Straw into Gold: Oakland Community Land Trust turns blighted houses into desirable properties

Alan Lopez, Oakland Local (March 18, 2010, Updated March 24, 2010)

Next week, demolition will begin on an abandoned two-bedroom home on Olive Street in east Oakland as part of an effort to fight blight and take a bite out of the local foreclosure crises.

The home has been foreclosed on and abandoned for at least four months. Following demolition, the home will be completely renovated with energy-efficient fixtures and lighting and sold to a low-income home buyer.

The project is one of 125 such homes that the newly formed Oakland Community Land Trust (OakCLT) will renovate and then resell. Spearheaded and organized by the Urban Strategies Council in concert with the Alliance of Californians for Community Empowerment (ACCE), the land trust was granted $5 million in seed money by the Oakland City Council last April

"We're working closely with the city and have now acquired two properties," said Anne Griffith, the interim executive director of the Oakland Community Land Trust. "We're in contract for two others. These four properties are all located in east Oakland but we'll be working in east and west Oakland."

Hard hit by the foreclosure crises, Oakland sees between 2,000 and 2,500 foreclosed homes at any given time. The Oakland Land Trust will purchase some of these homes, renovate them and sell them below the market rate cost.

There are about 245 active urban land trusts throughout the country, though this is the first of its kind in Oakland, Griffith said.

She cited a national 2008 survey that found the foreclosure rate among land trust homeowners to be half of 1 percent, compared to the market rate which is 3.3 percent.

The land trust is working with the National Community Stabilization Trust, a third-party intermediary that has agreements with banks to give a "first-look" option to non-profits in the sale of foreclosed homes.

Once the homes are purchased and renovated, they will be sold to low-income residents with an $85,000 subsidy from the land trust. Residents who later decide to sell their homes will be subject to a cap in equity based on the average yearly increase in the consumer price index.

The inability from homeowners to receive a windfall in equity has so far been the main criticism of the land trust program, said Junious Williams, the president of the land trust board. His response is that the program allows low-income residents, who would otherwise likely be renting, to achieve some equity.

In addition, the "shared equity model" allows the homes to be sold to other low-income families to enter into housing market if they wish. The $85,000 subsidy from the land trust remains in the sale of the home in perpetuity, while the land trust will own the land underneath the home.

"We think it's important work to do," Williams said. "We're looking for people to support the effort, that we think in long term, will be a really important vehicle for the community in terms of affordable housing and stabilizing the neighborhoods."

Len Turner, the owner of Turner Group Construction, said demolition work was expected begin next week on the home on Olive Street with demolition on another east Oakland home following less than two weeks after that.

He said Turner Group Construction will employ at least 10 workers on the first home and have the renovations completed within 60 days. Workers have been hired from local training programs as well as prison re-entry programs.

"Those are people that are going to benefit," Turner said. "The salary is union or prevailing wage, which is what makes it so great as well. It's a nice salary."

Depending on the future funding of the land trust, as many as 80 to 100 workers could eventually be hired, Turner said.

The land trust is aiming for acquiring $2 million in addition to the $5 million it has, Griffith said. The land trust plans to leverage the money it has by getting involved in a new market tax credit structure that will allow the trust to earn equity from investors.

The idea behind the new market tax credit is finding a sophisticated investor such as a bank or corporation that could provide equity for a non-profit in exchange for a tax credit.

Overall, the goals of the land trust will depend on finding additional money.

"The more money we get, the more houses we get, the more houses we do, the larger the crews (Turner will) be able to pull together," Griffith said.

In the meantime, monthly informational workshops for potential land trust homebuyers are being held at 6 p.m. every fourth Thursday of the month at Eastmont Mall, 7200 Bancroft Avenue, Suite 202.

The next workshops will be held on March 25, April 22 and May 27. For more information about the land trust, go online at www.oakclt.org.