The historic town house on Ice Street was in a poor state when Randy McClement bought it in 2003.

McClement, now mayor of Frederick, was a church youth director and the owner of a bagel shop at the time. He qualified to buy the house through the city's affordable housing revitalization program.

“I put a lot of blood, sweat and tears into that house over the last 11 years,” he said.

The newly refurbished house is now up for sale, and McClement said he is glad that someone with a moderate salary will be able to afford it.

“It helps serve people like first responders and teachers,” he said.

The house, at 118 Ice St., is one of the first properties up for sale by the new Frederick County Affordable Housing Land Trust.

The land trust is a nonprofit formed in early 2013 as a partnership between county government and Habitat for Humanity of Frederick County. Habitat is the parent organization for the trust and runs it, and the county provides funding. When the trust was created, officials hailed it as the first of its kind in the state, a unique program that keeps homes affordable for decades.

"The sky is the limit," Ron Cramer, Habitat's executive director, said when the land trust was being launched.

The trust also represents a central piece of sitting Frederick County commissioners' strategy for meeting affordable housing needs. The county supports the trust's work with money from a fee paid by developers as an alternative to building moderately priced homes. Cramer says he believes over time the trust will provide more bang for the buck than directly requiring developers to construct lower-cost dwellings.

About a year after the county and the land trust sealed their agreement, the trust has gotten organized and bought several properties. But it has yet to make its first sale, and many aspects of the program continue to evolve. The process for choosing which properties to buy is still developing, and the land trust doesn't have a scoring system for selecting homes, though leaders are considering one. Additionally, land trust leaders are dealing with banks' reluctance to finance purchases through the program. It will take time for lenders to learn about the trust and get comfortable with the concept, officials say.

The county's goals are also in flux. Commissioners believed that the land trust would serve a dual purpose of providing affordable housing and clearing foreclosures off the market. In fact, the document laying out the relationship between the county and land trust was called the Foreclosure Clean Up Act. So far, however, only one of the properties bought by the land trust was in foreclosure. 

"The focus is definitely not only on foreclosures," said Jenny Short, the county's director of housing and community development. "It's on any affordable, vacant housing that can be rehabbed for a small amount of money and turned over."

So far, the county has provided $50,000 in startup money for the land trust and $270,000 for program funding. A state grant provided an additional $440,500 for the program. Online land records show the trust has spent $498,500 to buy three properties, one in Yellow Springs, one in Myersville and McClement's home in downtown Frederick. 

Under the trust's model, low-income individuals can buy the homes with the value of the land subtracted from the overall purchase price. Taking the land out of the equation can reduce home prices by about a third, making the properties affordable to families who would otherwise find them out of reach.

After each sale, the trust maintains ownership of the land, and as a result, charges homeowners a monthly fee of $50. Along with home sales, these fees return money to the land trust and enable the program to buy more properties.

Eventually, the land trust hopes to sell about 15 homes each year, Cramer said. Over the next year, as they're still getting the program up and running, they hope to turn around about five or six properties.

Ryan Trout, chairman of the Frederick Affordable Housing Council, agrees the trust should take it slow early on. 

Trout said he hopes the trust's vision will eventually move outward from single-family houses and encompass affordable rental housing. Cramer said if the program takes off, he believes it could grow to include a range of housing types.

Next steps

Cramer said affordable housing land trusts across the nation have dealt with a reluctance by local banks to provide mortgages for people buying homes through the programs.

"There are questions that we're working with the banks to answer, so that they feel good about loaning money to folks going into the land trust," Cramer said.

Barbara Bezdek, a professor at University of Maryland Francis King Carey School of Law, said she hopes to see community land trusts become more common across the state. Other states have seen success with the model, which manages to avoid some of the pitfalls of programs that rely on developers or the government.

"With a community land trust, you've created a community steward that's going to stick around," said Bezdek, who has expertise in affordable housing issues. "It's not the developer who can pick up and leave, and it's not the government who can change its mind after every election cycle. It's a third way."

However, results often depend on land trust management, and Bezdek said it's important that those in leadership have the financial acumen to keep the program going.

Choosing a home

McClement bought the two-story, 1,208-square-foot house on Ice Street for $132,000 in September 2003.

When McClement and his wife, Maryjane, decided it was time to move earlier this year, Maryjane mentioned it to her boss at Habitat for Humanity of Frederick County, McClement said.

Jennifer Minnick, the land trust's director, heads up the search for homes to buy for the program. She looks for homes that can be bought and rehabilitated for less than $200,000 and then presents available options to the seven-person land trust board, which votes on whether to buy a particular property.

Minnick said officials at first believed the program would help clear foreclosed properties off the market. However, these low-priced homes are often snapped up before the land trust can make an offer.

"We thought there was going to be so many houses out there, there would be plenty to acquire," Minnick said. "But there's actually fewer out there right now, and people really want them because they are reasonably priced." 

Two of the trust's purchases so far, the Yellow Springs and Frederick houses, happened after the previous owners approached program leaders. The Myersville home was in foreclosure when the trust acquired it.

The organization saw McClement's house as the perfect fit for the new land trust program, as it was in a ZIP code with a high need for affordable housing, Cramer said.

The trust bought the house from McClement for $188,500 this past spring, and is now asking $122,525 for the house, not including the land. McClement moved to a slightly larger house on Schley Avenue.

Because Maryjane works at Habitat, the organization recognized the potential conflict of interest, Cramer said.

McClement talked to a city attorney, and Habitat checked with a county attorney, who both saw no potential conflict, McClement and Cramer said.

“They saw no real conflict as long as we were upfront with it,” Cramer said.

The sale is an arm's-length transaction through a third-party, independent appraisal, he said.

Still, to avoid any sort of conflict, the land trust's board and the Habitat's board voted on the sale, rather than just the land trust board, Cramer said. 

The board doesn't currently have an established system for ranking various properties for purchase, although they have discussed one. Joe Baldi, president of Habitat's board of directors, said a scoring system could take into account a property's price, condition, lot size and location to help evaluate a potential purchase.

Cramer said a scoring system will be used for the next purchase.

Baldi said he was glad to keep McClement's house affordable, as he doesn't like seeing houses leave the affordable housing market.

“It's just another family that can't live in Frederick County,” he said.

Follow Bethany Rodgers @BethRodgersFNP.

Follow Jen Fifield on Twitter: @JenAFifield.

(17) comments

steven09
steven09

I hope I see such appreciation on my property.

backroomfrederick
backroomfrederick

Club Habitat.

girlpolitic
girlpolitic

FNP your reporting is so unbelievably bad!

The historic town house on Ice Street was in a poor state when Randy McClement bought it in 2003.

That is absolutely untrue. The house had been remodeled before McClement bought is from the City of Frederick.

This quote from FNP article in 2005.

Since its inception, the effort has created two new homeowners along Ice Street, he said.

The city bought the two neighboring homes in 2001. Renovations at 116 and 118 Ice St. were tackled first. Those homes had severe fire damage and were in far worse condition than the 114 Ice St. property, Mr. Schmersahl said

http://www.fredericknewspost.com/archives/back-to-life-city-rehabilitates-several-ice-street-homes/article_42fd8ff8-67bb-52ce-a3d1-47246a3dd851.html

mdcommuter
mdcommuter

Class discrimination is alive, well and growing in Maryland and especially Frederick County. Affordable housing is not included in new developments because, yes, those buying the new homes ARE elitists and don't want affordable housing in their back yard.

upyourgazoo
upyourgazoo

Wow.

Extra Ignored
Extra Ignored

How can developers even sell unaffordable housing.

Extra Ignored
Extra Ignored

A family with a $31,000 annual income couldn't afford a house after a $200,000 rehab even if they had a $20,000 down payment. Giving the $1 million for down payment assistance would have gotten more families into a house instead of selling homes without the land. $1 million would have helped 50 families rather than just the 3 who have sold their homes to the land trust now.

You can afford a house up to $115,132
Based on your income, a house at this price should fit comfortably within your budget.

http://www.zillow.com/mortgage-calculator/house-affordability/

Extra Ignored
Extra Ignored

The $1 million awarded to Habitat for Humanity could have built a trailer park where there was no charge for rent and they could have made up the difference charging for electric, water, sewer, and road maintenance. Bring your own house.

OFMV
OFMV

There are so many better alternatives for providing safe and affordable shelter for those in immediate need than the 3 housing purchases made by our Habitat for Humanity group. [sad]

rbtdt5
rbtdt5

"Made by OUR habitat group". You don't live in the city or even the county.

Extra Ignored
Extra Ignored

There are a slew of homes in Walkersville for $80,000 which is outside the city limits but inside the county. But they buy the mayor's house for $188,500. Typical, what would you expect. Public dollars going to people in public office first.

Seriously if you want to own a house but not the land buy a mobile home then you can move it someplace else to get away from the neighbors.

darththevader
darththevader

You obviously didn't read hiw the land trust worjs.

3 homes into the program and you are already complaining

DaveSM
DaveSM

[thumbup]

Extra Ignored
Extra Ignored

What's the point of owning a house if you don't own the land it is built on.

I think you are the one who just doesn't get it.

OFMV
OFMV

I have no problem with the worthy goals of Habitat for Humanity. I have a big problem with a local government that proposes to sell a house but own the land it sits on in perpetuity. We're not in Ireland and we're not sharecroppers paying indefinite land rents to County Executives. No wonder banks aren't interested!

I have a slight problem with the Mayor recycling his own affordable program housing home right back into another affordable housing program if he earned a profit which if I remember right, he was not authorized to earn from the public assistance he, himself received. Yet, even Mayor McClement owned the home and the LAND it sat upon. Would Habitat or the BoCC have settled for buying just McClement's house? Likely not. But heck, why not? Investors, let's offer our houses for sale to Frederick County Government while holding the deed to the land. They can pay us the indefinite land rent. BoCC, you'll feel proud of your ownership, and rent the houses to teachers, right?

I have a HUGE problem with our Board of County Commissioner's having virtually eliminated the MPDU-Moderately Priced Dwelling Unit program supporting the construction of a percentage of affordable housing to be built in new developments to help keep the families of our public service providers and moderate income workforce to include, teachers, fire and rescue, etc, earning between $30-$60k per year living where they work instead of commuting on our highways. We make this compromise for the good of the community as a whole. But this won't happen now with this BoCC's rollout of an 'in-lieu' of fee and DRRA's locking in the deal. 3 rehab/recycled homes will never begin to replace the 1000s of affordable new homes we've lost thanks to this BoCC. It's simply tragic to fathom the damage they have done.

Here's my blog with stats and documents in need of updating once the BoCC's push to approve new development requests is done: http://onefrederickmanyvoices.blogspot.com/2013/05/construction-of-affordable-housing-ends.html

darththevader
darththevader

Hey, lets just have the givernment dictate to all businesses what products they should provide. Better yet, lets just have the government own everything and employ everyone.

Extra Ignored
Extra Ignored

China is doing quite well these days.

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