Double Wide Dudes Podcast
What Are Community Land Trusts and How Do They Create Affordable Housing?
This episode we are joined by Bart Cochran, founder and CEO of LEAP Housing. LEAP Housing is a nonprofit dedicated to developing and the preservation of affordable housing up there in Idaho. And they provide all sorts of services that lead to greater housing stability in their community.
Intro: Hey look, it’s the Double Wide Dudes.
Alberto Piña: All right. All right. Welcome to another episode of the Double Wide Dudes. It’s your host AP. And today I’m joined with Mr. Bart Cochran, founder and CEO of LEAP Housing. Welcome to the show, Bart.
Bart Cochran: Thanks. And thanks, Alberto.
Alberto Piña: Yeah, for our listeners, if you didn’t catch our podcast back in November, LEAP Housing’s a nonprofit dedicated to developing and the preservation of affordable housing up there in Idaho. And they provide all sorts of services that lead to greater housing stability in their community. And we got the opportunity to visit with Matt Fast back in November, who runs the resident owned community department of LEAP charities. But in our conversation, he was talking about all the cool things that you and your team do. So glad to have the founder and CEO.
Bart Cochran: Yeah, great to be here. Yeah. I’ve heard lots of great things about the Double Wide Dudes.
Alberto Piña: Well, I guess for starters, let’s talk about how you got going. You started as, and still are, a realtor. How did that turn into founding a nonprofit and turning into all the different things y’all are doing now at LEAP Housing?
Bart Cochran: Yeah, I think that’s a great lead question because it really speaks to our origin story. So really, it goes clear back to the fact that pretty much since I got out of college, I’ve been in real estate, at one form of real estate or another. I’ve got a business partner, a guy named Chad Hansen, and we have been doing a variety of real estate activities. And I think we reached a point about six years ago that we just said, we just couldn’t handle watching so many people unable to access housing in our community.
We tried all sorts of different avenues to sort of, how can we provide some supports to be able to help maybe would be homeowners that had barriers to overcome, or people who maybe had the idea of wanting to rent a home, but really ran into some blockades or some challenges with limited resources or even knowhow.
And so, as we went back and forth about saying, “How do we tell tackle this issue? Can we do it from a for-profit company?” We researched different models. And we just said, “We have to go structure a nonprofit in order to be able to do what it is we want to do, to be able to support it.” It’s what I would call the depth of supports that we needed to be able to provide to this specific audience.
And when I talk about this specific audience, we’re really thinking about who are the most vulnerable in our community. How do we support those folks? And so what we did was we said, and our real estate company, by the way, is full service real estate. I mean, we’re called Property People, a management portfolio of rentals throughout the community, and then we’re a licensed team of realtors. And I, myself am licensed, like your question earlier. And so we just sort of said, “How can we take the real estate experience that we’ve got and leverage it in a way that serves the most vulnerable in our community?’.
So we formed this nonprofit called LEAP, and it was a bit of a shell of a nonprofit at the time. And we said, “Well, where do we start? Do we volunteer? Do we do this?” So our real estate company said, “No, what we’ll do is we’ll give the top percent of our revenue to the nonprofit.” And that began the pool of funds that allowed us to incubate the first couple of projects of our organization.
And when we toyed with the idea of, “Okay, so are we really departing from full service real estate now?” What we decided, and just in practicality, is everything we were doing in order to serve these most vulnerable populations in our community was all real estate related. And most of those activities were all the kinds of activities that would require a license in the state of Idaho. And what we really found ourselves in, we started as entrepreneurs and we’ve now found ourselves as social entrepreneurs.
So we have essentially become a bit of a social venture, because I’m still the CEO of the real estate company. But at the same time, I’m also the CEO of the nonprofit side of it. And pretty much everything we do, buying land to develop and convert into a new community, transacting a multifamily project, helping an individual homeowner buy a home for the first time. Really everything touches, one, not only that expertise of real estate, but it touches the fact that I’m a licensed agent. So it just made sense to keep that piece of it and continue to hang our license with Property People and then our broker is a company called Silver Creek here in Idaho.
Alberto Piña: That’s awesome.
Bart Cochran: So, yeah, so it’s like the definition of saying, ‘What do I got to offer? What do I know? And then how can I leverage that in a way that serves people?” And so, one of those things was my real estate license.
Alberto Piña: Yeah. That’s awesome. And when we founded Braustin, that was a big core of what we were trying to do is focus on the idea that we could be for profit and for people at the same time. You didn’t have to be one or the other. And it sounds like y’all found a way to make a living, but also serve your community simultaneously. That’s just so cool. Y’all just do so many things. It’s not just Rock Communities we talked to Matt about. Y’all got developments with container homes and all sorts of projects. Can you walk us through the different kind of arms of what LEAP has become, and I guess how you go from selling real estate to full blown developer, Rock Communities? That’s a big evolution.
Bart Cochran: Sure. Yeah, no problem at all. Let’s see. I think the easiest way to explain it, we have this great little graphic that shows the stair steps. So it’s like steps you can imagine, and we view housing as a spectrum. So sometimes people might imagine it’s just one type of real estate. It’s all the same. But really, we view it as a spectrum because everyone has a little bit of a different for need. And so our organization really evolved into it.
The first thing we said when we first got started is we said, “We don’t want to do anything somebody is already doing.” We don’t want to repeat because we care about being good stewards, financially of the resources already out there. And the last thing we want to do is just duplicate effort.
So when we started, we said, “Okay, well, there’s this huge housing need in Boise,” at the time. It was 2015, I think. And they’d just come out with a housing study. There was like over 8,000 units were needed in the city of Boise of affordable housing. And we said, “Well, how can a little nonprofit like ours do anything?” So we said, “Well, we need something bite sized.” And so we went to the resettlement agencies. Boise is a large resettlement city for people that are coming through refugee resettlement into the United States. And we said, “what housing needs do you have?” And so there’s three agencies and they all said the same thing. “We need a soft landing place for people when they come through refugee resettlement because our vacancy rate’s so low, there oftentimes aren’t permanent apartments for people.”
And so we said, “Oh, that seems doable. We might be able to create that.” So we structured it, we put together three apartments and we gave people basically a soft landing space. And once we did that, because we went out 2016, I think, we went out the first thing we did when we started the nonprofit was go do a capital campaign, which is a terrible idea if you’re just starting an organization, because a lot of response, people were like, “Who are you? What are you doing?”
And thank goodness, just amazing network of people and just amazing came together and made it happen. And what it did was it really just lifted our spirits to give us the confidence, try the next thing. And each time we look at the next need in the community, we look around and evaluate, is there anybody else that’s doing this in the community? And if so, how can we come behind them and support that work? And if not, then it’s a gap and we might have to fill it. And so we assessed to determine, are we uniquely positioned to be able to fill that gap in the community?
So it really has evolved like what we call the stair step. And so in this stair step, we look at the first step is being transitional housing. So we provide a transitional program for households coming through resettlement. So that’s the first step. So it’s just basically no house, house. I just need a place to be right now. And then the top of that spectrum, if you look at the top step, and there’s a few stairs between, and we can talk about those for a second, but that top step is what we call wholly owned ownership.
And by that we mean, we take a person who would be at 80% of very median income. So what HUD defines low income. We like to use the term income limited. We think some of that terminology is a little dated, so we’re trying to work on some more dignifying terminology. But we’re talking about income limited, but the idea is that person would be able to go into the community, find a house that’s for sale and purchase it and get all of the upside if they sold it into the future. So that’s the wholly owned concept. So those are the two ends of that spectrum.
But what we find is there’s a huge gap in between that’s needed. So long term rental housing is in the middle. The Rock program is in the middle where say, for example, in a cooperative ownership, we all collectively own a community. But I don’t own my piece entirely by myself. I’m a collective owner. And so my income, my upside is slightly limited. The land trust, which we will talk about, has that same dynamic because the land is being held in the trust. And so the upside of it is limited.
But that each of those trade offs is in exchange for some of maybe the future upside, you are trading off the idea that you can get into something that’s below market rate. And so what’s interesting is we sort of started one into the stair step. We knew that the crown jewel of poverty alleviation was home ownership. That was the other end of it. And then all these gaps are the gaps that we encounter in our day to day activities. We say, “Oh gosh, if there’s only somebody to help people navigate the barriers they might have to become a homeowner.”
If there’s only some way to preserve manufactured housing communities, instead of scraping them and creating an apartment community on its own property instead. If there’s only a way. And each time we look around and say, “Anybody else doing this? Is this something we should be doing?” And that’s where those programs really come from. This really five steps, that stair step, and really each one of those basically represents a program. And then when you start caring for so many people in this ecosystem, you can’t help but build in the services piece of it. How do we help people connect to resources in the community that are going to empower them to be successful? Either as homeowners, so the tools that needed to be successful. And then how do we make sure that they have access to the kinds of community resources that will help them to be successful as well?
Alberto Piña: That’s so cool. And that’s a great way to look at it. I think for most folks, real estate is viewed as, it’s an investment, it’s an asset. And there’s a lot of first time home buyers that are able to just jump up to that pinnacle and get there. There’s a whole other half of the population that isn’t, and at the end of the day, housing’s a need. People just need a roof over their head and a place to live. And it’s really cool to see the different steps. And do you find that when folks start, let’s say, that initial housing, when they immigrate to the US, that they start climbing the steps with the services y’all provide? What have y’all seen with that?
Bart Cochran: That’s a great question because we do see some of it, for sure. We do see some throughput as people kind of work their way through. It’s not always a linear fashion. It wasn’t really designed that way. So yeah, it’s really a case by case basis. But what we do find though, is we’ve been working in this program called Yes, You Can, which is the wholly owned side of it. Essentially, people who want to become homeowners, they have to have the dream of becoming a homeowner. And then they basically have barriers, some sort of a barrier that they need to overcome. So it could be credit counseling, it could be saving for a down payment, it could be education. There’s so many different ways that people can be stopped from being able to achieve that dream.
One of them that surprised us was interpretation. So language barrier. It’s complicated if your native language is English. It’s really complicated if your native language isn’t English, because most everything is done in English in terms of real estate transaction. So think real estate license contracts and all sorts of stuff. But what we have found, just a point about folks that are coming to the United States for the first time is that we have noticed that there’s a little bit of a superpower. We have seen some just incredible barriers get overcome when people catch the vision of a home.
So whether it’s an idea that was planted in the person’s mind or whether it’s an experience that they’ve had in the past. When they go from the idea of like, “Hey, we can help you overcome these barriers so that you can become a homeowner,” and then, sure, that sounds good. But when the person begins, when it sinks in, this idea of home, like actually sinks in and they begin to believe it themselves, I am telling you that the kinds of barriers and the speed at which people can move is incredible. It’s like, we define it like a superpower. People, when they catch that vision and they see the finish is really possible, it’s right there. People will go to incredible lengths to make it happen. It’s really, really powerful.
And we’ve seen like a little bit of a hyper speed for folks who are coming through the resettlement process. There’s a couple of just great examples of clients that have moved through. We’ve actually had people not only come through a settlement, purchase their first home and then now have sold their home, capitalized on the equity, and then bought another home, bought a new home that’s newer, that’s larger because of their growing family, that reflects the fact that they have a lot more earning potential that they’ve gained over the last couple of years. It’s really cool. We’re calling those people alumni, people who have actually got into the program once and then they’ve sold and then they’ve done it again, which is pretty neat.
Alberto Piña: That’s awesome. Yeah. That’s super cool. And it all starts with stability of the housing, whether that means to you, you own it or in the case of a Rock that you don’t have to worry about a developer selling it out from under you. It’s the stability of knowing you have a place to go sleep tonight.
Bart Cochran: Totally.
Alberto Piña: So cool. Well, let’s dive into the community land trust as a concept and LEAPs involvement in that. What is unique in terms of your organization, the community land trust and how y’all are using that to support the need for housing in your area?
Bart Cochran: Sure. Probably a little bit of context to give you is, in a perfect world … Well, in a perfect world, we wouldn’t have a housing challenge. But in an ideal scenario, we would be able to utilize the Yes, You Can program and help people, all willing potential buyers that have a dream that want to make it happen. We’d help them get over the barriers, we’d take them to the market, and then they would be able to purchase a home.
But what’s happened, just so happens that our fair city, Boise, is the fastest growing city in the nation. We have had an incredible amount of growth, rapid appreciation. We ranked constantly as the highest rent increases in the nation, the fastest appreciation, home price appreciation. It was just a couple of years ago that median home price was in the three hundreds. Today it’s well over $500,000. We’ve seen between 70 and 80% appreciation over just the last three years.
And it has to do with a lot of … It was partly because, well, I mean, it’s a great place to live and we’re seeing this all over Idaho. But people are coming from the coasts, from major cities, and especially post pandemic, or I guess we’d call post lockdown, people looking for a little bit of space to stretch their legs and to find a place that really, I mean, that they can call their own. And so Idaho seems to fit that for a lot of people. Really all over the country, especially Western, the Western United States, there’s a lot of movements, especially California.
And so because of that, what has happened is so much demand on a really limited supply of housing has just catapulted costs. So it’s put really everybody on their heels. There’s crazy stories about how many offers a person has to put, and how many offers a listing might get, how much competition, gets sold over asking. So in 2018 we started the Yes, You Can program. And I think interestingly, we had 18 home buyers that we helped. In 19, we had 19 home buyers. And then in 20, I believe we had 20 as well.
And so I was just asking our coordinator this morning, are we going to have 21 this year? And there are some limited opportunities for housing that it fits that affordable price point. Our AMIs, our 80% of area median income, really correlates to about a, at the most, a family of four, $300,000 purchase price. So when you look at 300,000 is like really the max, somebody could debt service and not go over that 30% threshold. And if you’re median home price is over 500,000, basically this whole group of people, we’d say 30% of our population, of our households are considered low income. And then so probably even that group before. So somewhere between 30 and 50% of households really are just left out of the idea of home ownership. It’s just not an option.
And so what happened was the inventory was fewer and fewer and fewer. So we had to say, “We’re going to have to build our way out of this. We’re going to actually have to create housing that can be sold to these households at 80% of their median income or less.” Because our first projects were all rental housing, so when we explored the home ownership strategy, we looked at a couple of things. We wanted to understand, what are the models? What different models are people using to be able to build home ownership? And what we found was, God bless all the down payment assistance providers, for sure. But if you look at the kind of traditional way home ownership is done, it most often is a purchase by an income limited home buyer. They get down payment assistance, and that down payment assistance has some set of terms. Maybe it’s a five year burn-off, maybe it’s 0% into and it’s paid off in the future sale. Whatever it is, it’s usually limited from a timeline.
And so when the house gets sold, it almost always goes back to the market. So really great opportunity for the household that gets to take advantage of it, but no longer is it held affordable in the future. And that’s where we felt like there was some friction. Wait a minute, we’re going to invest lots of public money into housing product that is only affordable for one household. That doesn’t seem like a good use of money.
So we explored other strategies and we came up with the land trust. So it’s conventionally called the Community Land Trust. Our network is called Grounded Solutions that we’re a part of. We’re part of a Northwest coalition called the Northwest CLT. And the Community Land Trust is the concept. We fall into a category called shared equity. So our namesake is the LEAP Housing Trust. We tried to make it as straightforward so people could understand what we were trying to do, but really what we’re talking about is a concept called shared equity.
And so that what we liked about it was the idea that we made one single public investment and it created perpetual affordability. And so when you look at, if you said, how do you create permanent perpetual affordability, and you Googled it and you did a bunch of research on housing products, really two programs come up. The Rock program and the Land Trust Concept. Even rental housing oftentimes has a subsidy that is tied to a timeframe. Low income housing tax credit projects have a period of affordability and it’s up to the developer to decide what happens to that property after that period is over. Oftentimes it can be as long as 40 years, but it’s not perpetual. And so what we decided to do is say, “If we’re going to do this, we want to create not only affordable home ownership opportunity for this first household, but for every single household thereafter.” So we’re really putting a stake in the ground to say, this is what we’re going for.
Alberto Piña: It sounds like at the surface level, that the land trust locks in the appreciation of the land component to keep that housing unit, like you said, perpetually affordable. Affordable day one for buyer one and affordable for buyer five down the road. Is that, in the simplest form, the concept behind it?
Bart Cochran: Well, for the most part, what we do is we just, the first way that we create a below market opportunity for a home buyer, for an income limited home buyer, is what we do is we eliminate land from the equation. So if your house was going to cost X and your land was worth Y, we just eliminate Y, so all you’re going to pay for is X. So that’s the first piece of it. That’s how we artificially subsidize the cost of the housing right off the bat.
So then what happens is that land is held by the LEAP housing trust in a guarantee that it will remain perpetually affordable. And then the land then enters into a long term ground lease with the home buyer. So instead of the home buyer taking a deed that includes the building and the land, they’re just taking a deed that includes the improvements. And so then we hold the land long term ground lease. It’s a 99 year ground lease that’s renewable. And it’s basically at the minimum cost that we can charge so that we can operate it. We have to have some staffing so that we can answer questions and then help with it. But it’s 99 years. It’s inheritable and it’s renewable. So if anybody ever made it to the end of that 99 year lease, it would just get renewed. It would just start over again.
What happens is, every time the house is sold, the 99 year clock starts again. So really, there’s no likelihood that that ground lease is ever going to end. And then the way that the home price is set so that it remains affordable is that we essentially have a calculation for what kind of appreciation can be earned in the future. So it definitely has a component where the home buyer gets the ability to, they get all the tax benefits of being a homeowner. They get the ability that they’re going to get a mortgage, so that mortgage going to be fixed. So they have a static mortgage payment every month, which is different than rental housing, because you’re going to see those numbers climb. You get principle pay down, which we call forced savings. So you’re going to get principle pay down. And then you get a certain amount of appreciation.
We lock it into something along the lines of CPI. So Consumer Price Index. And the reason why we do that is if you look at wages, nationwide. At least we’ll talk about our market. For the most part, wages are tracking CPI, maybe a little bit plus or minus. And so if we let the home price appreciate at a pace that is faster than wages, then we risk that the home will become unaffordable to people at those income levels. So if 80% is here today, the amount, the value of the home can really only climb at the rate at which people’s incomes are climbing. So people still get to leave with a nice amount of equity. They get their principle reduction, they get all those tax benefits. And then of course, if they do any improvements, they get a portion of those improvements credited back as well.
Alberto Piña: Gotcha. That’s such a cool concept. It’s like a hybrid between the Yes, You Can program and the Rock behind a traditional home. I know that’s way oversimplified.
Bart Cochran: Yeah. I think the hard thing for people to wrap their head around is this idea of shared equity. We call it shared equity. That’s the concept I really want people to understand. But they’d say, “Well, why shouldn’t these home buyers have all of the upside potential?” Well, if we think about the stair step again, what we’re doing is it’s a stair step in the middle. We want everybody to be able to access a house in the market and get all the upside. We know that’s the crown jewel of poverty alleviation. We want everybody to have that. But sometimes it’s just not possible. There isn’t enough income in the household to be able to support a purchase price in the market.
And so what we’re doing is artificially creating housing that is below market. So to give you an example, the project, we’re just heading into the final stages of closing on six homes. One of those homes will sell for $212,000. It’s about a thousand square foot home, four bedroom, two bath, brand new construction. It’s from the factory, indieDwell. It’s a cool little shipping container converted houses, a factory built product. And so it’s 212,000. That home is worth well above $300,000 in this market. And so, what we’re doing is artificially creating a housing product at 212,000. And of course, when you put that in the market, we had a hundred phone calls in the first weekend. We always joke, if you type into Zillow, let’s say, Zillow and you type in house, Boise, 212,000, it just laughs at you. It’s just like ha-ha-ha.
So what we’re doing is artificially creating lower cost housing. And so the trade off is that we’re sharing some of the equity with you today and you get to share the equity with somebody else into the future. So that concept of shared equity, I think, really hits it on the head because in order to get all the upside, you have to be able to purchase in the market. But when there isn’t an opportunity to purchase in the market, your alternative is just rental housing. So we’re creating housing product and inventory that doesn’t exist in the market and that is artificially at lower cost than the market. And as a result, there’s a dynamic that gets created because we’re helping this household, they’re going to help the next household be able to purchase as well.
Alberto Piña: So I think the idea of shared equity is such a cool concept. And as you put it, you’re passing on equity today to folks that wouldn’t get it today. So in turn, they take reduced equity at sale so someone else can get equity they can’t necessarily afford today. And it just, in theory, keeps going and going and going, right?
I think one of the questions that jumps to mind and I’m sure y’all get, if they don’t own the land, what is the guarantee to them that, like we see in traditional mobile home communities that the land just doesn’t get sold off or the rug pulled out from under them. How do you all address that concern and deal with that with these folks taking advantage of this program?
Bart Cochran: Yeah. The homeowners, I think especially … Well we’re the first community land trust in the Treasure Valley that is doing this home ownership concept. So it’s a new product. So for sure, there’s quite a bit of education at the beginning and people say, “Well, how’s that work?? I think the biggest criticism we’ve had so far, which I’m still just going to chuckle about it, because I don’t have any other choice otherwise. I think somebody said they thought it was un-American that we weren’t passing on the land. And I thought that doesn’t quite seem quite right. But everybody has a little bit of a different response to, wait a minute, you don’t have the land? So it really requires us to go through and really be diligent about explaining, making sure people understand the concept.
And I think the other thing too, is people need to understand that the Land Trust Concept isn’t new. It came out of the civil rights movement. There’s literally hundreds of land trusts across the United States. And some of them are handful of houses and some of them are literally hundreds of houses. And Grounded Solutions is a great network that helps do the best practices, they help with lender, helping us understand how do you even get a mortgage on a lease hold interest? And so, and so forth. We want people to understand that we didn’t just hatch this idea. So that’s one of the thresholds. It’s okay. Can you finance it? Yes, you can finance it. Here’s some lenders set up that understand how it works. They’d approve the documents. Then the next biggest one is, is exactly to your question, is how do I know that this isn’t … you aren’t going to change the terms.
And so we provide the ground lease early on, and the ground lease really is, it’s so generous, I guess. It’s very clear about the way it’s structured. It’s very clear that it’s meant to be perpetual. And our understanding of the way it’s written this way, it’s a 99 year ground lease. I don’t think we can legally give a longer ground lease than that. I think 99 is literally the maximum. And if we could, we’d give a million year ground lease, or whatever. But since that’s not perfect, we give this 99 year, we call 99 year renewable ground lease. So literally, if somebody lives in the house for 99 years and one day, their lease just starts over again. They get another 99 years under the same terms.
And so there really isn’t a scenario in which, unless somebody, they could default on their lease. These have to be owner occupied so you can’t just buy one and then turn it into a rental. Its owner occupied. And so you could default on your lease. That’s possible. There are some termination clauses in that way. But otherwise, it’s set for people to stay long term. In fact, if I was an investor… Say the manufactured housing community concept, when you sell a mobile home park, your ascending these rights. So there’s lease obligations that the end buyer is assuming that the homes are owned by the end users and then the land is owned by the investor. There’s rights, and they can terminate those rights within certain parameters. Say, for example, usually there’s just maybe a one year lease with the people in a manufactured housing community. So at the end of that year, I can change the terms, I can change the use of the property. I can do a lot of things.
In this case, so that park is worth something to this investor because of the cash flow, future use, whatever it is. In our case, I’m not sure that the land trust would be value able to anybody, because if you think about it, there’s no real income stream for somebody to get, first of all. So the land trust has this huge pool of land that it owns. “Hey, any investor want to buy it all?” They’d be literally buying land, but with no cash flow stream or alternative use ability, because the obligations are so long that literally people’s lifetimes would pass before there would ever be the possibility of the expiration of a contract. So we’ve really locked it out so that the land is, it’s essentially, that’s why we use this term trust, is we’re essentially depositing the land in trust by the organization for one specific perpetual use. And that’s it.
It is really like, some of the similarities that we see are, if you’re familiar with conservation easements. So a lot of times foothills near a community for walking and biking, or whether it’s an environmental conservation easement, or even a nature conservancy or something like that. The idea is that these are being set aside for this one specific purpose. And there really isn’t any way to create an alternative strategy that you’d be able to monetize or do something different with.
So the homeowners, I think, are well set from that perspective and that there isn’t a way to pull the rug out from underneath of them. I mean, this extra layer that we go to is we give the home buyers all the documents, and then they meet with an attorney, an attorney tells them the same thing, that here’s the terms of these documents got to make sure keep up your property, take good care of it, and pay this really minimal land lease fee. And then otherwise, it’s yours. It’s essentially.
And what we’ve seen is the appraisers have reflected this way. Some of the new appraisal guidelines that have come out really essentially, because the long term, the lease is so long, it’s 99 years and renewable, essentially appraisers can almost treat the land as if it’s owned by these home buyers. Even though they don’t technically own it, they have the right to use it in such a way, in such a long period of time, it’s as if they own it. And so the appraisals are able to be reflected similarly. There’s a still few carve outs and caveats, but they’re starting to be able to put some of that land value into the total valuation, because it’s as if it’s theirs.
Alberto Piña: To some people it might seem too good to be true out the gate, but it’s a very creative way to get as close to true ownership as you can get at that price point.
Bart Cochran: Totally.
Alberto Piña: And have that value continue to rinse and repeat in the community for, I mean, 200 years is a long time if they renew it twice. And that’s, I mean, heck the country’s only what 250 years old.
Bart Cochran: Here’s a text message I got last night. Let’s see. These are the kind of messages we get regularly. I’ll block their number here, but this just says, “Hi.” And then there’s a picture of one of our land trust properties that’s about to close in a couple weeks. And it just says, “I need more information about this house.” And it’s really common because they are looking at real estate listings and it’s like this price point way up here, and then all of a sudden, there’s this huge gap, and then there’s this land trust property down here. And so they’re like, “Oh, are there more of these?”
One of the interesting things, when we first put these houses out, people figured out that it was a subdivision. So we have a 14 unit subdivision we’re building out right now. And we did a phase of six. And so when the six went under contract immediately. And then, but people got clever and they started to say, “Are there other lots in there?” And they drove by, they found the plat, and they determined that, “Hey, there’s another eight here.” And so the next wave of questions we get from realtors is, “When are these coming out? When can we get these one? Because we know you’ve got more lots.” So it’s interesting. There’s just so much demand for that housing price point.
Alberto Piña: It’s a super creative way to get that done in the community. And that’s something we’re seeing here in Texas, too. Heck, my brother’s trying to find a house and they put in multiple offers and sure enough, here comes a cash buyer from the west coast and it’s all done from there. But the rate that, across multiple states, that housing prices are rising does not match income levels. And I imagine this is a problem that’s only going to get worse without awesome creative solutions like what y’all are doing here.
One of the big questions, if I’m a home buyer looking at this, and I imagine y’all get, is the what happens when I’m ready to move on? When I go to sell this? Most folks don’t stay in a home for 99 years. So, what’s next? I’m in this for five to seven years, my family gets bigger, I get a job in a different city. I’m ready to move. I go to sell this home, this asset. How does my share of the equity as the home buyer work in that scenario?
Bart Cochran: Yeah, that’s great. The minimal land lease does help us keep an asset management team on our staff. And the asset management person would really field the call. So you would call us first. And then we would run the calculation scenario. So we have a calculator and it goes through and determines how long you’ve lived there, what the original price was, if there’s been any improvements. And then it calculates CPI and it determines what the sales price is going to be. And so we work out with the home buyer, what is a sales price going to be? And then our organization has a right of first refusal to purchase it. So sometimes we imagine in the future, when houses get to the end of their deferred maintenance, if there’s some needed upgrades, we may in the future buy back houses to reset the timeline on some of the capital improvements and then put them back out.
But we have the first right to buy. But most often we will not purchase. That’s sort of how I imagine it. And then what we’ll do is, we’ll be keeping a waiting list of people that could buy. The unique thing is, this isn’t one of those scenarios where you can … We’ve established the purchase price and if you put it out to the market and people bid it up, it doesn’t really matter because we’ve established a purchase price. So it’s like a total anomaly for the market.
And so the home buyer can choose to sell. We can offer people on the waiting list as potential buyers. They can list it with a realtor. It’s totally up to them how they decide to sell it. But the agreement is they have to abide by the calculated sales price. So that’s the purchase price that it’s going to go out to. And then we are involved in the income certifying side of it. So when they get it under contract and they determine this person’s going to buy it, we’ve already agreed on the purchase price, we then take a look at the income to determine that the person meets those income requirements. In most cases, it’s 80% of their median income or less. And then once that’s all okayed, then the transaction moves. They do all the normal and customary things, inspections, due diligence. And then they move towards closing, from that perspective. So it does have us being involved in the process. It doesn’t necessarily mean we have to sell it for them though.
Alberto Piña: Yeah. So this whole thing is one big hybrid approach at all the different stages, but in my mind, I don’t know if there’s anything more American than coming up with a way to put a permanent solution in place. They make more money than if they were just renting. So they’re better off down the road. And the next person gets to buy a home that they can afford. And it’s just this cycle of roofs over heads and in an affordable way. That’s so cool.
Bart Cochran: I think so, yeah. Let’s adopt it as American. It’s as American as apple pie.
Alberto Piña: Yeah. Coming together and figuring things out. Absolutely. Bart, most of our listeners aren’t in Idaho, but you mentioned this isn’t just for y’all’s state. This has been around for a while and it’s across the country there. How would folks in other parts of the country, if they wanted to get involved or find a similar program in their neck of the woods, how do they learn about this stuff? And how can they contribute to getting more sustainable housing in our communities?
Bart Cochran: Yeah, that’s great. Well, we would, of course always invite folks to support the work that we’re doing here. We have, as the need grows in our market, we have decided to expand throughout the state. So now what was what an organization started really focused on what we call the Treasure Valley, which is the area surrounding Boise, has now expanded to the corners of the state. And we’re working on scoping projects. As each community’s experiencing it differently, we find that communities are experiencing these housing challenges. A lot of times the challenges are articulated as economic development challenges. So there’s jobs available for people, but there’s not housing for them to take. And so they can’t fill jobs. Communities want to grow and add new employers, but the employers won’t come because there isn’t housing in the community.
We find that there’s severe health issues. The number one thing we can do to help people with their health is essentially provide a stable place for the person to live. And so on and so forth. So what we find is that because of those dynamics, the Boise dynamics are people moving in. But that’s not necessarily the case in all these other communities. There’s not necessarily a major influx of population. So we’re finding really there isn’t a community that isn’t affected by housing in one shape or another. And so we are seeing elected officials, healthcare communities, the economic development community, all sort of grappling for these solutions. So I think you’re going to see a lot more collective ideas and creative solutions come out.
The way that we would suggest people that want to engage in it would be go to the Grounded Solutions website. That’d be my starting point. You could, of course, Google. The two terms are Community Land Trust. That’s the most common term used for this concept. And then the second is the Shared Equity Concept. So you can Google those if you want it for your own community. But the Grounded Solutions has great resources. And I think you can just go right on there and identify members that are in your community and see, is there a land trust that’s nearby? And if not, my suggestion would be is reach out to the nearest, especially if you’re a practitioner of affordable housing or you’re just desiring to see that in your community. Reach out to the nearest land trust. They tend to be very geographically focused.
You don’t usually see nationwide land trusts, for example. They tend to be focused on a geography. So reach out to one of those and say, “Hey, do you have any interest in coming to my community? If not, would you help us get something started in our community? Would you show us how to do it?” And the neat part about … That’d be a great peer organization. And if you’re going to just do it from scratch, the neat part about Grounded Solutions, they’ve got a CLT 101 program where literally you start from the beginning. I’m thinking about starting a CLT, what do I do first? And so they’ve got some great training and education on that piece of it.
Alberto Piña: Nice. Well, my guess, Bart, is y’all’s reach, one way or another, will reach well beyond Idaho. Y’all are leading the way in a lot of ways and it’s just so cool to get to it with y’all. If someone in the audience wants to learn more about specifically what y’all and LEAP Housing’s doing and possibly contribute to y’all’s mission, how do they find you? How do they learn more about you? How do they reach you?
Bart Cochran: Yeah. Okay. Well, great. That sounds awesome. I hope everybody that’s listening goes straight to our website because just a few weeks ago, we just rebranded. So we are now LEAPHousing.org.
Alberto Piña: Very cool.
Bart Cochran: Originally, here are some of our names, LEAP charities, but we’ve gone to LEAPHousing.org. Simplified it. So check out our new website and you got to see the new logo because it is just, it’s just awesome. And so the website’s all fresh. It’s up to date. So go to our website, check it out. There’s tons of resources, even a video about our community land trust program. So I would say get over to our website and of course, on there, if you feel compelled to give and support the efforts that we’re doing here, there’s a donate button right there on the website. And if you prefer email, you could always just info@LEAPHousing.org, will get to us as well.
Alberto Piña: Awesome. And we’ll be sure for the listeners watching on YouTube to show the website, share all the links in our show notes, and make sure if you want to get involved, you have the ability to do so. Well, thanks again for joining us, Bart. It’s so cool what you and the team are doing. It was great talking with Matt. And just your organization as a whole, it’s awesome what y’all have built, and excited to keep watching the impact y’all continue to have.
Bart Cochran: Oh, man. Thanks, AP. I really appreciate it. And I love the work you’re doing. Thanks for spreading the word about affordable housing and keeping all these ideas fresh on people’s minds. You’re doing great work. So thanks to the Double Wide Dudes.
Alberto Piña: Yes, sir. Yes, sir. All right. Well that doesn’t for our show today. As always, appreciate y’all tuning in and we’ll catch you on the next one.
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