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.
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.
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