April 2006

On the Ground with...

Greg Rosenberg, Executive Director
Madison Area Community Land Trust

interview by Bob Jacobson

When the Madison Area Community Land Trust (MACLT) was founded in 1991 by the late Sol Levin, a long-time champion of affordable housing in Madison, the median price of a home here was about $83,000. In the years since then, housing costs in Madison, and most other parts of Wisconsin and the United States, have risen at a rate that far exceeds increases in income. In 2004, for the first time, a three-person family earning Dane County's median income could no longer afford to buy a house at the county's median price. Last year, the median cost of a home in Madison reached $205,000, out of reach for the majority of working families. At the current pace, the median price for a home in Madison will be over $2 million in the year 2050. There is a real danger that homeownership will be a luxury reserved for the wealthy within a few decades.

The land trust model offers a unique approach to addressing the skyrocketing cost of owning a home. MACLT sells the homes it develops, but retains ownership of the land they stand on, leasing it to the homebuyer at far below market cost. The buyer in turn agrees that when they resell the home, most of the increased value stays with the home, rather than going into their pockets as profit. In this way, the home remains affordable for generations.

BJ: The thing that seems to set the community land trust model apart from a lot of other approaches to affordability is the idea of making of the housing permanently affordable. How does that work?

Greg Rosenberg

GR: Permanent affordability is important to us because when we look at the issue of affordable housing, its not an issue that's going to go away or get better-it'll only get worse over time. So our model is based on a concept of ensuring affordability to not just the first homebuyer, but all subsequent generations of homeowners as well. We have a simple mechanism for doing that. We create affordability for the first homebuyer by splitting the land from the house so that the buyer only has to cover the cost of purchasing the home. And then, through a variety of funding sources, we're able to sell that home at a price substantially below market; for example, at Troy Gardens our condominiums are selling for $40,000 below market price.

Part two is that instead of selling the homebuyer the land beneath the home, we lease it to them under a 200 year ground lease at a monthly fee that's a fraction of what they'd be paying if they had to finance the purchase of the land themselves. Then if the homeowner ever sells the home, it is sold according to a resale formula. That formula is initial purchase price plus 25 percent of the increase in the market value of the home. What that does is ensure that upon resale, that home will be affordable to somebody in the same income bracket as that initial buyer was. Since housing prices in the marketplace are rising from two to eight times as fast as wages, that formula is critical to ensuring the long-term affordability of homes.

BJ: You recently broke ground on MACLT's most ambitious project to date, Troy Gardens. What is unique about this project?

GR: The first thing that's unique about TG is the process through which it came into being. This was 31 acres that people on the north side of madison had used as a community park for many years, and the state was in the position of needing to sell off surplus land around the state. This is one of the parcels that was identified as surplus, which meant it was to be sold at market rate price. When the neighborhood and the community gardeners who had been gardening here for many years heard about this, they sprang into action. Their first goal was to buy some time until they could figure out a long-term strategy, and enter into a lease with the state so they could continue to garden and have a place to walk their dogs. Things grew from there, and a variety of other groups got involved, such as the Northside Planning Council, the UW Department of Urban and Regional Planning, the Urban Open Space Foundation, and then us. Over the course of several years of discussion, a vision evolved that was beyond what anyone had initially imagined. What resulted was a project that incorporated the existing community gardens, added an organic farm, a prairie restoration project, an interpretive trail system, nature education programming, and 30 units of housing with a small community center. The housing was to be owner-occupied and mixed-income. So it's a remarkable plan, but the thing that's most remarkable about it is the process itself.

Our role is ownership of the entire 31 acres, then we lease 26 acres to the Friends of Troy Garden, an organization that was founded to manage the site's natural areas, and then our specific focus is to develop 30 condominiums, 20 of which will be sold to folks at 80 percent or below county median income. Some key features of the housing include Green Built Home and Energy Star certification--we're hoping that these will be some of the first solar-ready homes built in a multifamily setting and people will be able to upgrade to solar hot water and photovoltaic panels--also, this is a barrier-free neighborhood, where all 30 homes will have barrier-free first floors with at least one bedroom and full bath. Plus we'll have two two-bedroom homes that will be UFAS (Uniform Federal Accessibilities Standards) compliant, meeting the highest possible accessibility standards.

BJ: Building green and building affordable are generally goals that are at odds with each other. How are you able to accomplish both of these at the same time?

GR: Green is always affordable in the long term. If you're looking 30 years into the future, the reduced energy costs will wash out any additional construction costs. But for us, we have a pretty tight ceiling on our construction costs, so we can't do everything that people might like to see in green-built homes. So we try to strike a balance. We use conventional materials in a way that maximizes energy efficiency. We look to a couple of standards-Energy Star and Green Built Home-for compliance and guidance. Those add moderate increases in cost, but not such that we don't hit our price point. And then we design the homes so that over time they can be upgraded to different solar technologies, which will become mainstream within the next 20 years. We want to make sure these homes can be upgraded when that technology becomes affordable. I would estimate that between the accessibility features and the green built features it adds about 5 to 10 percent to the cost. But mostly it requires thoughtfulness in making it a priority and and collaboration with groups like Focus on Energy and the Green Built Home program. It's something that our buyers are appreciating, because it's not something they're used to seeing in this price range.

BJ: As the cost of housing continues to spiral out of control, do you think more projects like this are going to be developed by other entities, some of which perhaps have not historically done such innovative sorts of development?

GR: I think there are two things we'll see more of. One, I think green-built, Energy Star features are going to take over the mainstream. That's already really begun here; for example the largest homebuilder in the state, Veridian, has made a commitment to that. The nonprofit housing development organizations have pushed the envelop on these features for many years, so its nothing new for us or our colleagues. Funding sources really like the idea of long-term affordability, where the subsidy assists not only for the first homebuyer, but assists many generations of homebuyers, and we're seeing a lot of interest in the community land trust concept around the country. You're seeing new nonprofits starting up, and you're seeing some municipalities starting their own community land trusts. You're also seeing inclusionary zoning gaining more and more interest, which requires all projects to contain at least some affordable housing. That debate usually covers long-term affordability issues. We recently passed one in Madison, and we're seeing more and more around the country every year. The other thing we're gonna see more of is the focus on accessibility. If you look at the demographics for Dane Co., the population of folks over age 70 is going to skyrocket over the next 20 years, and people are going to be interested in buying homes that they're going to be able to stay in and not be forced out of because they can't climb stairs anymore. So within the next 20 years, this concept of having a home where you can sleep on the first floor and use the bathroom on the first floor is something that's going to be very much mainstream. One of the goals of our project is to model practices that we think will be mainstream in the next 10 to 20 years, but to give people of sense of that today, and encourage the for-profit sector to focus more on these areas.

For more information about Troy Gardens, visit www.affordablehome.org, or contact the Madison Area Community Land Trust at (608) 280-0131.