The state has created a community land trust for the Park Heights area of Baltimore City to ensure affordable housing in an area that is undergoing redevelopment.
The Maryland Department of Assessments and Taxation approved the community land trust in April, the first in the state, according to Will J. Hanna II, president and CEO of The New Park Heights Community Development Corp. Inc
. The CDC will administer the trust. The community land trust designates a specific area in the Park Heights community for development of affordable housing for 99 years. Area nonprofits and the CDC are working to redevelop the area
with new services and buildings while a new workforce training program
is seeking to lower the area's high unemployment.
Two property owners have donated 100 vacant houses within the community land trust boundaries to the nonprofit to begin the affordable housing effort.
Hanna says he is negotiating with two investors who are interested in buying and redeveloping 50 houses each. He declined to provide names. He is also talking to two banks, SunTrust and Wells Fargo, about closing and development costs.
Hanna says the nonprofit, which was founded in 1999, expects to have a purchase commitment by next month.
The federal Housing and Urban Development department’s home program determines the selling price for houses in the land trust. Currently, that price is set at $80,000 to $125,000 per property, a rate based on median income and affordability of the housing stock in the community at the time.
Hanna says the community land trust area stretches from Seven Mile Lane to Druid Park Drive. The 100 vacant houses are scattered within this broad area. He estimates the average value of each property at $40,000, with some of the houses little more than shells.
He figures the average cost of redeveloping the houses will be $60,000 each. The nonprofit will retain ownership of the land, and intends to charge ground rent.
Hanna talks about the tax advantage to the property-owners who donated the houses, home-buyers and private investors who redevelop them.
By donating the houses to the community land trust, the property-owners received a tax exemption. Whoever buys a house in the land trust will be exempt from state taxes during the life of the land trust.
For investors who buy the properties to redevelop, 80 percent of the development cost is not taxable. Moreover, the nonprofit can issue IRS certificates to reduce tax liability.
Source: Will J. Hanna II, The New Park Heights Community Development Corp., Inc.
Writer: Barbara Pash