How the ACHT Works
Adirondack Community Housing Trust utilizes the Community Land Trust (CLT) model for perpetually affordable housing. The first CLT’s were developed in the 1970’s. There are now some 200 in the country, and the number is growing rapidly as more communities are concerned with preserving affordable homeownership.
For qualified home buyers, ACHT will finance a portion of the mortgage to purchase an affordable house in exchange for title to the land.
- How does ACHT control that future sales of the homes remain affordable?
ACHT retains ownership of the land on which the homes are located. Homebuyers get a deed to the house and any other improvements on the land, and they get a 99-year renewable ground lease giving them secure long-term control of the land.
The lease gives the ACHT homeowner most of the rights of conventional homeowners, but with a few limitations: if they want to sell the home, it must be sold back to ACHT or to another income-qualified family; and it must be sold for a price that is limited by a formula written into the lease.
ACHT’s resale formula allows the seller to receive the amount they originally paid for the house, plus the value of any ACHT–approved capital improvements they have made at their own expense, plus 25% of any additional appreciation in the value they originally paid for (but not the appreciation of that portion of the home’s original market value that was paid for by ACHT).
Example of Resale Formula:
Homeowner’s Purchase Price: $100,000
Initial Appraised Value: $125,000
Ratio of Homeowner’s Purchase Price to Initial Appraised Value: .80
Appraised Value at Time of Resale: $200,000
Total Appreciated Value: $75,000
Capital Improvement Credit (if any): $5,000
Appreciated Value other than Capital Improvement Credit: $70,000
Portion of Appreciated Value to be shared: $56,000
Homeowner’s Share of Appreciated Value other than Capital Improvement Credit: $14,000
Resale Formula Price: $119,000
For an interactive resale formula spreadsheet, click here.
- What does “income-qualified mean”?
ACHT uses area median income (AMI) as determined by the US Department of Housing and Urban Renewal (HUD) for its income guidelines.
The home for sale by owner at 384 Old Lake Colby Road in Saranac Lake is open to households whose income is up to 120% of Annual Median Income for Franklin County. Additional financial assistance is available for people whose income is up to 80% of Annual Median Income for Franklin County. Click here for this information.
ACHT currently has funding from the New York State Affordable Housing Corporation. These grant funds can only be used for existing homes (no new construction) and a majority of the funds has to be directed to home repairs; the remaining funds can be used for down payment and closing costs assistance. This assistance is limited to households earning up to 90% of AMI. Please click here for the income limits.
Our goal is to match income levels with housing prices for best use of state funding.
- What other limitations or requirements does the ground lease establish?
Homeowners – or members of the owner’s family – must occupy the home as their primary residence. They cannot move away and continue to own the home for use as a vacation home or as rental property.
The use of the property may be limited to residential use and whatever uses are permitted by local zoning regulations.
Other ground lease requirements, such as those relating to maintenance of the home, health and safety, etc. are similar to those imposed by the terms of state and local ordinances and home mortgages.
- Who pays the taxes, and how are the homes assessed for tax purposes? Are the taxes as high as they would be if the resale prices of the homes were not restricted?
The owners of the homes are required to pay the taxes on both the house and the leased land.
ACHT has worked with various state agencies to get these homes assessed for the value they have under the terms of the resale restrictions, not the potentially higher market value they would have without restrictions.
- What kinds of houses will be made available through ACHT? Newly constructed homes? Rehabilitated homes? Homes sold in as-is condition?
The first homes to be made available will be houses rehabilitated by non-profit developers, but plans are also moving forward for new construction that will be sold through ACHT.
A "buyer-initiated" program has also been established, whereby ACHT will make a financial commitment to assist prospective homebuyers who will shop for and select an existing home on the market.
Prospective homebuyers will shop for a home on the market that is structurally sound and reasonably priced. ACHT will assess the home for long-term cost efficiency. ACHT will use its funds to cover enough of the price of each home to make it affordable for the purchaser (typical assistance amount of $20,000 to $30,000), and in return will take title to the land. The homebuyer will receive a deed to the home and a 99-year ground lease that is renewable up to 198 years.
- Can homeowners leave their homes to their children? To heirs outside of the family? What if they want to leave the home to someone who is not income qualified?
Homeowners can leave the value of their homes to anyone they choose.
Immediate members of the family may inherit the homes even if they are not income qualified, although it must be their primary residence. Other recipients must be income-qualified or sell the home under the terms of the ground lease.
- Is there a problem in getting mortgage financing for these ACHT homes?
The State of New York Mortgage Agency (SONYMA) has agreed to provide mortgages for ACHT qualified buyers through local participating banks.
USDA has adopted regulations allowing CLT homebuyers in rural areas to qualify for loans under its “Section 502 Direct Loan Program” and its “502 Guaranteed Loan Program”
Although leasehold mortgages are not familiar to some lenders, a growing number of banks now provide such financing for CLT homebuyers.
Fannie Mae offers a “community land trust mortgage product” and has established guidelines for underwriting such mortgages.