeGare, whose background is in real estate, said there’s a lot to find attractive about Elevation’s model and how it can work for the growing city. Part of the allure, he said, is that there was so much philanthropic interest in making homes affordable, but also because of the opportunity it presents with existing homes and in the future.
“I am hopeful that we can work with some of the new homebuilders and have lots in new home subdivisions, to actually buy the lot in the new subdivision so literally the home will be brand new coming out of the ground and the family will have an opportunity,” LeGare said.