New homes for low-income residents coming to Two Harbors

• A One Roof home

This home at 1615 Seventh Avenue in Two Harbors, was purchased last fall by One Roof Community Housing. It will be renovated and sold to a qualified low to moderate-income home buyer when the work is completed.

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After selling more than 250 homes to low-income families in the Duluth area over the past 20 years, One Roof Community Housing’s land trust program is coming to Two Harbors.

The Duluth-based non-profit purchased two vacant homes in Two Harbors last fall and, after completing renovations, the organization expects the houses to hit the market this spring with a price tag about 20 to 30 percent lower than market value.

“What’s good about it is it’s for folks who are employed and have an income and have been able to pay rent, but have not been able to save up the money for a down payment on a home or fix up a property,” said Jim Mischler-Philbin, the community land trust director at One Roof.

Community land trusts, which have seen significant growth over recent years, allow non-profits like One Roof to retain ownership of the land, which helps keep costs down. Land trust organizations are able to lease the homes to qualified applicants, thereby keeping the homes out of the competitive market.

One Roof has recently expanded its land trust area, branching out from Duluth, Hermantown and Proctor into Two Harbors and Cloquet. A foreclosure and an estate home were purchased in Two Harbors last fall and work is underway to prepare them for sale, and the organization hopes to locate two additional properties in the near future.

Every house that One Roof purchases gets upgrades to improve energy efficiency and safety. The furnace, water heater, plumbing and electric systems are typically renovated, and the roof, windows and floors are often replaced.

“We require that the homes we purchase are vacant and in significant need of rehab,” Mischler-Philbin said. “Once we acquire it, we put in about $15,000 to $18,000 in rehab.”

Once homes are ready, applications are sought from qualifying individuals and families. Potential homeowners must have a low to moderate income, typically making no more than $39,500 a year for a couple or $49,350 for a family of four.

Mischler-Philbin stressed that the homes are not giveaways, and the new owners must be prepared to make payments. They typically need to have a solid credit history and be able to qualify for a mortgage of about $90,000, the average price of one of the land trust homes.

Additionally, property taxes are assessed by actual market value, not the final sale price. But the costs of home ownership may not be as high as expected.

“For a lot of people, their mortgage payment is lower than what they were paying for rent in a more inferior property,” Mischler-Philbin said.

Homeowners must sign a 99-year lease, the maximum allowable by law. However, there is no obligation to stay in the home for any period of time. Homeowners can sell the property, although it must be transferred to another individual or family that qualifies for the land trust program.

To help residents with the transition into home ownership, One Roof provides up-front education and post-purchase support to the new homeowners. Statistically, the foreclosure rate on community land trust homes has been lower than market-rate homes, and One Roof officials say it’s largely because of the education opportunities.

“We have classes that focus on DIY, home maintenance and repair, seasonal maintenance, finances, handling the estate, refinancing, retirement, college savings for kids,” said Jackie Kemp, the home ownership education coordinator at One Roof.

“We try to help people think about what’s the next step. Home ownership doesn’t end just with the home. We try to help out with education opportunities post-purchase.”

Help is also available in the event that there is a need for emergency home repairs. Low- and no-interest loans, and occasionally grants, are available to help cover the cost of unexpected expenses.

“At the very least we try to be the best resource we can,” Kemp said. “But we certainly hope that our newer homes that enter the trust shouldn’t be a problem for quite a while.”

Funding for the purchase, renovation and sale of the homes in Two Harbors is being provided by Northeast Minnesota HOME Consortium, Federal Home Loan Bank, NeighborWorks, Lake County Housing Authority, Minnesota Housing Finance Agency and the Greater Minnesota Housing Fund.

For more information on the One Roof Community Housing community land trust and to find out if you qualify, visit 1roofhousing.org.

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