Some years ago, the City of Wilmington and members of the Affordable Housing Coalition of Southeastern North Carolina identified a pressing need in our community for more affordable housing options, especially in the area of workforce housing. You might think of workforce housing as that which is affordable for our police officers, fire fighters, teachers, nurses and other service sector workers. Several notable organizations existed at that time focused on low-income and/or very low-income housing, but none existed with a mission determined to permanently preserve workforce housing for essential workers (those that earn 60-120% of the Area Median Income).
The challenge faced by all was that to impact housing affordability on a permanent basis, a significant commitment would be required to establish, fund and operate an organization that would ‘out-live’ us all. In 2008, the long-term commitment required to address this issue was addressed through the formation of Cape Fear Housing Land Trust.
Cape Fear Housing Land Trust (CFHLT) is a nonprofit organization that provides affordable homeownership opportunities in New Hanover, Brunswick and Pender counties. CFHLT is one of over 200 Community Land Trusts (CLTs) across the United States. CLTs offer a practical means of preserving permanent housing affordability by selling homes to qualified low- and moderate-income families, but retain ownership to the land under these individual homes, thus removing the land cost from the sales price equation. Plus, CLTs hold the land “in trust”, therefore keeping the houses on the land affordable for future generations.
You may ask – why does southeastern North Carolina need a Community Land Trust? With a little bit of background information the reasons become quite clear.
The Cape Fear region is quickly approaching a housing crisis - over 90% of New Hanover County has been built-out and home prices in our region are rising faster than incomes, resulting in a growing affordability gap. Available opportunities to meet housing needs of modest-income families are severely limited. This leaves working households without practical alternatives other than renting or living outside of the community they work in.
Meanwhile, Brunswick and Pender counties are large, rural communities whose housing prices and opportunities are becoming negatively impacted by the escalated market in and urban sprawl from New Hanover County.
But Cape Fear Housing Land Trust offers an innovative solution to this crisis by providing homes that remain affordable both now and for future generations of modest-income homeowners. Because the Land Trust retains ownership of the land and the homeowner retains ownership of the home and leases the land from the Land Trust using a 99-year ground lease, our homes remain affordable relative to other homes in the community. In effect, we seek a balance between the interests of our homeowners (to live in a nice home in a good neighborhood and build equity) and the interests of the larger community (to integrate affordable homes throughout the community and to have those homes remain affordable forever).
For most American families, their investment in homeownership is their single most important source of wealth creation. Community Land Trusts are pioneers in coupling the individual wealth creation of generations of their homeowners with the prudent use of public funding for affordable housing. CFHLT achieves these mutually satisfying goals in the following three ways:
1. Removing the cost of the land – As land costs can make up over 40% of a home’s selling price – by keeping the land underneath a Land Trust home in the trust – the price per unit is significantly reduced.
2. Subsidizing the units, not the homeowner - Rather than subsidizing the homeowner, as many public affordable homeownership programs do, CFHLT places the subsidies directly into the units. This avoids the need to provide additional public subsidy each time there is a turnover.
3. Employing resale restrictions – Because the price of the land is taken out of the purchase price equation and because public subsidies are place into the home, Land Trust homeowners gain significant advantages. In exchange - CLT homebuyers agree that, when they sell, they will sell at a price determined by a resale formula designed to keep the unit affordable to other modest-income families.