Updated on Sept. 25, 2023: In a block vote, City Council unanimously approved a funding agreement between the Department of Housing and Stability (HOST) and Elevation Community Land Trust that will allow the nonprofit to acquire and sell homes at an affordable rate.
The $6.2 million grant to Elevation will go towards the purchase, renovation and resale of at least 62 homes in the Denver area. The homes will be sold to people with a qualified income.
Elevation will have to acquire the 62 to 83 homes in Denver over the next three years and sell the homes back to folks earning up to and below 80% of the area median income. For a family of four, 80% AMI would be an income of about $94,650.
Affordable homeownership could soon be within reach for 62 Denverites across the city.
The Safety, Housing, Education & Homelessness Committee approved a $6,220,000 grant proposal on Wednesday that will fund the purchase and resale of at least 62 homes in the Denver area at an affordable rate.
The funding agreement is between the Department of Housing and Stability (HOST) and Elevation Community Land Trust, a nonprofit that acquires homes and sells them back to people with a qualified income.
Elevation uses the typical land trust model. The group purchases a home and accompanying land and, when they sell, they only sell the home itself, keeping the land in a communal trust. Keeping the land as a community-owned space allows the organization to maintain affordability and allows them to sell the home at an affordable rate because the land portion of the sale is removed.
They're currently working on building affordable condos in the Five Points neighborhood and have already completed condos in the Santa Fe Arts District.
With the proposed grant, the goal is for Elevation to acquire 62 to 83 homes in Denver over the next three years and sell back to folks earning up to and below 80% of the area median income. For a family of four, 80% AMI would be an income of about $94,650.
The resale value will depend on income and the size of a home.
Let's say that family of four in the 80% AMI range was interested in purchasing a two-bedroom home, the maximum resale rate would be $271,450, according to prices set by the U.S. Department of Housing and Urban Development.
According to Stefka Fanchi, the president and CEO of Elevation, funding this kind of model is a way to bring back starter homes and make homeownership more accessible.
"There used to be what we called entry-level housing...There's nothing like that anymore," Fanchi said. "I feel like without a bridge into ownership, which is really what community land trusts provide, home ownership is something that is only going to be available to the very wealthy."
The funding would come from two sources: $5,520,000 will come from the American Rescue Plan Act and the rest, $700,000, will come from Impact Investment Funds.
The Impact funds are managed by Community Planning and Development and the Neighborhood Equity and Stabilization (NEST) division. Through the grant agreement, the $700,000 can only be used if the homes are purchased in several agreed upon NEST neighborhoods, Sun Valley, East Colfax, Westwood, Globeville and Elyria-Swansea.
In addition to the grant, Elevation would receive funding from the Colorado Division of Housing and they would leverage private debt. On average, the total development cost, including purchase and renovation, would be about $470,000, according to Fanchi.
People interested in buying a home through Elevation would need to go through the organization's standard application process, which can be found here.
The proposed loan agreement would give Elevation a reimbursement of $75,000 to $100,000 per unit. HOST said this is all an approximation, especially as the years go by and housing prices fluctuate.
HOST's Lead Housing Development Officer Adam Lyons said this proposal is on par with the department's five-year strategic plan that focuses on not just affordable rental housing but also affordable homeownership.
"We have a strategy around working with and supporting land trust throughout the city...as part of our broader strategy to increase not only home ownership rates but the cost burden of our homebuyers," Lyons said. "One strategy in our toolbox to meet our five-year strategic housing goal is to work with these community land trust models and they've proved successful thus far."
According to HOST, the city has funded about 784 for sale units throughout the area.
With the committee approving the grant proposal, the agreement will head before council in the upcoming weeks.
Fanchi believes the proposal will pass through council thus pushing forward Elevation's goal of providing that bridge to homeownership for all Denverites.
"We think this is going to be a transformational grant," Fanchi said. "It will allow us, because it's three years, the flexibility to really be nimble with the market and to invest more when it makes sense and to pause when it makes sense...In the long run, we are going to have more homes available in more neighborhoods that are mixed income and that those homes will be permanently affordable, which I think is going to be a benefit obviously for generations."
