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Wealthy Heights: moving towards a community land trust

Dwelling Place, a community development corporation that is highly active in Grand Rapids, has been investigating the Land Trust model during the same time frame that East Hills has been investigating Wealthy Heights. After a thorough analysis of the conditions present Wealthy Heights seemed the perfect fit and Dwelling Place the perfect partner to make the first ever Community Land trust in Grand Rapids possible.

Community Rebuilders, a local non-profit focused on housing, has added to this marriage of opportunity by making available several properties in the Wealthy heights area. The City of Grand Rapids has also places a hold on vacant parcels in the area to be used for the project. In total we are looking at over twenty housing units including some new infill housing.

What is a Community Land Trust?

A Community Land Trust is a way to maintain permanent affordable home ownership opportunities in an area where housing values are rising quicker than income levels.

In the CLT model home ownership is made available to people who would not be able to purchase otherwise. The way this is made possible is by removing the land from the deal. The land of all the properties is held in trust by a non-profit and the homes on the land are sold under long term leases that allow the same privileges as home ownership.

By removing the land, the price of the unit is greatly reduced. The arrangement is similar to that of a condo association. When you go to sell your house you have certain parameters that you must meet including selling it to another family that would not otherwise be able to purchase a home.

In exchange for the opportunity of home ownership the owner agrees to take limited equity from the project. The owner will enjoy all the perks and privileges of the equity from their mortgage payments and such but would be limited in the amount of the rise in property values. This is how affordability continues through generation after generation.

The revitalization of the Wealthy Street business district in southeast Grand Rapids has received considerable attention in recent years, with dramatic improvements apparent in recruitment of new businesses, rehabilitation of deteriorated buildings, and street enhancements. At the same time, the residential neighborhoods surrounding Wealthy Street have also achieved significant results in improving housing stock, increasing owner occupancy, decreasing crime, and increasing resident involvement.

Within this framework of activity, the area known as Wealthy Heights—comprised of five short residential streets running north of Wealthy between Fuller and Diamond Avenues and a short residential segment of Wealthy Street—has presented significant challenges. The dead-end pattern of four of the streets has served to isolate them geographically. The high level of absentee ownership has contributed to deterioration of the housing stock and increased the difficulty of sustaining resident involvement in revitalization activities.

At the same time, many in the neighborhood have recognized Wealthy Heights as an area offering a significant opportunity. Most of the housing in Wealthy Heights is of modest size on small lots—with the potential to play an important role in helping the neighborhood maintain an adequate supply of affordable housing. Wealthy Heights’ short, narrow streets and narrow setbacks make it easy to envision a charming, intimate enclave of modestly-priced attractive houses.

In the 1990s South East Economic Development (SEED) undertook a housing rehabilitation project focused on this area. SEED secured funding and rehabilitated several houses. Unfortunately, as a result of lack of organizational capacity, inability to attract a housing-focused partner, and other factors, SEED was unable to successfully market the rehabilitated houses and subsequently discontinued its housing efforts in the area.

The Wealthy Heights Initiative

Over the past two years, the East Hills Council of Neighbors and Wealthy Mainstreet have led a new effort to capitalize on the potential of the Wealthy Heights area. The Wealthy Heights initiative has brought together an informal partnership involving residents of Wealthy Heights and the surrounding East Hills neighborhood and representatives of public, non-profit, and private organizations. These organizations include Bazzani Associates, the City of Grand Rapids, Community Rebuilders, Dwelling Place Inc., Dyer-Ives Foundation, Grand Rapids Community Foundation, Harmony Homes Realty, Wealthy Mainstreet, and the Wealthy Street Business Alliance.

In December 2004 Wealthy Mainstreet secured funding from Dyer-Ives Foundation to conduct research aimed at:

• Documenting the current situation in Wealthy Heights, particularly housing market trends
• Identifying a potential strategy for moving the initiative forward
• Identifying potential partners and their roles in the initiative

Planning and communications consultant Dotti Clune was contracted to conduct the research. Research assistance was also provided by Jeannie Hosey, Mark Rumsey, and Gail Peterson.

Between January and April 2005, information was gathered from more than 20 interviews with representatives of public, non-profit, and private organizations either currently involved in the Wealthy Heights initiative or with the potential to play a role in the initiative. Participants in a meeting of Wealthy Heights residents also provided information. Additional research focused on market trends in the Wealthy Heights area, previous revitalization activity, and potential revitalization strategies.

Guiding Principles for the Wealthy Heights Initiative

The research conducted for this situation analysis, including feedback from Wealthy Heights residents and from organizations either currently involved in the Wealthy Heights area or with the potential to be involved, indicates a strong desire that the revitalization strategy focus on maintaining housing affordability. Based on this feedback, Wealthy Heights revitalization activity should be guided by the following principles:

Permanent affordability

The growing disparity between wage levels and housing costs, combined with rising property values in the neighborhoods surrounding Wealthy Heights, create an urgent need to assure a supply of permanently affordable housing in the area.

Neighborhood involvement

Current Wealthy Heights residents, both owner occupants and renters, should play a key role in revitalization activities.

Development that minimizes displacement

Redevelopment activities should include working to assure that current residents are not displaced, with a focus on supporting current homeowners with a desire to improve their properties and current renters with a desire to become homeowners.

Supporting diversity

Revitalization activity should seek to maintain and enrich the diversity of the Wealthy Heights area.

Public/non-profit/private collaboration

Both East Hills and Wealthy Street have an impressive history of successful revitalization efforts involving a mix of public, non-profit and private entities, e.g. the recently-completed Center of the Universe development, in which the city, the neighborhood association and a private developer all played key roles. The East Hills area is also fortunate to be home to well-established housing developers, both non-profit and for-profit. The Wealthy Heights initiative should draw on these assets as it moves forward.

The Community Land Trust Concept

The current situation of stagnant or declining owner occupancy in the face of rising property values in Wealthy Heights, together with the guiding principles articulated in this report, point to the potential for developing a community land trust (CLT) in Wealthy Heights. The CLT could serve as a focal point for a strategy to support neighborhood revitalization and at the same time develop permanently affordable housing.

What Community Land Trusts Offer

In typical affordable home ownership programs, affordability is achieved through funding from public and philanthropic sources, enabling the sale of housing at below-market costs to low-income families. However, when the first homeowners eventually sell their homes on the open market and at the market rate, the properties are no longer affordable. For the most part, the benefits of the investment of public and philanthropic funding have been reaped only by the first generation of homeowners—and then the affordability is lost.

Community land trusts, on the other hand, have an impressive record of achieving permanent housing affordability. Now in operation in more than 100 communities in the U.S., CLTs are community-based non-profit organizations. CLTs sustain housing affordability by

• Purchasing property and holding the land in perpetuity
• Selling housing on the property to low-income buyers through long-term renewable “ground leases”
• Operating with a resale formula, stipulated in the ground lease, that balances the interests of the lessee/homeowners for a fair return on their investment with the community land trust’s long-term affordability goals. Typically, the property must be sold to a low-income buyer (or back to the CLT) and the price is capped at a specified percentage of market appreciation.

For homeowners and residents, the benefits of community land trusts include:

• Access to affordable housing
• Long-term security
• Return on investment
• Assistance with financing, home repair, and/or rehabilitation
• A stable neighborhood.

The benefits of the CLT to the community include:

• Local control over land and housing ownership—resulting in stable, healthy neighborhoods
• Long-term housing affordability
• Long-term return on the investment of the community’s public and philanthropic dollars, because these funds remain in the property, locking in subsidies for the benefit of future low-income buyers.

(For more information on Community Land Trusts, see “Community Land Trusts: An Overview”)

Neighborhood Connectivity

Wealthy Heights, since its construction before the turn of the century, has suffered from a lack of connectivity with the surrounding residential neighborhood. All of the streets are narrow, void of sidewalks and terminate on Wealthy Street, a business corridor. The walkability of the area has been increasingly less desirable as the automobile has come into play. The alleys that were once used as sidewalks are now overrun by automobiles, leaving no room to walk.

To alleviate these problems infrastructure improvements are necessary. A new east/west access road at the north end of Wealthy Heights will allow for improved access to city services and increased connectivity to the residential neighborhood. This change will create a dramatic effect on the walkability of the area and the perception of the area as part of a community.

The introduction of the new roadway will take advantage of available vacant space and will only require the removal of one property in the Wealthy Heights Historic District.

Creating a sense of place that is secure and friendly is tantamount to the redevelopment of Wealthy Heights. Connective infrastructure improvements are the keystone to creating that sense of place.

Staff from the City of Grand Rapids have been actively involved in the Wealthy Heights project. The proposed infrastructure enhancements have garnered support from a wide audience within the City. The improvements will not only make the area look better and feel safer but they will also allow the City to better provide services from fire safety to snow removal.

Current Status

Since the time that this report was originally released a great deal of the groundwork to make the CLT happen has taken place. East Hills Council of Neighbors partnering with Dwelling Place of Grand Rapids, Inc., are leading the effort.

In recent months the Wealthy Heights Community Land Trust initiative has

• Identified 20 properties for potential acquisition for the land trust, based on conversations with four owners, each controlling between three and nine properties
• Made initial contacts with a variety of potential funding sources
• Worked with the city of Grand Rapids on issues including
  • Purchase of three city-owned vacant lots
  • Addressing assessment issues for land trust property
  • Inclusion of Wealthy Heights streetscape improvements in the city’s five year plan for street improvements
• Formed advisory and development committees
• Gathered additional information about community land trusts from the annual national land trust conference
• Pursued the potential for involvement of a national land trust consultant, through a MSHDA program

Priority activities for the land trust for the coming months include:

• Developing a budget including
  • Property acquisition, rehabilitation of existing housing and construction of new housing
  • Identifying the target market (50-80 percent of AMI)
• Securing funding
• Identifying potential partners for rehabilitation and construction, as well as homeowner training

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