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Dream Home
Na HALE O Maui offers hope to future homeowners with a radical new approach to affordable housing
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February 22, 2007
In 1973, my parents moved to Whittier, California, a small middle
class suburb of Los Angeles. There they bought a modest but comfortable
house for $26,000—at the time, the median home price was about $23,000,
according to the U.S. Census Bureau. Only my father worked, and his
engineer's salary was $12,000 a year (again, just about the median
income, which back then was $12,051). Since the purchase price was
about twice their annual income, my parents considered the home
affordable.
While Maui in 2007 is obviously a very different place socially,
economically and demographically from Whittier back then, the economics
of affordability remain the same. Here the median income is a solid
$65,700, but the median home price has skyrocketed to a head-spinning
$693,000, according to the Realtors Association of Maui. Even
condominium prices have shot through the roof—the median condo price on
Maui is $505,000.
Under the old rules of affordability, people on Maui earning the
median income shouldn't move into a home that costs more than about
$160,000—to do otherwise is to spend far too much each month on
mortgage payments, leaving nothing for savings. But for the last few
years it's been impossible to find a house for even twice that amount
anywhere on the island that's fit for human habitation. With current
median home prices standing at more than 10 times median earnings, home
ownership for many residents is a bitter joke.
"There's nothing [on Maui] to sell people working at 140 percent of
the median income [$94,500 a year]," realtor John Andersen says. "And
there's limited supply up to 160 percent of the median income [$105,120
a year]."
Left unchecked, these trends could dissolve away Maui's whole social fabric.
"Young people are leaving because they don't see a future here,"
housing advocate and former Maui Economic Opportunity Special Projects
Director Tom Blackburn-Rodriguez says. "You can't continue to bleed
away your human capital."
Last year the Maui County Council unanimously passed the Workforce
Housing Policy, which requires developers to sell 40 to 50 percent of
their residential projects at affordable, less-than-market prices. With
developers and realtors balking at the plan—their profit margin is much
lower on lower-priced homes—the council is now struggling to come up
with "incentives" to keep builders from simply walking away and
building nothing.
There's another possibility. Exactly a year ago on President's Day,
Andersen and Blackburn-Rodriguez helped form the non-profit
organization Na HALE O Maui (Housing and Land Enterprise of Maui).
Their plan is to bring a radical new approach to building affordable
housing that would, if successful, get people making 80 percent to 140
percent of the median income ($32,850 a year to $94,500 a year) into
homes without having to rely on exotic, risky mortgages and/or ohana
rentals but still leaving enough income left over for long-term
savings.
It's called a community land trust (CLT), and though you can find it
in 38 U.S. states, no one has apparently started one before in Hawai`i.
The key to making a CLT work is to keep the price of the house itself
distinct from the price of the land below.
"The concept is simple," states a Na HALE o Maui promotional sheet,
"separate the value of the land from the value of the improvements and
sell only the improvements while keeping ownership of the land in trust
forever. The owner occupant acquires title to the home and receives
exclusive, possessory use of the land that is conveyed to individual
landowners by means of a long-term renewable ground lease that is
assignable to their heirs of the owner/lessee."
The effect is disengage the cost of the house itself, which should
more or less stay stable, from the cost of the land, which lately has
been exploding. The result is a house divorced from market speculation.
"You can put a land trust house right next to a market-priced house
and you couldn't tell the difference," said Blackburn-Rodriguez, who is
the volunteer president of Na HALE O Maui. "It's housing just like
everyone else has."
"We think the highest need is for single-family detached [homes],"
Andersen said. "Rental housing, too. What we're hearing is rental
housing is in big demand."
Of course, there are tradeoffs to buying a community land trust
home. CLT homeowners must live in the home fulltime—no timeshares or
absentee landlords allowed. There are also equity restrictions
requiring CLT homeowners who want to sell their house to sell back to
the trust. They'll get a return on their investment, sure, but not
nearly as much as if they'd sold in the open market.
"This is done to balance the seemingly competing goals of providing
a fair return on the initial owner's housing investment, with assuring
that the housing unit is kept affordable for the next buyer," reads one
promotional sheet written by Andersen, who serves as Na HALE O Maui's
executive director. "People who buy homes through a CLT are, in
essence, trading their right for unlimited market-driven appreciation
in exchange for [a] significant upfront subsidy that allows them to own
a home they otherwise would have been unable to afford."
Old housing cooperatives ran on similar lines, but they largely
failed because of their inability to keep owners from breaking the
equity limits. Community land trusts attempt to solve this with a truly
revolutionary tactic—namely, the democratization of housing. In fact,
it comes perilously close to workable communal living.
A community land trust achieves this through its board of directors,
which is split into three groups, each of equal size and voting power.
The first is made up of land trust homeowners—the people who lease the
trust's land and live in the homes. The second holds "general
representatives"—people who live in the surrounding community but don't
actually lease CLT land. And the last group, the "public
representatives," includes local officials, bankers, non-profits and
other members that, according to Na HALE O Maui, "speak for the public
interest."
In 2003, the writer Tom Wetzel explored the social ramifications of
such an organization in a society dominated by private property rights
in the Z Magazine article "The City."
"As a democratic membership organization, the community land trust
can empower people in a neighborhood to control what is done with the
land there, what services are provided in the neighborhood, and ensure
that an adequate supply of housing is provided at prices working people
can afford," he wrote. "The community land trust thus acts as a buffer
to protect the housing coops against the corrosive effects of the
surrounding capitalist economy."
There are about 200 community land trusts currently operating on the
U.S. Mainland. According to the Community Finance Solutions forum at
the University of Salford in the United Kingdom, Dr. Martin Luther
King, Jr. established the first CLT in the U.S. in 1967 for
African-American sharecroppers in Georgia.
Of course, the idea of holding property in a community trust goes back centuries. In his 1972 book The Community Land Trust: A Guide to a New Model for Land Tenure in America,
author Robert Swann sees the origins of CLTs in ancient China,
pre-Spanish Conquest Mexico and in old Native American tribes—all
peoples that rejected the idea of a person owning land.
According to the Institute for Community Economics (ICE), a
Springfield, Massachusetts-based organization that assists non-profits
in starting CLTs, a community land trust can help alleviate a variety
of housing problems. In Portland, Oregon, where anti-sprawl measures
have slowed growth and doubled housing prices in a 10-year period, CLTs
provide working people affordable housing. In Rochester, Minnesota—a
city without many housing options—the Mayo Clinic helped form a CLT for
its employees. In resort areas like Martha's Vineyard and the Florida
Keys—places very similar to Maui—community land trusts offer the people
who work in the rests a chance to live nearby, despite stratospheric
property values.
In late 2005, Blackburn-Rodriguez, Andersen and a number of county
officials attended a national Rural Community Assistance Corporation
conference in Honolulu on exactly that subject. Titled "Affordable
Housing in High Cost Areas," the conference delved into CLTs in great
detail.
Returning to Maui after the conference, Blackburn-Rodriguez,
Andersen and a few others got together on Feb. 19, 2006 at the Cameron
Center. There they outlined their new group, which they called Na HALE
O Maui, and elected their interim board of directors—mostly from the
real estate community. The Realtors Association of Maui gave them
$15,000. Except for Andersen, who is the executive director, all Na
HALE O Maui officials and directors work as unpaid volunteers.
So why'd it take so long for the land trust model to reach Hawai`i's shores?
"We're not sure if [the CLT] took a long time to reach here or if
the conditions had to get such that it was seen as a viable tool,"
Blackburn-Rodriguez said.
Andersen agreed. "There was an effort about six years ago to get
discussions on a land trust," he said. "They couldn't get any traction
at that time. During the '90s the housing market was depressed and
there were lots of affordable homes. It was really not a supply
problem. But that's changed in the last five years. Affordability for
the work force has gone out the window."
Still in the fundraising stage–they say that so far they've gathered
$100,000 in private donations, a $50,000 county grant and have applied
for $100,000 from the state–Andersen and Blackburn-Rodriguez say they
hope to have their first project underway by the end of this year.
Within the next five years, they hope to have 300 to 500 projects done.
Within a decade, they want to see between 2,000 and 2,500 properties on
Maui held in community trust.
Housing analysts say there's a shortage of between 5,000 and 9,000
affordable homes on Maui, but even if Na HALE O Maui succeeds in
building even a couple thousand homes, it will be the greatest CLT
success story in the U.S. That's because just 5,000 or so community
land trust homes have been built nationwide since the 1960's, according
to ICE.
Remember, this is America—market forces and property rights are
still in control of our economy—and "community" ownership of just about
anything has always seemed to strike people as vaguely "socialist." And
this begs the key question that decides whether a community land trust
lives or dies: why should a realtor or land developer become involved
in a CLT when vastly greater profits are available in the housing
market?
"There aren't any specific incentives solely by virtue of there
being a CLT," Jeff Yegian, an ICE technical specialist, emailed me.
"Local governments can create development
incentives/requirements that are easiest to meet by partnering
with a CLT. Otherwise, it's pretty much up to the personal
motivations of the developers and realtors."
On the first part—incentives from local government, Andersen and
Blackburn-Rodriguez see Na HALE O Maui as providing an easy way for
developers to comply with the County Council's harsh Workforce Housing
Policy requirements. To get a sense of the second part of Yegian's
answer, I spoke with Tricia Morris of Hawaii's Premiere Mortgage Co.,
one of the better known real estate professionals on the island, who
wrote a letter for Na HALE O Maui supporting community land trusts and
donated $5,000 to the organization.
"It just makes sense to me," Morris said. "I'm in the mortgage business. I try to give back to the community."
Then Morris said something else: "I particularly like [Na HALE O Maui] because it's important to get people into homes."
In other words, backers say the real estate market has gotten so
expensive that there are few options available to realtors who want to
sell homes to working people.
"It's simply a situation that there's no supply for people making up
to 140 percent of the median income," Andersen said. "Realtors know
that people have to start somewhere."
It makes sense. Sell a land trust home now, get somebody
experiencing home ownership who otherwise wouldn't have that option,
and in a few years that person will be able to enter the free market.
Just like the community land trust in Burlington, Vermont, which is
probably the most important model Na HALE O Maui officials like
Andersen look to.
"There 74 percent of those in the trust could afford to buy a home
in the open market after selling their land trust house," Andersen
said. "The average time they spent in the trust was seven years."
Think of it as an example of Alexis de Tocqueville's "enlightened
self-interest." Americans "show with complacency how an enlightened
regard for themselves constantly prompts them to assist each other," de
Tocqueville wrote in his 1835 work Democracy in America, "and inclines them willing to sacrifice a portion of their time and property to the welfare of the state."
For its time, that was a radical view—at least as startling as the
idea of free market Maui residents buying homes on community-owned
land, where the homeowner, landowner and members of the nearby public
can come together to decide how best to use that land. The only thing
we don't know yet is if it will work. MTW
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