Could a Sitka housing program work in Haines?

A nonprofit in Sitka is building “perpetually affordable” homes to combat a housing shortage and keep young people from leaving town. Members of Haines’ housing working group are wondering whether a similar program would suit the borough.

The Sitka Community Land Trust (SCLT) has built and sold three cottages in the last two years, with plans to construct 14. Funded mostly by grants and subsidies, the nonprofit has designed a system that keeps its homes affordable for median-income residents. Earlier this year, SCLT sold a home for $100,000 less than Sitka’s average listing price of a single-family house.

Three aspects of SCLT’s program make its homes affordable. First, the land trust was granted public land. Second, it doesn’t sell the land beneath homes, but rather leases the land to homebuyers for $50 a month. Third, SCLT limits the resale price. For example, in Sitka, an owner makes 25% of a home’s increase in appraised value. As Alaska Public Media reported, if someone buys a house from SCLT for $200,000, and the house is later appraised at $300,000 when the owner wants to sell, SCLT will limit the sale to $225,000.

“The ownership structure has many features that are far from conventional home acquisition and ownership,” said Haines Borough planner Dave Long, who is researching the model and how it might apply to Haines. “Getting it all started would be the biggest challenge, the need to acquire land and then invest in structures to lease out, that may be a large initial investment.”

Haines’ housing working group met for the first time this month, and among several solutions, members discussed constructing dry cabins for low rent. Theoretically, a program like that, or something similar, could be established by a community land trust.

In Sitka, the median estimated home value is $385,000, up about 1% from a year ago, according to a recent report by SCLT co-executive director Mim McConnell. The state does not collect or analyze housing data specific to Haines (or other similarly small communities), and real estate appraisal values in Alaska are not public information. Only two single-family homes are listed on Haines Real Estate’s website: one for $215,000, the other for $340,000.

“Before (2018) we were on just kind of a steady mellow sort of growth, and we started to see home prices increase last year and continuing this year,” Haines realtor Pam Long told the CVN in October.

According to the Alaska Housing Finance Corporation (AHFC), 74 households in Haines have received federal coronavirus rental relief funding. AHFC director of planning and program development Daniel Delfino said localized analysis and discussion is key to addressing housing needs in small communities and that local housing market estimates based on national algorithms or census data can miss the mark. The problem or solution in one Alaskan community isn’t always the problem or solution in another, he said.

Created in 2013, SCLT grew out of the Sitka Community Development Corporation, which had been working to address the community’s housing issues since 2006.

The Rasmuson Foundation and Catholic Campaign for Human Development (CCHD), among other organizations, have provided grants to cover costs associated with site preparation, utilities and operations (CCHD). Subsidies from AHFC have helped homebuyers with down payments. And loans from First Bank have paid for construction.

McConnell said the organization’s model wouldn’t be viable without the external funding. McConnell said at first she tried setting up the nonprofit with minimal outside aid “but the more I learned, the more I realized there was to learn.” With a Rasmuson Foundation grant in its fledgling years, the nonprofit hired a community land trust consultant to help design its program. McConnell said the organization has benefited from having board members who understand the real estate industry and development.

“It became obvious we really needed somebody with knowledge about home construction that could stay on top of what the contractor is doing (during design and construction). We learned the hard way that you really need to be your own developer,” McConnell said, noting that, early on, the land trust had to abandon plans for a house when a contractor went over budget on construction.

SCLT now has two paid staff members, whose salaries are covered by a developer’s fee on home sales and donations.

“It’s been a long haul. In the beginning, there was a lot of negative stuff to deal with, a lot of trying to convince people,” McConnell said. According to McConnell, some Sitka residents have questioned whether SCLT is the best way to use public land or to address the community’s housing needs.

McConnell acknowledged that SCLT’s program isn’t for everyone and, on its own, can’t solve all of Sitka’s housing problems. Only residents who make 120% or less of Sitka’s average income are eligible for houses through the program, and low-income families likely can’t afford the down payments.

Haines Borough Assembly and housing working group member Tyler Huling said she would like to see more affordable homes for sale in Haines but that a more immediate concern would be finding affordable rentals for residents at the lowest end of the socioeconomic spectrum. “In Haines the biggest challenge is low income housing and being realistic about what low-income actually looks like in this current moment that we live in… Rent that is $1000 a month is really unaffordable for a lot of people,” Huling said.

Despite the obstacles over the years, SCLT plans to construct two more homes in 2022, bringing its total to five.

In emails to the CVN, Long brainstormed a few points about how a community land trust might work in Haines.

“I am not sure where that initial money comes from, quick math at $150-200,000 per housing unit, it would require $1 – 1.5 million to build 6 – 10 units,” Long wrote. “I also think it will be surprising to some how much just the construction will cost. Estimated at $200/square feet. The land itself would require development of roads, utilities, and site prep prior to any homes being built. That is not inexpensive these days.”

The first community land trust in the U.S. was created by civil rights activists in Georgia in 1969 to assist black farmers.

Today, there are over 225 community land trusts nationwide, according to Grounded Solutions Network, a California-based nonprofit. But only three are in Alaska — in Sitka, Juneau and Anchorage. Anchorage’s is geared towards businesses not housing.