Members of an affordable housing task force, started last year to investigate ways to create affordable housing for Black Hills residents, have gone on to implement an incorporated land trust that will purchase property at low prices and work with local non-profit housing organizations to sell affordable housing to full-time residents.
Officially dubbed as the Dakota Land Trust, McCracken said the organization is currently working to obtain a 501c3 status, and is seeking funding to hire a full-time staff to administer the land trust. Currently the Dakota Land Trust is operating under the auspices of Neighborhood Housing Services of the Black Hills, but McCracken said the trust hopes to be a separate entity by early next year, if not before then.
"Neighborhood Housing Services is very adamant that it (Dakota Land Trust) will be strong when they release it so that it doesn't fail," McCracken said. "They will hang on to it as long as they need to so that it's strong and doesn't fail."
While the Dakota Land Trust is still getting its legs to administer services, McCracken said members have been working to establish bylaws and guidelines by which the trust will be administered. The land trust, she said, will purchase property for houses developed by local nonprofits such as Habitat for Humanity, Neighborhood Housing Services and the Rapid City Community Development Corporation. Once those houses are sold, McCracken said the buyers will retain ownership of the house, but will lease the land under the house from the Dakota Land Trust. The lease, McCracken said, will be for 99 years, and homeowners will pay $25 a month for the land. Further, McCracken said homeowners who purchase houses within a land trust must retain the house as their permanent residence, in an effort to ensure that the houses are reserved for people who live and work in the community.
In an effort to keep housing within the land trust affordable, McCracken said homeowners who sell their house after it has acquired value will only be permitted to keep 25 percent of the increased value, as well as their principle payments, improvement costs and any original down payment they made on the house. The Dakota Land Trust, McCracken said, would then retain the remaining funds and sell the house at a lower price than its appraised value - keeping the house afford able forever.
One example McCracken used was for a house appraised at $75,000. If, in five years, she said that house sells for $110,000 - or $35,000 in appreciation - the homeowner will retain 25 percent of the appreciated value, or $8,750. The land trust, she said, would then sell the house again at $85,000, just $10,000 more than the original selling price and $25,000 less than the appraised value.
According to McCracken, this land trust is a tool to ensure that local families can afford a house, despite rising property values, by taking the cost of the land for a house out of the equation. However, she said, the arrangement is not for everyone.
"If you can afford the $100,000 (house) you should do that," she said. "There are people who can't afford $100,000, but who can afford $75,000. In today's market there are very few houses that don't need a lot of rehab that are on the market for less than $100,000. A lot of people's options are (do the) land trust, or rent. If you rent obviously you don't walk away with anything when you sell it in five years. If you go with the land trust you walk away with some."
The idea for the land trust, McCracken said, came from communities such as Jackson Hole, Wyo., where rising land costs have prohibited many residents from purchasing homes, creating a community of transient residents. With property costs appreciating at 8 to 10 percent a year in the Hills, McCracken said Black Hills communities are starting to see that same phenomena as houses that sold for $75,000 five years ago are now $110,000, while many wages haven't changed.
"It's called supply and demand," McCracken said. "There are a lot of people who can't live here full time but want to live here part time. So they're buying a second home here, they're living here part time and they come here on vacation. There are so many of them that there are not enough houses left over for people who want to live here full time and who want to buy a home."
She continued by saying most communities in the Black Hills are having difficulty hiring because of a lack of affordable housing.
"It's really affecting our economy and it's really affecting the ability to attract new businesses into our community," she said.
According to McCracken, some of the first lots in the Dakota Land Trust could come from the proposed Deadwood Stage Run Development. As a condition of the Tax Incremental Finance District for the Deadwood Stage Run development, Mayor Francis Toscana asked the developers to set 20 lots aside for affordable housing. McCracken said Neighborhood Housing Services is currently seeking funds to purchase those lots in stages and put them into the Dakota Land Trust.