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HOMESTRETCH BECOMES FIRST REGIONAL COMMUNITY LAND TRUST IN MICHIGAN
On April 16, 2003, the HomeStretch Board of Directors voted to become the first regional Community Land Trust in the state of Michigan. This pioneering step was taken as a way to make homes affordable at initial sale and to preserve affordability for future buyers.
HomeStretch has been able to sell its homes below market value due to the MSHDA and FHLB subsidies. However, rapidly increasing land costs have made it more difficult to keep the homes affordable and ensure the subsidies in the homes will be passed on to future homebuyers. The organization became a Community Land Trust to address these issues. (NOTE: The method of preserving affordability has changed for most of our homebuyers. See the section“Refining the Land Trust” below) When a home in the Community Land Trust is sold, HomeStretch retains title to the land, thus removing the cost of the land from the purchase price of the home. This in combination with the subsidies for construction keep the homes affordable. The homebuyer executes a 99-year Ground Lease with HomeStretch. A resale formula is a part of the Ground Lease. HomeStretch holds a Right of First Purchase on Land Trust homes and the resale formula balances the homeowner’s equity interest with the future affordability of the home. This formula allows the homeowner to build equity yet keeps the original subsidies in the home. HomeStretch resells the home at below market value to another income eligible family.
To read more about Community Land Trusts, see our Spring 2003 HomePage Newsletter or visit the Institute for Community Economics ( ICE ) website.
REFINING THE LAND TRUST
Being a pioneer sometimes means that you come up against unexpected issues and HomeStretch was no exception. While some were small inconveniences, the issue of property taxes was a much larger problem. Under the Ground Lease, HomeStretch retained ownership of the land itself, yet the owner of the home on the land was required to pay the property taxes for the home and the land. However, as land trusts are new to Michigan, the tax code does not allow the underlying land to be given the Homestead tax rate as the homeowner doesn’t also own the land and the owner of the land, HomeStretch, does not reside on the land. Because of variances in assessments across counties and townships, a few of our homebuyers pay much more in property taxes than anyone expected. As we can’t change the code, we decided to change our procedure.
Working closely with MSHDA, a different way to preserve future affordability has been devised. Starting with the homes in Ridgewood, HomeStretch no longer uses the Ground Lease to retain ownership of the property, but executes and records a Declaration of Affordability on the property before any homes are sold. This Declaration contains the same provisions that were in the Ground Lease, including the Formula Sale Price and Right of First Purchase. As in the Ground Lease, if the homebuyer wishes to re-sell the home, it must be to an income eligible household.
Since there is no longer a Ground Lease, buyers will no longer pay a monthly Ground Lease Fee. New homebuyers will pay a one-time Land Trust fee of $1,800 at closing. This fee can be rolled into the mortgage as a closing cost just as are done with the fees for title insurance, credit reports, etc.
At closing, the new homeowner receives a title to the land as well as the home using a Warranty Deed with deed restrictions. The restrictions are the Declaration of Affordability which was previously recorded by HomeStretch and takes the place of the Ground Lease. In this manner, the homebuyer receives title to the house and the land, allowing the homestead tax rate to be applied to both, while HomeStretch preserves the measures used to balance the homeowner’s interest with the future affordability of the home.
As homes currently using the Ground Lease are sold to new owners, the property will be converted to the new model. We also hope to obtain monetary and technical assistance to convert the properties most affected by the tax issue.
CONVERSION
In November of 2008 HomeStretch began the process of converting our previously sold homes to the new Declaration of Affordability. Our attorney prepared the documents and they, along with a letter detailing the reasons for converting, were sent to the homeowners most severely affected by the property tax issue. A second mailing was sent to the remaining homeowners. Conversion from the Ground Lease to the Declaration of Affordability was voluntary and a few homeowners elected to remain under the Ground Lease. The majority of homeowners chose to convert to the new method and receive title to the land. Legal costs for preparing and filing the documents were covered by a grant from MSHDA so there was no cost to the homeowners who changed to the Declaration of Affordability as part of this group conversion, and the change was made in time to meet the 2009 property tax deadline.
FIRST ANNUAL MEETING
 HomeStretch held the First Annual Meeting of the Community Land Trust on October 20, 2004. The event was held at the Elks Club and provided an opportunity for several of our homebuyers to meet each other and members of the HomeStretch Board of Directors. Executive Director Bill Merry gave a short speech outlining the history of the organization and its accomplishments with special emphasis on the individuals and families who were able to fulfill their dream of home ownership through HomeStretch.
The highlight of the evening was the presentation of Outstanding Service Awards to five Board members: Richard ( Mack ) Beers, Mary Lee Lord, Kristin Brady, Stan Tornga and Virginia Coulter. These dedicated individuals were members of the Founding Board of Directors and they are still serving on the current Board. Their perseverance and hard work for affordable housing is deeply appreciated.
SECOND ANNUAL MEETING
The Elks Club was also the setting for the Second Annual Meeting of the HomeStretch Community Land Trust membership. Members new and old enjoyed an evening of good food, short speeches and good company. Special guests included Beth Buelow and Tim Burden from Rotary Charities and Shelley Quinn-Becker and Anne Begg of Transnation LandAmerica Title Insurance.
 
THIRD ANNUAL MEETING
 The third Annual Meeting of the Community Land Trust membership was again held at the Elks Club. William Merry, Executive Director of HomeStretch, welcomed several new directors and members and remembered founding board member Mary Lee Lord and long-time member Bob Drury, both of whom passed away in 2006. After a delicious meal and a short speech, a vote was held to elect, or re-elect, those members of the board whose terms were expiring and a new board member was added on a write in vote. Esther Smith, a homebuyer from Kensington Park East, was elected to fill a vacancy on the board. She joins current board members Michael Moore and  Sarah Lucas as homebuyers who also give their time to help continue the mission of providing affordable housing.
 
At right, Executive Director William Merry consults his notes during his presentation covering the past achievements and future plans for the Community Land Trust. Above, Board Member Megan Olds and Members Janet Whiting and Stuart Hollander are intent on the business at hand.
It’s not all business and speeches as the photo on the right shows board members, staff, members and guests having an enjoyable evening. Without the support of the board and the community at large, HomeStretch woud not be able to carry out its mission of providing affordable housing and we are grateful for their support.
FOURTH ANNUAL MEETING
The Elks Club was again the setting for the Annual Meeting of the HomeStretch Community Land Trust. As before, speeches were short, the food was excellent and the proverbial “a good time was had by all” describes the evening.
Two new board members, Sister Augusta Stratz and Kristy Sumera were welcomed and retiring board member Esther Smith was applauded for her service. Longtime supporter and legal advisor for HomeStretch, Stuart Hollander, who passed away during the summer, was remembered for his work in founding HomeStretch.
 
Early arrivals socialize before the dinner and the formal meeting. Executive Director Bill Merry chats with members Janet Whiting and Bernadette Michel while they enjoy the fine selection of wine and cheese
FIFTH ANNUAL MEETING
The Fifth Annual Meeting was held in October at the Elks Club. As in the past, Executive Director Bill Merry gave a short summary of the previous year as well as the plans for the future. The food and atmosphere was excellent and the conversations were animated. We welcomed new homebuyers to the festivities and were pleased to see several of our homebuyers from previous projects in attendance.
Plans for the future include the conversion of the four unsold Ridgewood townhouse units to Supportive Housing as well as the tax credit project, Keystone Village, a permanent Supportive Housing complex.
SIXTH ANNUAL MEETING
The Sixth Annual Meeting was delayed several times due to schedule conflicts and the weather, but was finally held on December 16th at the HomeStretch office. The meeting was held as more of a business meeting than the usual Annual Meeting, with HomeStretch providing beverages and cookies and several attendees bringing appetizers. A summary of the previous year was presented and discussed.
The past year saw the four townhouses at Ridgewood converted to Supportive Housing and quickly rented. Three of the four homes in Traditions were sold and the final home was soon to be sold - the buyer was only waiting for the mortgage paperwork to be completed. The Honor Main Street project was underway and it was expected that the Keystone Village construction would soon be underway again. We look forward to a productive year.
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