Land trusts: conserving homeownership

“A neighborhood in transition.”

It’s a phrase that hides the stark images: a block of dilapidated homes next to cookie-cutter condos, a row of foreclosed houses—sometimes all of it at once. Right now, at least 18,500 Richmond houses sit in neighborhoods in transition. What that means for residents is entire swaths of their city are in the midst of a housing crisis.

The red dots on this Googlemap screen shot represent Richmond properties currently in foreclosure. Click map to enlarge.

The North Richmond intersection of Second Street and Silver Avenue is one example. The middle of the crossroads provides a four-way window onto many of Richmond’s streets—miles of weedy yards and boarded-up homes and duplexes that stretch to the vanishing point.

Head a few blocks east to Giaramita Street, and handyman Michael Simon is about to nail boards on a vacant house. “I’ve been doing landscape design and fence building for 21 years, and work has definitely slowed down,” he says. “I’ve seen more homes boarded up and more people not being attentive to their properties around here.”

As of today, Richmond has almost 1,800 homes in foreclosure and pre-foreclosure, according to RealtyTrac.com, an online aggregator of foreclosure information. The city’s Community Redevelopment Agency did a study this past January to identify the scope of the problem. The study found that in 2008, banks acquired 10 percent of homes in the 94801 zip code, which includes the Iron Triangle and North Richmond.  And 40 percent of all homes there were at a high risk of foreclosure because they’re financed by subprime loans. The study also isolated the 94804 zip code as a trouble spot. Ten months later that’s proving true, as default and abandonment rates rise in the Santa Fe and Coronado neighborhoods.

In an attempt to stop the exodus of foreclosed-upon homeowners, both the city’s redevelopment agency and a coalition of advocacy groups have decided to implement a tactic new to Richmond: the land trust.

The Nevin Project will sit on this vacant lot.

What’s a land trust?

Patrick Lynch stands with his hands on his hips and glares through his sunglasses at the vacant lot on Nevin Avenue and First Street. He’s the housing director at the Richmond Community Redevelopment Agency. A path of trampled grass cuts diagonally through the middle of the lot. Lynch watches lone pedestrians walk the shortcut.

Smack in the middle of the Iron Triangle, the lot is a square, fallow slice of urban prairie. In one corner, a mattress leans on a trash bag. Around the perimeter, unconnected fence posts protrude from the ground. Lynch says the city will partner with a local developer and in five years, this will be a 20-unit condo complex organized as a land trust.

“We’re calling this land trust the Nevin Project,” he says.

Land trusts have long been used to protect the environment or agricultural lands. A housing land trust is a non-profit entity that can buy foreclosed properties and resell the houses to low-income buyers. Those buyers purchase only the house—the trust still owns the land. Buyers pay a mortgage, plus a long-term fee to the trust to lease the land.

If homeowners decide to sell, they are permitted to take only a small percentage of the equity they’ve earned. The rest returns to the trust, which then sells the house to another low-income buyer. That way, the home remains affordable regardless of how neighborhood housing prices change, says Jessica Grant, administrative director of the National Community Land Trust Network in Portland, Ore.

The Nevin Project is slated to be the first housing land trust under the auspices of the Richmond Neighborhood Stabilization Corporation, a non-profit arm of the city’s redevelopment agency.

The second big project to stabilize neighborhoods, Lynch says, is to buy up 40 foreclosed, abandoned or blighted houses, and rehabilitate them using a $3 million federal grant, which must be spent fixing up homes for permanent new owners. Lynch says the city has inspected six houses and plans to spend the money in the hard-hit neighborhoods of North Richmond, Iron Triangle, and Coronado. He says the homes will be priced for low-income buyers and then might be allowed to revert to market rate. If he uses a land trust to keep prices affordable, Lynch says each home would be placed in its own separate trust.

“Land trusts are the flavor of the month at the ice cream club,” Lynch says every time he talks about the issue. “But they’re no more or less important than any other tool in providing affordable housing.” Other tools, he says, include loan modification counseling, co-ops and public housing projects.

Joanna Griffith is the assistant director of real estate development at the Community Housing Development Corp. (CHDC) of North Richmond. She stands on First Street and sizes up the Nevin Project site with Lynch. The CHDC is one of Richmond's foremost affordable housing developers.

A conflict arises

Before the city’s Neighborhood Stabilization Corp. could buy its first foreclosed home, a second land trust sprang up in Richmond. Vernell Crittendon, spokesman for the grassroots group ACORN, says he didn’t like the idea of a land trust run by the city’s redevelopment agency. A land trust has collective power to influence neighborhood development, Crittendon says, and that power ought to be in the hands of residents.

ACORN is part of the Richmond Equitable Development Initiative (REDI), a group of environmental and social justice organizations in the Bay Area. REDI commissioned a study from UC Berkeley’s Center for Community Innovation (also a REDI member) on how to establish a community land trust in Richmond.

According to the May 2009 study, a land trust could spend $7.3 million to buy and renovate 22 bank-owned homes annually for the next eight years. So REDI founded a new non-profit to do just that: the Richmond California Community Land Trust.

“This is a cheaper and much more effective way of empowering the citizens of Richmond,” Crittendon says.

On September 15, Crittendon and Community Land Trust representatives appeared before the city council, announced the new non-profit and gained a resolution of support from council members. Crittendon says the land trust is counting on, among other sources, unidentified city funds. Lately, he’s set himself in opposition to Lynch.

“Lynch wants control of development in Richmond to be a one-horse game,” Crittendon says. The city’s land trust, he says, is “not a true community land trust. This is the bureaucracy setting something in place to eliminate the public voice.”

“They have to have a big bad wolf,” Lynch retorts, “and we are not that wolf.”

Lynch scoffs at the notion that the Community Land Trust would do a better job for low-income homeowners. He says the Community Redevelopment Agency has the expertise, contractor connections and guaranteed funding that the Community Land Trust lacks. “Given that they have no money and no experience,” Lynch says, “why are they getting so much attention?”

Lynch also stands up for his relationship with Richmond residents. He says he spends a lot of time engaged with people in neighborhood council meetings and used what he learned to apply for the federal grant. Now Lynch says he intends to spend the money the way the city promised in its grant application, whatever pressure the Richmond Community Land Trust may bring to the table.

“They think they’re going to intimidate and get up and mau-mau,” Lynch says, “and I’m not having it.”

The conflict’s gotten vocal enough that Mayor Gayle McLaughlin has planned an early-November meeting to see if the two land trusts can collaborate, she says.

“There’s no reason everybody can’t come together,” McLaughlin says. “We have to look and see what’s best for low-income residents.”

Lynch and Crittendon both admit they’re willing to work with each other if it came down to it.

“A collaboration with Lynch is most certainly possible,” Crittendon says.

“We team up with everybody,” Lynch says, “as long as you can pass audits.”

It’s unclear whether the Community Land Trust can raise the funds to accomplish any of its goals. And it’s unclear how much long-term affordable housing the Richmond Community Redevelopment Agency intends to create with the federal grant money.

But it’s clear on a walk though Richmond’s neighborhoods there is no shortage of boarded-up houses that could become homes for low-income buyers. Two entities are now looking up and down those streets to ask how the seeds to a different community can begin to germinate in the ashes. Their success—or failure—will determine how much longer these neighborhoods bear the lonely fallout of an economy that exploded on homeowners.