It’s All About Choice

Rather than just developing homes for sale, City of Lakes CLT lets buyers pick houses to bring into the land trust.

“The fact we could choose a house of our liking, in a location of our choice, was very appealing to us,” says Jason, a recent homebuyer with the City of Lakes Community Land Trust (CLCLT). “Last week, my wife and I closed on a house large enough for our family of five, in a south Minneapolis neighborhood we love.” Being able to choose — the home and the neighborhood — is the primary reason homebuyers like Jason appreciate the CLCLT’s Homebuyer Initiated Program (HIP).

Launched in 2002, CLCLT’s mission is to provide perpetually affordable homeownership opportunities to low- and moderate-income individuals and families in Minneapolis. Like other land trusts, the CLCLT focused on stewarding public resources for affordable housing, creating community-controlled assets by retaining ownership of the land, and implementing resale restrictions that keep houses affordable for future buyers.

At first, the CLCLT worked with developer partners to create multifamily homeownership opportunities. But CLCLT buyers increasingly asked for single-family homes. They wanted space, a yard, and freedom from any potential restrictions imposed by homeowners’ associations. So, drawing upon the experience of its peers in St. Paul and Duluth, Minn., the CLCLT started HIP in early 2005.

HIP offers two kinds of grants to help households at or below 80 percent of the area median income (AMI) in purchasing market-rate single-family homes of their choice in Minneapolis. The HIP affordability investment grant fills the financial gap between an affordable mortgage and the cost of a market-rate home. HIP buyers below 50 percent of AMI are eligible for up to $60,000; 51 to 60 percent, up to $40,000; and 61 to 80 percent, up to $25,000. The total affordability investment, however, does not exceed a buyer’s total contribution.

Since these are not new homes, HIP also gives rehabilitation grants to address deferred maintenance; mechanical, safety, and code issues; environmental hazards; and some energy efficiency needs. The goal is minimizing the possibility of destabilizing expenses for home repairs in the first two to four years of homeownership.

In order to qualify for HIP, buyers must attend a CLCLT orientation and homebuyer education workshop, and secure mortgage financing from a CLCLT partner lender. When qualified buyers reach the top of the wait list and sufficient funding is secured for them, those buyers and their chosen real estate agent meet with CLCLT staff to review the program requirements and agreements. Once a property is located and a purchase agreement is executed, the CLCLT inspects the property for eligibility. If the property is sound structurally and rehabilitation needs fall within budget thresholds, the CLCLT approves the home and the buyer moves forward with closing. The CLCLT buys the land at the same time as the buyer buys the house directly from the seller. Except for rare occasions, the CLCLT is not acquiring properties and reselling them and therefore does not incur holding or transaction costs.

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