Making a house a home (that's affordable and energy efficient)Thanks to One Roof Community Housing and seed grant money from the Cloquet Economic Development Authority (EDA), there are now three land-trust-model homes on (or just off) the market in Cloquet.
By: Jana Peterson, Pine Journal
The house on Selmser Avenue had “good bones,” according to Jim Mischler-Philbin, it just needed a little TLC … plus a new roof, a furnace, water heater, more and better insulation and upgrades to the kitchen and bathroom.
Thanks to One Roof Community Housing and grant money from the Cloquet Economic Development Authority (EDA), the three-bedroom home at 1210 Selmser Avenue got all that – and now it’s on the market, waiting for the right family or person to walk in the door.
That prospective homebuyer should have a steady income, but not too high. One Roof targets low- to moderate-income homebuyers, earning 80 percent or less of the area median income. In Cloquet, that amounts to $49,200 for a family of four.
“We have some folks who wouldn’t be able to buy otherwise,” said Mischler-Philbin, touting the non-profit group’s many success stories in Duluth, Hermantown and Proctor. “We have other folks who could afford to buy a home, but they wouldn’t have the money to make all the improvements [likely needed for something in their price range].”
One Roof aims to strengthen communities by providing housing services as well as building and sustaining affordable homes, which leads to healthier neighborhoods. Although buyers have to qualify for the mortgage, homes are generally sold at about $20,000 to $40,000 below market value – and far below the cost of purchase and renovation by One Roof and its construction company, Common Ground Construction. Homeowners get an affordable home that doesn’t need a lot of money to fix up, plus the utility bills are affordable because the home is now energy efficient. Home buyers also receive significant down payment assistance as well as Homebuyer Education classes to prepare them for successful home ownership.
What One Roof asks in return is that the home stays in the “land trust model,” meaning that when it is sold, it is sold through the land trust to another income-eligible buyer. The seller gets the money he or she invested, plus 25 percent of the increase in assessed value from time of purchase to time of sale. The home also has to be owner-occupied.
In short, these aren’t homes a person would purchase to try and flip. That would be impossible under the terms of the contract and also completely not in the spirit of the endeavor.
“Our goal is two-fold: We take challenged properties – maybe they’ve been vacant for a while, or they’re an eyesore – and we breathe new life into them,” said Mischler-Philbin, Community Land Trust director, explaining that One Roof was formed by the merger of Northern Communities Land Trust and Neighborhood Housing Services of Duluth just over a year ago. “We want to make them energy efficient and appealing and still keep the character and good structure of the original building. Then we sell them at a significant discount to an income-eligible [buyer], as long as they agree that if they resell the home, they will go through our program.”
In Duluth, the land trust recently celebrated its 300th homebuyer and a grand total of 230 homes over the past 20-some years, Mischler-Philbin said.
However, the home on Selmser Avenue and two others are the first land-trust model homes in Cloquet. All three are part of a pilot project initiated by One Roof and the Cloquet EDA with the Minnesota Housing Finance Agency (MHFA).
One of the three homes already sold. Once a vacant foreclosure, work on 426 18th Street in Cloquet was completed in the fall and a new homeowner signed the purchase agreement for the house earlier this month. Another home, at 1610 Carlton Avenue, has been for sale about a month.
The Selmser Avenue house has been on the market for less than a week.
Community Development Director Holly Butcher sees it as a wise investment by the EDA, both in terms of helping to stabilize neighborhoods and in attracting more investment into Cloquet.
“Essentially, the EDA’s $90,000 leveraged another $475,000 in grant monies into the community,” Butcher said.
That gave One Roof a total of $565,000 to spend on purchasing and renovating the three homes – certainly more money than the non-profit agency will get from selling them.
While he didn’t have exact numbers, Mischler-Philbin said the agency will generally spend between $150,000 and $175,000 buying and fixing up a foreclosed home. Then they sell it at below the assessed value.
If the house on Selmser Avenue was assessed at around $120,000, for example, it would likely sell at around $90,000, he said.
And the people who buy it should be able to afford to live there, because it doesn’t need any work. In fact, after decades of “deferred maintenance,” it is now up-to-date. The hardwood floors are smooth and shiny, the walls are perfectly painted (and any lead paint remediated), the kitchen and bathroom look modern and clean and the vibrant red siding exterior outside is inviting and warm.
Neighbor Bill Fleisch is delighted with the finished product.
“It bodes well for the property values in the neighborhood,” said Fleisch, after stopping by to investigate the finished product.
And his presence there bodes well for the next homeowner. After all, he stopped by to bring some treats to the workers who have been restoring the home only to find them gone and a tour of the home under way.
Mischler-Philbin is also happy with the home.
“This is why we come to work every day,” he said.