Repaying the Social Mortgage

THLT home

Thanks to a gift of land, Thurston Housing Land Trust is making this Olympia, WA home available and affordable for low or moderate income families.

Investment by private owners of real estate contributes only a fraction of the growth in value of their properties. There is also a form of “social appreciation” that causes property value to increase not through any effort or action of the owner but due to community investments in amenities such as schools, roads, public transportation, or parks, or simply due to the collective contribution community residents have made to the region’s economy. Yet in our economic system, when property values grow, the windfall flows entirely to the private owners unless those owners take deliberate action to change that dynamic.

One of the pleasures of working at Equity Trust is the opportunity it provides to collaborate with people who acknowledge the social mortgage on wealth, and want to take personal action to contribute to a more just economy. In last year’s annual report, we described how one of the founding ideas of Equity Trust was to provide a vehicle for people to return some of the social appreciation of their property to the community that helped to create that value, and we shared some examples of how that concept is being implemented currently. We are pleased this year to share more stories, this time from two of our board members.

When Scott Reed and Ferdene Chin-Yee decided in 2022 to sell the Sunderland, Massachusetts farmhouse they had lived in for twenty five years, they weren’t interested in simply putting it on the market to sell to the highest bidder. Having originally acquired the house together with 10 acres of prime Connecticut River Valley farmland, where they started and ran Riverland Farm CSA for a decade, and then continued to reside after selling the business and farmland, they understood the need to preserve both agricultural land and farmer housing in order to maintain the region’s robust food economy.

Years earlier, they had protected the farm from development through the sale of an Agricultural Preservation Restriction, a type of conservation easement, to the Commonwealth of Massachusetts, but that easement, and the subsequent sale of the agricultural land separated the farmhouse from the rest of the farm. The planned sale of the farmhouse offered an opportunity to rededicate it to supporting valley agriculture. Although there was no immediate way to reunite the farmhouse with the land it once served, Scott and Ferdene wanted to keep that option open for the future and in the meantime make the home available and affordable for people doing agricultural work in the area.

Working with Equity Trust staff, they developed a plan to sell the house to local farmers for a below-market price, while creating restrictions that ensure the reduced price will be passed on to future buyers and that the house will always be offered first to working farmers. The reduced price was locked in using a shared-appreciation mortgage equal to 15% of the property’s market value that Scott and Ferdene donated to Equity Trust. They also assigned a purchase option to Equity Trust that will allow us to participate in finding the next farmer buyer.

The new homeowners are Rachel Haas and Matt Kaminsky of MeadowFed Lamb, a silvopasture project growing tree crops and animals together at Preservation Orchard in the neighboring town of Hadley, just a few miles away. Rachel and Matt were grateful for the opportunity to acquire a home at a more affordable price and are happy to be part of a project that will allow them to pass the benefits on to another farmer buyer whenever they decide to sell.

Meanwhile, on the opposite side of the country, another board member, Russ Fox, has been carrying out a similar project in Olympia, Washington. In this case Equity Trust played no role beyond contributing to the philosophical inspiration for the gift, but we are pleased to share it as another example of how one can contribute a portion of the value of one’s property to promote equitable and affordable access to land and housing.

When Russ decided to sell a property that he had previously rented to a housing collective for over 25 years, he wanted it to continue to be a resource for his community. As an advocate of community land trusts, he saw the Thurston Housing Land Trust (THLT), a CLT formed in 2018, as a natural partner. Together they created a plan that will establish the young organization’s first permanently affordable home.

Russ and THLT have entered into a purchase agreement where Russ will sell his house for the appraised value of the building only and will donate the value of the land. THLT is now marketing the house to sell to a family at or below 100% of the area median income, because the removal of the cost of the land makes the home affordable for people at this income level. When an eligible buyer is selected, they will be able to purchase the home and sign a long-term ground lease to the land. Through the lease, THLT will preserve affordability and availability for future low- or moderate income buyers.