Innovative Homeownership Model Proves Successful

BURLINGTON, VT – For almost twenty years, an innovative model has brought homeownership to persons who were excluded from the marketplace because of limited incomes combined with the high cost of housing in northwest Vermont. Until now, the accomplishments of the program were based largely on anecdotal evidence for individual cases. A newly completed comprehensive study documents the success that the Burlington Community Land Trust (BCLT) "shared equity" model brings homeownership to first-time homeowners of modest means through the effective use of public resources and, at the same time, preserves the affordability of the homes themselves for future homeowners.

The results of the multi-year study were presented at an event today with City of Burlington Mayor Peter Clavelle, the Burlington Community Land Trust, funders, and current and past homeowners who purchased homes through the BCLT shared equity program.

Since the inception of BCLT’s model program, the City of Burlington has remained a strong partner through City-initiated programs targeted at improving neighborhoods and boosting homeownership. Burlington Mayor Peter Clavelle commented, "Our community broke new ground in 1984 when we initiated the first municipally funded community land trust in the country. Almost 20 years later, the Burlington Community Land Trust continues to grow and break new ground. Today, with the results of this important study, we've further clarified and underscored the effectiveness of our Land Trust and the land trust model in ensuring perpetually affordable housing, providing opportunity for our citizens, and building healthier neighborhoods." Since 1983, the City of Burlington has assisted over 1,000 homeowners with grants for exterior paint and accessibility modifications and loans for repairs, rehab and purchase down payments.

Between 1984 and 2002, BCLT assisted 259 moderately-priced single family houses and condominiums. All of these homes were sold to first-time homebuyers – with restrictions regarding the terms of ownership and home resale that are designed to maintain their availability and affordability for lower-income households far into the future. The study focused on 97 BCLT homes resold between 1988 and 2002. On average, the homes initially sold for prices affordable to households earning 62% of the Area Median Income (AMI). When these same houses were later resold, the subsidies remained with the homes and were affordable to a household earning 57% of AMI.

Brenda Torpy, BCLT’s co-director, said, "One of the unfounded criticisms of BCLT’s perpetual homeownership program was that it interferes with market-based programs. The record clearly shows that the affordability of BCLT houses improved over time for the next generation of first-time buyers. At the same time, most of the original buyers moved into market-rate homes when they sold their first homes." Sixty percent of original owners in the study purchased market-rate homes after leaving the BCLT shared equity program.

In the early 1980s, US Congressman Bernie Sanders served as the Mayor of the City of Burlington when his administration founded BCLT. Phil Fiermonte from Congressman Sanders’ office, said "The balanced approach of creating homeownership while restricting the escalation of home prices has proven to be even more successful than we first imagined. The BCLT model works by devoting federal and state housing program resources to generate more homeowners than could be accomplished through conventional methods." Burlington is the only municipality in the nation that provided the start-up funding for a community land trust from local tax dollars.

Public support for the BCLT shared appreciation homeownership program comes from many sources and subsidies are provided for the properties as well as the homeowners. Grants are awarded by the City of Burlington, the Vermont Housing and Conservation Board (VHCB), and US Department of Housing and Urban Development (HUD). The Vermont Housing Finance Agency provides a special, below-market mortgage product. These public subsidies allow the BCLT to sell each home initially for less than the appraised value of the building and its underlying land. When the property is subsequently sold, the subsidies remain and allow the purchase price to remain affordable for the next home buyer.

The results of the BCLT study were announced today in the home of the McCarthy family, the first property purchased by a BCLT homeowner in 1984. A number of homeowners attended the event to share their success stories. (PLEASE NOTE: A list of homeowners to contact for media interviews is attached.)

Homeowners who participate in BCLT’s shared equity program also attend the Home Buyer Education program offered through the Homeownership Centers of Chittenden, Franklin and Grand Isle Counties (a BCLT program). This program provides home buyer education, credit and budget counseling, financial assistance, special lender programs, home maintenance education, home rehabilitation planning and loans, and delinquency intervention. Orientations and workshops for prospective first-time homebuyers of any income are held throughout Chittenden and Franklin counties on a regular basis.

For more information about BCLT’s homeownership programs, please contact Colin Bloch (Homeownership Center) at 864-2609 or Brenda Torpy at 862-6244. To receive an electronic summary of the study, please contact Laurie Drew via email at ldrew@bclt.net.

print this page | close window