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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. 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. Membership benefits include an invitation to the Annual Meeting, the right to vote for Board Members and to serve on the Board, the HomeStretch newsletter, and technical assistance.
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.
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. This year HomeStretch plans to increase its membership and create various levels for donations. We hope to have an application for membership available online soon.
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
MEMBERSHIP IN THE COMMUNITY LAND TRUST
The conversion to a Community Land Trust changed the structure of HomeStretch from an organization governed solely by its directors to one governed by its members. So, just who can become a member? To start off our membership drive, all members of the HomeStretch Board of Directors joined the CLT and are continuing to serve on the Board. Not to be outdone, all staff members of HomeStretch became members. Completing our initial membership are the homebuyers who purchased homes in the Land Trust. The purchase of a home in HomeStretch’s Community Land Trust automatically makes the homebuyer a member for as long as they own the home. We currently have thirty-nine homes in the Land Trust - all of the Carlisle, Midtown, Kensington Park East homes, two Ridgewood homes, one Cross-Town home, three Benzie County Homes placed in the Community Land Trust by the Benzie Housing Council, and four Leelanau homes through Leelanau County Community Development.
We will soon begin the second phase of our membership drive. A printer friendly application will be posted on this site as soon as it is available. If you have any questions regarding membership in the Community Land Trust, please send an e-mail to maureen@homestretchhousing.org or contact her at 947-6001.
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