if the apartment building or land acquisition is subsidized in any way, TT’s concern that more poor people will get crammed into East O is legit.

They could eliminate their investment risk through CDs and still probably do better than the land trust.

I question whether home-ownership makes financial sense on a risk/return basis if the buyer doesn’t have clear title. Home ownership is for people whose financial situation allows them to tolerate the risk this sort of equity investment involves.

I ask as someone who as done a fair amount of rehab and EQ retrofit. The folks who buy your homes won’t be able to afford EQ insurance. With the probability of an Hayward fault earthquake combined with the projected MM index numbers for the flats (not even assuming liquefaction) means that the house will likely be red tagged.

With a land value of zero, the likely EQ scenario has unusual financial implications.

First, no single strategy will work to address the problem of foreclosed properties in Oakland. On any given day, there are around 2000 vacant, foreclosed-upon bank-owned properties (REOs) in Oakland, overwhelmingly concentrated in the Flatlands neighborhoods in Districts 3, 6, and 7. For the majority of these homes, a strategy of augmenting the City’s Mortgage Assistance Program and targeting it to assist purchasers of makes a lot of sense. The Land Trust would be a strategy to deal with the 200 or so REOs that are a) remaining vacant for long periods of time and/or b) likely to be purchased by investors and converted to poorly-maintained rental housing. The Land Trust would purchase, fully renovate and convert these to permanently affordable home ownership units, making non-Land Trust properties in the neighborhood more attractive to market-rate purchasers and immediately removing the blighting influence these units are having on neighborhoods, in addition to creating affordable home ownership opportunities for generation of residents, whatever the housing market may do.

On average, Land Trusts around the country end up offering 2 to 3% a year in equity appreciation. I bet most homeowners nowadays would take that if they could get it. But that’s sort of the point, as Art points out. The Land Trust protects homebuyers from the downside and in return limits the upside. We expect to engage a broad range of residents and stakeholders to determine the equity appreciation formula for the proposed Oakland CLT.

That equity can be borrowed against, and CLT homeowners would get all the tax benefits of homeownership, as well. We plan to give credit on resale for homeowner improvements, and there is a pool of lenders in the Bay Area already familiar with the Land Trust model that CLT homeowners can work with.

Of course, since the Land Trust will fully rehab units to energy efficient standards before initial sale, the first generation of homeowners may not need to do much home improvement, but that option is available to them and incentivized.

The trade-off for homebuyers for getting a fully-rehabbed unit at below market prices is a limit on equity appreciation, ie the deed restriction, so obviously units will have to be priced low enough for homebuyers to accept that trade-off. The amount of public investment required to get to that price point will depend in large part on acquisition and rehab costs but the per-unit investment will undoubtedly be far below what the City spends to produce a unit of new affordable rental housing.

There are dozens of blocks in East Oakland where more than half of the houses are vacant due to foreclosure. The problem is severe and goes way beyond ideological debates about affordable housing. We think we need an earnest conversation that considers all the community, public and private resources available to deal with this issue. The Land Trust is not intended to compete with other home ownership strategies, In fact we think both are needed and actually can work well together.

Andy Nelsen, Urban Strategies Council

All things considered, the point I was making is that there is a huge number of 80 to 100+ year old houses in Oakland, particularly in the flats, that need help in order to be safe. I went to pry out a top plate the other day because it looked dodgy, and I put my crowbar straight through it because it was so rotten. Not an uncommon experience for a remodeler.

As far as concentrating land-trust properties goes, I’m certainly concerned. Places like GhostTown are already overburdened with high-impact social services. Ad to that the old practice of redlining, combined with decades of urban planning and highway routing that has walled off the poor, and there’s definitely reason to worry about land-trust properties being located in the poorest parts of town. Our city has a habit of not requiring clients of social services to behave. OHA has similar problems. If we screw up the land trust by putting it in the wrong place and not holding the residents accountable, all we do is amplify the ghetto.

Sheetrock is actually quite a bit more effective under fire conditions. Fire breaks did not exist in many of the older structures (especially “balloon frame” Victorians).

The new construction style’s problems lie in the fact that they rely on very very tightly engineered margins, and under extreme conditions, after being exposed to weather, water, earthquakes and especially FIRE, they tend to fail, and fail catastrophically.

Look up “gusset plates” that are used in new roofing trusses, and you will understand what I mean. They are mechanically nailed plates that only penetrate (at most) 1/4 inches into the wood, and then, only about 60% of them are even attached correctly.

One of my main concerns with the proposed land trust that has gotten little attention is the location. 200 low income land trust properties will be highly concentrated in some of the most distressed areas in Oakland. This is not equitable in that it makes permanent a concentration of low income people rather than disbursing low income people throughout the city (or even the county–what a thought!). At least when you build low-income apartments, you increase the retail potential in an area because you add density. Increasing the concentration of low income housing without increasing density guarantees that depressed neighborhoods remain depressed.

CFF, what are the issues with the one story houses that get jacked up, foundations replaced, and complete shearwalling installed? Are you saying that the sheetrocking (and stucco) are not as good as plaster at stopping fire? (makes sense)? or the fireblocking in the walls is now inferior?

I think you are gravely mistaken. The new codes with their 1/4 inch gang nailing/Gusset plates and 2×4 hanging joists are much more likely to have a catastrophic collapse without warning, and don’t even get me started on the engineered I beams.

Those old houses, if properly maintained, and not jacked up an entire story are far superior to the normal home construction that we see popping up all over the city.

Especially under fire conditions, where the new light weight construction can catastrophically fail in less than 5 minutes.