Creating Community Controlled, Deeply Affordable Housing A RESOURCE TOOLKIT FOR COMMUNITY ACTIVISTS & ALLIED COMMUNITY-BASED HOUSING DEVELOPERS PARTNERS FOR DIGNITY & RIGHTS Spring 2021 Date Spring 2021 Authors Peter Sabonis Partners for Dignity & Rights Zachary Murray Up South/Down South Community Development Editors Philippa Rizopoulos Ben Palmquist Acknowledgements We would like to thank the community housing developers that provided the data and time that made this report possible. Steve King, Executive Director at Oakland CLT Keith Cooley, Director of Asset Management at SF CLT Rick Lewis, Executive Director at the Bay Area CLT Berkeley Athena Bernkopf, Project Coordinator at East Harlem/ El Barrio CLT Michael Monte, Chief Executive Officer at Champlain Housing Trust Nora Lictash, Executive Director of the Women’s Community Revitalization Project Julius Kimbrough, Executive Director of the Crescent City Community Land Trust Thanks also to the Right to the City Alliance, the New York City Community Land Initiative and the New Economy Project with whom we partnered to host the “Affordable for Whom?” conference in August 2019 that led to this report, and to Jenny Akchin, a former staff member at Picture the Homeless, who envisioned the value of information sharing among CLTs that were reaching levels of deep affordability. This report was made possible by a grant from Oak Foundation. Thank you to Deirdre Reznik, DPI Creative for design and production of this report. Creating Community Controlled, Deeply Affordable Housing Contents 2 Executive Summary 4 Public Policy Recommendations 6 Introduction 9 The Current State of Extremely Low-Income (ELI) Housing 9 Federal Subsidies for Low-Income Housing 11 Single Family Rentals 12 Housing Development for Rental Units: An Overview 13 Property Acquisition and Pre-Development 14 Covering Property Acquisition & Pre-Development Costs 15 Construction/Rehabilitation 16 Support with Construction/Rehabilitation Costs: Public Equity & Other Options 18 Operating Costs 18 Tenant Based Rental Assistance 19 Direct Operating Subsidies 20 Cross-Subsidy 21 Summary of Housing Development for Rental Units 22 CLT Case Studies 23 Oakland Community Land Trust: Galvanizing Tenants to End Displacement by Small Site Preservation 28 Bay Area Community Land Trust: Layering Funds to Preserve At-risk Housing 30 San Francisco Community Land Trust: Using Public and Private Financing to Support the Anti-displacement & Limited Equity Housing Cooperative Movement 33 Champlain Housing Trust: When Government is a Committed Partner, Possibilities Abound 35 East Harlem El Barrio Community Land Trust: A New CLT Starts Big, Converting Vacant Buildings with City Assistance 37 Women’s Community Revitalization Program: Modestly Staffed Program Breaks New Ground in Using LIHTC to Reach ELI Households 40 Conclusion & Public Policy Recommendations 41 Policy Recommendations 43 Appendix: Table of Federal Operating Subsidies Partners for Dignity & Rights | dignityandrights.org 1 Executive Summary Housing is a fundamental human need and human right. However, any hope that housing can be a profit-making commodity and still meet human needs has been exposed as a fantasy by COVID-19. One-third of the nation’s households—30 to 40 million—were estimated to be at risk of eviction during the crisis.1 But our national housing crisis is so much more their incomes on rent.3 And the dearth of avail- than just one terrible year. This problem has been able housing compounds the problem. For each devastating lives for decades, hitting households 100 ELI renters, only 37 affordable and available who are of extremely low-income (ELI) the very homes exist.4 hardest, with Black, Indigenous, or persons of color facing the brunt of the hardship. They are But these households need not live on the edge. more likely than white households to occupy the There exist already proven housing models that ELI sector and live on the edge of eviction.2 No provide housing security: community-controlled matter their race, ELI households are forced to housing. In addition to public housing and gov- pay a disproportionate share of their income on ernment subsidized housing vouchers, communi- rent. Seven out of 10 of the 10.8 million renter ty-controlled housing, which involves community households in that sector pay more than half of land ownership combined with rental, cooper- ative, or homeownership housing can provide stability amidst economic disruptions.5 Yet, none of these models get as much public subsidy as privately owned housing.6 While home- owners enjoy significant subsidies through the mortgage interest deduction, government housing assistance for the ELI sector has been seen both as politically and practically unfeasible. But this report shows it can change. Community activism is forging new models to provide and finance secure, long-term affordable housing to those who need it most. United Workers United 2 Partners for Dignity & Rights | dignityandrights.org Creating Community Controlled, Deeply Affordable Housing This report is a resource for them and the CLTs to THREE STAGES OF RENTAL which they connect. It provides a short education HOUSING DEVELOPMENT on each of the three stages of housing develop- ment, outlining the inter-connectivity of each Property Acquisition & Pre-Development stage and the dynamics that lead to the creation 1 • Site Control of housing that is called “affordable,” yet unreach- • Calculations of cost and financing able for ELI households. for all stages The biggest challenge for ELI housing is the oper- Construction / Rehabilitation ations stage, as these costs usually are covered by rents and ELI rents must be keep low to be af- 2 • Equity (“cash”) • Debt fordable. But operations costs are also impacted by the amount of debt incurred in the construc- tion/rehabilitation stage that needs repayment. Operation And if debt is used to cover property acquisition/ • Paying off Loans 3 • Maintenance — Repair pre-development, it can create a domino effect as • Creating “reserves” for emergencies successive stages need to cover debt incurred in prior ones. This report examines a number of CLTs that have The most common model of community-con- negotiated these stages successfully to reach ELI trolled housing utilizes a Community Land Trust levels, and provides specific “case study” infor- (CLT) as landowner. The trust keeps housing af- mation on each. Like any ELI housing, these CLTs fordable through a ground lease that sets resale have utilized government subsidies at one or all prices and gives the trust the right of first pur- three stages of development. In a time where fed- chase. It is governed democratically by those who eral help at each stage is becoming scarcer, these reside on CLT land, those living nearby, and vari- CLTs also have been activists in creating new ous professional and organizational stakehold- ers. This community and resident control change its operating culture. As its primary mission is SUMMARY OF CLT DEVELOPMENT housing, not profit or speculation, communi- FINANCE FINDINGS* ty-controlled housing is the means to permanent affordability and housing security. 10 Community Controlled Developments ELI housing is challenging enough in a housing Total Units Produced # 288 Residential Units # at-risk units 57 units (5 preservation system that relies primarily on profit-incentives. preserved developments) Adding community land ownership makes it more # new construction 231 units (5 new challenging, as the institutions, public policies, units construction developments) and gatekeepers that currently dominate housing Total Development development finance are more familiar with pri- $79,545,648 vate ownership. The CLT model, where private and Costs Total Development collective ownership can co-exist on the same $276,200 per unit Costs Per Unit plot of land requires education, legal support, and financial hand holding. Total Annual Operating $2,337,408 / $8,116 Costs/O.C. per unit per unit Grass roots activists and community organizers % Units Affordable at 67% nationwide are taking on those challenges, lead- or below 30% AMI 192 of 288 units developed ing a new surge of interest in CLT housing, partic- * Table summarizes a scan across developers, within various localities, development types, funding models, building conditions, ularly for those households at ELI levels. market types, and fees & costs. Partners for Dignity & Rights | dignityandrights.org 3 Creating Community Controlled, Deeply Affordable Housing state and local policies and resources to reach 1. They keep the housing permanently afford- deeper levels of affordability. able and retain public subsidies to ensure that; and The community-controlled housing developers in this report created or preserved a total of 288 res- 2. They keep tenants secure and not subject to idential units in the projects detailed here. Two- involuntary displacement when market condi- thirds of these units are affordable to ELI renters. tions change, or subsidies expire. This is outstanding, given the current state of For these two commitments, CLTs should be federal, state and local subsidies. prioritized and incentivized in all low-income While these community-controlled housing de- housing finance programs as well as the private velopers may resemble or even outperform other lending connected to them. For affordability and affordable housing developers in reaching ELI security are what we all seek in housing, and ELI levels, they differ in two key commitments: households