Cordova: 8/25/26 Housing Supply Accelerator Committee Meeting

And nobody turns on their camera ever. I know. We could just be on the phone. There's no—. Yeah.

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There's been some— I've had some missed text messages and some other things, and I have—. Okay, so 253. I know. Almost done.

Oh yeah, because we're not going to have a party.

No. Um, there are two people. Randy Huey said that there was a—. That he had given the ladies. What should I watch on Apple TV?

Hello, who is that?

Weird. They've got to stop saying because they're like, there's that. Oh, Megan, all right, or you just call them. So do you want to come join us up here? Maybe?

Yeah, I'm good. Seats, there's plenty of seats. So it's fine. I look at the Department of Redundancy Department. Oh, recorded also.

So I always like— in real science, I've only had the same recorder for 18 years with the same cards that I use. That equipment, it was a good purchase. Limo bottles. So it must be even—. I still have my typewriter.

Yeah, there's a background of the Million Dollar Bridge. Now we see you. It should be delayed.

Okay, so are we okay to start? Yeah. Do you— and you're— we're live and here we are. Of course. Okay, great.

Well, hi folks, we have some people in the room here and some people online. So thanks to everyone who's chiming in.

Um, this is the City of Cordova Housing Supply Accelerator Committee meeting. I'm Kristin Smith, the mayor, and maybe for our guest speaker, and there might be somebody else joining online, do people want to just do a quick round of introductions and your maybe your interest for being on the committee. We can start with Sheldon said yes, so I'm gonna—. Sheldon Barnes, capital project director for the Native Village of Eyak, in charge of all housing, new construction. The Native Village of Eyak is very interested in solving the housing problem in Cordova, so they wanted a representative and They chose me.

Thank you. I'm gonna, since the screen is technically in the lineup for going around the table, I'm gonna go to Barb and then Diana.

Hi, I'm sorry, just joining from another meeting.

Yeah, we're doing a round of introductions so that our guest speaker kind of gets a little bit of the lay of the land of people, who the committee members are. Okay, thank you so much, Kristen. So my name is Barb Jewell, community member, homeowner, served on the school board for 12 years, work as a director of community programs at the hospital, and have a long professional connection with housing and homelessness. Um, and so very interested in supporting the development of sustainable affordable housing because I think it is such a key, um, piece of community health. Thank you, Diana.

Yes, hello, Diana Rydell. Um, I own, uh, Denega Services, a construction company here, and have built a few homes in Cordova and Um, my interest is in affordable housing for our youth that want to stay here and elders, um, and everyone. Thank you. Kenny?

Yeah, hey, my name's Ken Jones. Uh, people call me Kenny or Kenneth, doesn't matter. I am a local entrepreneur.

Here it's been taking what little fishing profits there are and reinvesting into the town because I hate to see the degradation of my hometown. And I feel passionately about buying derelict properties, fixing them back up. So that's kind of where my, my background is. It all started when, uh, I purchased my grandparents' house with my father and then rebuilt it into a triplex. So that kind of what got me interested, and I've just been trying to go through and and buy properties that are either underutilized or vacant or abandoned.

And, uh, that's kind of where my priority has been, is trying to get multifamily and commercial off the ground and restore, restore the community to what it was back in the '80s and '90s.

Thank you. Shay?

Yeah, I'm Shea Bowman. I work for Rural Cap in the Rural Housing Department, helping facilitate housing projects across the state of Alaska, but I'm based in Cordova, Alaska, and I actually got to hear you speak on land trusts at the Southeast Conference last year, so I'm very excited to hear hear it again and for this group to hear what you have to say.

Sheridan. My name is Sheridan Joyce. I run a small contracting company that specializes in groundwork and excavation, usually for residential.

Nicole. Nicole Songer. I am the executive director of the Cordova Family Resource Center. We're a domestic domestic violence, sexual assault program for shelter, and then also homeless and housing programs. So very interested in low-income housing and housing for individuals that are struggling in our community.

Thank you. We have a city council member with us.

Do I need to come up? You can, maybe. Yeah, why don't you sit there? Ah, yes. Yeah, my name is Wendy Rainey.

I'm a city council member. I'm also a business owner with an adventure lodge and am just interested in the economics and housing of Gorilla. Thank you.

Yeah, I think I got everyone. And, um, yeah, we are really interested, Randy, to hear about how the Sitka Community Land Trust has, um, worked to increase housing stock in your community. And, and I think there are two of you, so I'm just going to turn it over to you.

Okay, so I'm Randy Huey. I'm the executive director of the Sitka Community Land Trust. I am a retired teacher. But I'm really bad at retirement. And so I've been at this for 14 years now, about to leave and retire, and this time I mean it.

With me is Amy Kramer Johnson, who is our grant writer, grant manager. Amy, I know you're there. Do you want to say hello?

Hi, this is Amy. I'm just joining in, listening in from Sitka. Thank you. Okay. So, um, the housing crisis in our communities and across America and across Europe has to do— the fundamental problem is that property values have escalated beyond earnings wildly across my lifetime.

You know, in my parents' time, all of my, my parents and my aunts and uncles, everybody owned a home. And they were in my little community, they were blue-collar families with one working income, right? Moms tended to stay at home and they were able to buy a house and live comfortably.

Somewhere along the way, property values began to pick, escalate beyond earnings. And without going into that very much, That's the fundamental economic problem that we're working on, is how valuable properties are compared to earnings. And the, the community land trust is a model that limits that. It, it addresses that fundamental economic problem. Now, if you will give me control of the screen, I will try to share a slideshow with you.

Um, so Is sharing allowed here? Susan's going to maybe make you a co-host or—. Show me. Go to participants. That little carrot bottom.

This? Go left all the way over to participants. Click on the carrot. Or that. Yeah.

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And—. Well, I'll have all participants. Yeah, sorry. Do click on the X and then just go back and click on the participants icon. I think that should— yeah.

And then, and then go up to— yep, that one. And go over to the 3 dots. Yep. And then make host. Yeah.

Okay. So do I then hit the share button? You should be able to, yeah, share your screen. Are you seeing a slideshow right now? Not just yet.

All right, then I'm going to try the share.

And there it is.

Okay, you see that now? It's loading. There we go. Okay.

Okay, so front show. Okay, here's Sitka in the spring when the herring spawn. That's just for your enjoyment, but I wanted— I do want to point out that Sitka, like some of your communities, is on the water with a narrow bench of land and then mountains behind. And the mountains are a barrier, a greater barrier is that those mountains are a part of the Tongass National Forest, and federal ownership of land, government ownership of land in general, is one of the key problems that we face here. Um, and listen, uh, at any time I will want you to ask questions.

All right.

Okay, so the point of this is that I believe that, that communities, cities should consider partnering to create community land trust, uh, home ownership, because it's a marvelous model. And because what I want you to know is how we— how the model creates initial affordability, how CLTs, Community Land Trusts, achieve permanent affordability, and why municipalities should invest in it, and how municipalities can help Community Land Trusts in their— get going in their communities. So how it basically works is that land is acquired, and in our case, the city of Sitka has given us land. Land is acquired, and the land goes in a 99-year trust, community land trust, and the house is built on that land, but the deed of the land is separated from the deed of the house, and the buyer buys only the house. That saves like $100,000 here, right?

No land cost. And they lease the land, in our case, at $50 a month from the Community Land Trust. They can do largely whatever they want with that land, but they didn't have to pay for it up front. That's one of the key, uh, ways that we create initial affordability. And when we get done with this talk, you're going to understand how we create initial affordability and how we create permanent affordability.

And let me say right here that the community land trust model of home ownership is nothing that we invented. It's a national model that we imported and tweaked and adapted only a little bit too, but this has been in place in the United States since the '70s.

So the initial affordability, like I mentioned before, there's no land cost. And then we build really small houses. The biggest house we build is about 1,200 square foot, little 3-bedroom house. And then whatever subsidies that we can bring to bear on the cost of the production of the house. In our case, the Rasmussen Foundation gave us $499,000 which paid for the site work and utility installation in a 14-home neighborhood.

And we have other grants doing other things, but no land costs, small house, whatever subsidies you can bring to bear. In the case of this little red house that you see there, which is actually an 1,150-square-foot, 3-bedroom house, um, that we had no cost for the land because the city donated it to us. The Rasmussen grant paid us about $40,000 per house, and it was about $25,000 of site work and $15,000 of infrastructure. Those are very much round numbers. And it costs us $240,000 to build that house, a contractor price.

We hire a general contractor to do that work. We, at that time of this house construction, we were getting construction loans from First Bank, and for a 9-month build, it cost— because the interest rates were so high at that time— about $16,000 of financing cost. Then we take 10% of the cost of the home production, the general contractor's price, we take 10% of that as our development fee, that's what pays the bills to run the nonprofit. Total price of $280,000 for that house. And a single woman who works in childcare but who had some money to put down was able to buy that home.

Does that make sense so far? Yeah. Yeah. All right, okay.

Yes. Thank you. And now permanent affordability is achieved by limiting profit taking at resale. So, um, in exchange for the use of the free land and the subsidies that we bring to bear for people so we get a home that they can afford to buy, in exchange for all of that, they agree to limit profit-taking at resale. And the formula of resale, which we have adopted, which is common but not the only one— the owner keeps all of the equity that they have purchased by their down payment and their monthly payments, and 25% of the increase in the appraised value of the home over their time of ownership.

Right. All the equity that they bought, 25% of the increase in the appraised value. And so what that works out with in this little red house, we, we actually sold this same model, not this exact house, and it was a $280,000 initial price. And in 2022, it was appraised at $330,000.

And 2 years later, it was appraised at $430,000. Those are true and real numbers. All of those numbers you see there, it increased $100,000 in 2 years, which is insanity, right? That's bad news in the market in every way. Worked out pretty good for this particular seller because she got 25% of the increase in the appraisal, which was $25,000, and her down payment plus what she'd purchased with her monthly payments totaled to about $12,000.

So in 2 years of ownership, she had $37,000, and that is better than you can reasonably expect. You all understand that, right? That was that jump in appraisal of $100,000 made the, the take-home from this sale in a community land trust model a much bigger number than people would typically get. But that is our only resale, and that is actually what happened. And then we put the house back on the market for $305,000, which was the initial sale price of $280,000 plus the $25,000 of, let's call it profit, the increase, one-fourth of the increase in appraised value.

Does anybody want to ask any questions right there? Yeah, I just wonder, I mean, you must have had a line down the block of people who wanted to buy that place. And so how do you Yes, yes, we did. We had, uh, at one point in time we had 19 applicants and I think there were 5 lots, you know, at the end. It took a while for people to be excited about this because it's kind of strange, right?

You're not buying the land. They'd always say, we don't own the land. Well, that's one way to think about it. Another way to think about it is you don't have to buy the land. You get to use it.

You want a garden? Fine. You want pets? Great. You know, it's just that you don't have to pay for it.

So it took us a while for the community to accept the model. But once we started building houses, we— yeah, we had 19 for the last handful of lots. And then we are building the last house in this neighborhood, right? It started last week. A 14-home neighborhood.

Any other questions? I just, I would, I keep in my head, I keep thinking the beauty of this is that it's, it's, it's a much shallower or less steep on-ramp to homeownership. Yes. And building equity, and you don't, they don't have this enormous leap to make when you want to buy. Exactly.

Yeah, and we think of it as the, you know, the first step out of rental and into ownership. And so hopefully they can own the home for a while and save their money and sell it and be able to get out onto the open market because, you know, that equity in a home is the largest asset that most middle Americans have. Right. And so, you know, I'd love for them to be able to get to that spot, but this gets them out of rental at least and into their own home that they control. It's theirs to do with what they want.

And so it's working very well. It's accepted in Sitka. We can sell as many of these as we can build. Other questions? Kenny Jones has his hand up.

Okay. In your, uh, in your case study here, um, looks like it was done in 2022. So I guess I was just curious, uh, you know, the interest rates back then are a lot different than the interest rates are today. So, you know, I, I could see a problem with the 25% model. Um, if you cap somebody at 25% of the of the growth, there's a good chance that person is going to lose money when you start factoring in 7-8% interest rates by the time they, they, uh, pay back their, their mortgage.

And, you know, they're just— I, I just don't see how 25% of the appraisal, um, of the increase is going to allow somebody to come out of this with, with, uh, a good chunk of equity. Factoring in today's— back in 2022, it probably would work. But today, I just, you know, 2 or 3%, it would work. But at 7, 8%, that's, I guess, my question. How do you guys— how are you dealing with that with today's current rates?

Right, Kenny, it's an interesting question. And all I can say is the model has worked since the '70s. And so I think— I don't— I'm not sure. The truth is, I mean, we've only been at this since 2020. We've built 14 homes, but we follow in a long line of people, entities that have been doing this, and it has worked.

Many of the entities don't— of the nonprofits that do community land trusts have a variety of formulas, but I think that 25% of the increase in the appraised value is probably one of the more liberal ones. So, um, I— so the truth is, Kenny, I can't say, well, it's worked for us and everything, because we haven't had that experience yet. It has worked in the nation, and I'll just leave it at that. The another way to think about this is if you— let's say that you gave people 50% of the increase in the appraised value, then what this— then this house would have gone back on the market at $330.

$330,000. Does that make sense? Um, because initial sale price of $280,000 plus $50,000 would be $330,000. And so now you're— can people, low to moderate income people, buy that house? I'm not sure.

Some, certainly, but you would be serving higher income people if you give more income at sale.

Are you— are folks who are buying these units all working with conventional lenders? Yes, they get their own mortgage. They— we kind of stand down from that and refer them to all the banks to go get a mortgage. And yes, not all banks will do it because it's weird. The title of the land sits in a trust and the bank doesn't have first position on the land.

It does on the house. But First Bank here in Sitka does mortgages for them. And there's banks all over the United States that will take that position. And there's banks that will not.

Thank you. Yeah.

Okay, let's move on a bit.

So you tell me, this is a test. How do we get initial affordability?

They don't have to buy the land. No land. That's one.

And you're building small and expensive homes. Yeah, small houses and then whatever subsidies we can bring to bear. That's all there is to the initial affordability. The permanent affordability we were just talking about limiting profit taking at resale. And let me say this about if you don't limit profit taking at resale and you brought a bunch of subsidies to bear, Rasmussen Grant, some money from AHFC, whatever it was, that enabled you to produce that home for less and get it on the market, if you don't limit profit-taking at resale, then all of the subsidies that you brought to bear will go away as profit to the first person who sells the home.

Does that make sense?

So limiting profit-taking is what makes it It's one of the great advantages of— for cities, why we should do this. We create starter homes that stay starter homes. Starter homes that are just little houses but are on the open market are very— within a matter of years are no longer affordable homes in the— when the markets are as hot as they are here, and I suspect there. Does that make sense what I'm saying? Yes, yes.

Yeah, you don't want the subsidies that you brought to bear to go away as profit to the first homeowner. You want that— want those subsidies to be shared by many buyers over the life of that home. And if we keep it permanently affordable, we've always got a stock of starter homes.

Okay, so if I may ask a question. Please. And, and maybe I missed this in the presentation. So we've talked about the first sale, right? So do these rules continue to apply to all of the owners for this 99-year period?

Yes. Yes, they do. And, and our selection criteria remains in place, which is we choose people up to 120% of the area median income. Because the housing problem is not just a low-income problem, you know. So when this person sells their home, they can sell it to a friend or a family member if they want, but they have to be income qualified.

And if they either can't find someone or don't want to do it, we will take it and sell it, which is what we did on that home that I showed the example of. We had a— we took the first person in line in our waiting list and sold it to them. Okay, and so the 120% of poverty, is that, um, that's something that the community that's doing this gets to choose what the level is, or that's somehow tied into—. No, that's our choice. That was the City of Community Land Trust choice.

It's a common, uh, that's a very common, uh, number to use, and And we just use HUD income charts that are generated annually. And yeah, yeah, 120% of area median income. Yes, not 120% of poverty, but right. Thank you. Yeah, thank you.

Yep. But, but like you said, I mean, I think that's, that's a trap that Cordova falls into or is stuck in all the time because We aren't eligible for a lot of HUD programs because our income levels are too high, and yet none of those take into account the cost of living in this community. And so 120% of area median income is not living a high life, necessarily. No, it is not. Yeah.

And Sitka has the same problem about, in general, It's a wealthier community, you know, compared to the rest of the state. And, you know, so we don't— there's a number of HUD funds that we are not eligible to receive. Yeah.

Okay.

Right. I talked about this, the subsidies. If you just let that market, that house float on the market, all of the value of the subsidies go away. As profit to usually the first person that sells it, or certainly in a very short number of years, it's no longer an affordable house. So, um, it— and because you're talking about permanent affordability, um, this is— when it comes to appealing to funders, this is a great thing, uh, because if you were Talking about just helping the Smiths get started, you know, in life, we buy them a home, but then they sell it, it's no longer affordable.

It's way more appealing to create a stock of affordable homes that are permanently affordable. So we have found the state's funders to like the model and to respond to us well.

Okay, so in the city of Sitka, in the past 10 years, there have been— there are— I'm sorry, I'm going to get my numbers right here.

So we have— we're shrinking in population in Sitka. In the last 10 years, we've lost 480 kids. That's age 0 to 19. 480 In 10 years. We've lost 730 people of working age, so 20 to 59, and we've gained 440 people over 60.

So that's an alarming demographic. I don't know if you share any of that in your communities. But if you, if you look, this is 2.3 people a week for 10 years. It's like a family unit almost a week leaving, and it's about housing more than any other thing. There's other things, there's other affordability things, but housing is the big thing.

And so it's very appealing for a community that wants to thrive and have youth and and vitality in the community, it's very appealing to create affordable housing that remains affordable.

Okay, um, city-owned land generates no property taxes. And then the last thing is creating affordable housing is just the right thing to do if we can. If the, if the communities, if the cities own land, putting it into housing is the right thing to do at this time. It addresses the fundamental problems of livability and affordability in our communities. And you know, there are, there are families here in Sitka where between a husband and a wife, they're working 4 jobs and they got 2 or 3 kids at home.

That's just awful. That's a terrible thing to do to people. And so genuinely affordable housing that isn't a massive stress on their budgets and The hardest thing on marriages is money. That's the thing people fight about more than any other thing. It's about money.

And so the right thing to do is create an affordable housing stock when you can. Okay, so cities, I think, give land certainly, and then higher density zoning at times. Reduce or eliminate city fees. I think I skipped something.

In an ideal world, if you, if you love the model, something like this, this, the city would maybe partner with a nonprofit and start actually paying part of the salary of someone to work to create something like this that can address the problem that is using the resources of a community. For the highest and best good.

Okay, I'm, I'm done. There's our neighborhood 4 or 5 years ago. It's twice that size now, but I'm done and would be happy to answer any questions.

I had one question about property taxes, and you were saying, or one slide said, um, it, it doesn't That while you were saying that the land as it is now, empty land is not generating property taxes, right? And so these individual homeowners, they're paying property tax on the structure. And in our case, we elected to have them pay on the house and the land beneath it. Many land trusts do not make that decision, and when we started the Community Land Trust back in Well, 2016, we didn't know anything, you know, and so we made a bunch of decisions with lasting impact that we might do differently. That might be one of them.

We might, because they don't own the land, we might have separated that from the tax rolls and had only the value of the house. That would have helped them. Our reasoning was that we were incentivizing the city to give us more land by helping them make a little more on property taxes. That was our reasoning. I'm not, I'm not sure it was correct.

Thank you. Can you elaborate on that a little bit more? Like, why do you feel like that wasn't the correct decision? Because in some ways it makes total sense to me exactly what you're saying, incentivizing the city. It is an additional cost, but it's not huge, right?

Because those are small pieces of property. But anyways, you could elaborate. That's— you've got it. I mean, it's— we only pay 6 mils and it's $100,000. So what would that be?

$600 A year that they'd be paying for the land if it was $100,000 value. But we've got some people in these houses that just barely qualify to buy them. And so that $600 might be better served, you know, to the community in terms of community health as a whole. In, in their budgets and not in the cities. But that's, that's why I now sort of vacillate on that.

I, I know why we did it, but I'm not sure that we would do that again if we were doing it.

Thank you. Other.

Let me say, while we're— there's a little pause here. Well, maybe some— maybe there's some more questions coming.

We are hosting the Northwest Community Land Trust Coalition Annual Conference in Sitka, September 30th, October 1st and 2nd. And we, through the Rasmussen Foundation, are offering up to $500 travel scholarships for Alaskans to come down if they will do the day one, which is a CLT 101. So it's— we have some excellent presenters that I've heard and like who will talk about the basics of a CLT 101, the CLT model. And then so come for that and then attend the conference, and we'll give you $500 toward the cost of it. And we have a few left right now, and we'd rather give them away than give them back to the Rasmussen Foundation, who don't want money back.

They would rather have people come.

I did. Oh, okay. Yeah, I'm signed up, but if anybody else wants to come too, they've got—. Yeah. October, the last day of September and the first 2 days of October.

Yeah.

Oh, yeah. Okay, well, we might get somebody on this committee to join the— yeah, somebody from the city maybe, or we'll see. Yeah, thank you. Yeah, that's great. Yeah, I'm excited to be able to— I assume there's going to be some kind of a tour maybe or something where we can—.

Yeah, we'll walk through the neighborhood, uh, on Friday afternoon and see the houses and yeah. And so, okay. Wanna come, Lars? Or Diana or Kenny? I'd love to, but honestly, the plane ticket between Cordova and Sitka is a bit more than that.

Yeah, that's right. Which I apologize even for saying, but it's true. I know we, yeah. I got an airbag for 10,000 miles.

Yeah, Kristen's was only $5,000 each way. Oh, that's awesome. No, I couldn't believe it. I'll look at it then. Yeah.

So, um, I'm— so I will— you probably have other business to attend to. So any last questions?

I just want to say Oh, the timeframe that they couldn't sell, was it 2 years? Is that what you said? Or no, I'm sorry, I didn't understand the question. Once you're in one of these homes, you have a length of time that you have to stay in it before you're allowed to sell. No, no, you, you can sell the next day.

You can, you just have to live there, you know, and we even have an exemption, like for military service. Or they can come before the board and plead circumstances, but obviously they can't be rentals. They have to be home ownership is what we're after. Our mission is creating affordable home ownership, though we have built some rentals as well.

I guess my question really, or one of my questions is, how do you have any recommendations for? It sounded like you must have needed to build a relationship with the city council, with the municipality around, around this project. And I don't know if you have any advice for that, or, you know, dos or don'ts or lessons learned. Yeah, well, a group of citizens gathered together in 2007 and began to work on affordable housing. And one of the things that they accomplished was to devote this site that we're looking at there, which was— had been the site of the city and state shops.

And they got a referendum on the ballot, and this community voted to devote this site to affordable housing and on a non-bid, you know, kind of way. Allowing the assembly to do with it as they will.

And so that work was done, and we came along and asked them for it. And that wasn't until, I think, 2018. So like 11 years after they set the land aside, a group formed to build, you know, a development group. And so Um, those things were fortunate. Now we don't have any big parcels of land ready to go.

Uh, we are doing some infill things in the short term while we wait for this. There's a big study going on of city land right now and will result in some larger parcels of ground being devoted to housing, but In the meantime, we will do a little this and that here and there when this, this neighborhood should have 21 dwellings in it by the end of next year.

Great. Sounds like really awesome work you all are doing. What size piece of land did you start with? Well, the site is 3 acres, but only approximately half of that is buildable ground. If you look behind those houses, it's quite a steep slope retained by a rock wall, and then there's some places further to the— where we are looking east and further to the west out of this frame, there's some steep hillside ground that's not buildable.

So we had about 1.5 acres of buildable ground, and, um, it had been a contaminated site that the city had cleaned Only not quite. And so when we started to put utilities in, we found some more that we had to deal with that held us up for a bit. We got through that and we're wrapping up the entire neighborhood. We're starting the last house. So, yeah.

Yeah, I see Kenny's hand too.

You're muted, Ken. Oh, okay. Yeah, I just have a quick question. Can you hear me? Yes.

So, uh, in your pricing, um, in your case study there, you said it was a 1,200-square-foot house and it came in at about $280,000. So how did you find a contractor willing to build for— what is that— $200 20 a square foot. I mean, that's a really good price for today's market. Yeah, right. Um, well, our contractor is a good guy who's one of the most successful and bigger builders in town, and he, you know, in part he does the best he can for us.

I think he's still— and, and Those prices are a few years old, so our square footage price is higher than that now.

But he does these houses, he does them in 9 months, which of course he would be capable of producing in 3 months or less, right? But he's always got other houses going on. So he's— this is the work that fills in. So his crews, all of his various crews, you know, his drywall crew, his concrete crew, his roofers, his electricians. Everybody's got work to do if he has enough projects going.

So this helps him sort of fill in. And, and so he, he's— those are the numbers he does for us. He's doing the best he can for us. And, um, yeah, we have good barge service, but, um, That's— it is just the way it has worked out.

Yeah, and you guys have a Spenard builder that they go to, don't you? We do. Our builder buys from a consolidator in Seattle. It buys whole home packages from there, and we buy things from Spenard, but it's— and he used to try to do that, but the store has been unable to satisfy his needs, and so he's eventually gone to someone from Seattle.

Yeah. Thank you. Yeah, no, that makes a lot of sense that he's got a contractor who has a crew and he's able to— that's a good way to get some Prosper spread put down from here is to keep your crew busy on these projects in between other higher paying projects. I do that all the time with my apartment, keep my fishing crew busy when fishing's down. You know, that's part of the reason why I get so affordable labor.

That makes a lot of sense. Thank you. Yeah, and he also was drawn to the fact that this is right along Halibut Point Road, which is a state highway. It's the main thoroughfare. And so he reasoned that a lot of people would like it and a lot of goodwill in the community, which I think is true.

And that has helped him. I see Shay's hand. Yeah, just to talk to Kenny's point, I think it would be really smart of us to think about doing this in alongside like a self-help housing program, which would help us bring down the cost of our construction. And it would also align with what with what you're saying about, you know, bringing other sources of funding to bear.

Yeah. Yeah. Yeah, there's some putting together some two pretty big pieces of the puzzle. Mm-hmm. Sure.

Any other questions for Randy?

Hey, Randy, thank you so much for sharing this presentation. It was really exciting. To learn about this. When I built in Sitka, I ended up having to buy land, and we had a high at the time. I think that was 2007.

So something like this, I could really see it being needed and really see the benefit of it. And so thank you for your presentation.

You're welcome. So you lived here, huh, Diana? Yeah, I did. I actually— we built out on Halibut Point Road up on Little Bird Way, um, and Connor Nelson was my contractor. Yeah, yeah, yeah, it's beautiful there on a sunny day particularly, right?

Yeah. Um, Well, thank you so much. This has really been informative, and I think it gives us a lot to think about. And I also have a great resource now. We've got a contact connection with you.

And yeah, and I am looking forward to coming to the conference. Yeah, and I'm happy to talk about it. You know, I think you can tell I believe that this model fits the economic circumstances in America. And we have to fix this. We have to help young families all over be able to buy a house.

And so I believe in the model. The longer I'm in it, the more, the more enthused I am about it. So I'm happy to talk about it anytime.

Thank you.

Okay, well, good night everyone. Thanks for that. You're a great audience, so you take care. Thanks so much. Okay, bye.

Okay.

Oh, I hope— Randy? Yeah. Yeah. Might need to do— to make us the host again because you log off. I don't know if that ends the meeting, but if you can go to participants, click on participants, and click on, um, City of Cordova and click on those 3 dots on the right.

Can you think I can do it? You could try. So now, if I choose make host, that should work. I was able to do it. You got it.

Yeah, that's a good thing. Okay, y'all take care. Dark over here. Thanks so much. Thank you.

Okay. Kristen, thanks so much for making that happen. That was really informative and super helpful, and it was great. I was looking at my notes and we're like, oh, we said we wanted to do this, and boom, you made it happen. I mean, no big—.

I feel like some things have come together to help. Yeah, to help with that. And, uh, How did we—. Yeah, anyway, I think I must have emailed Amy because I did. I, anyway, just that, yes, he was great.

It seems to me like the, I mean, like Kenny said, the numbers maybe are a little bit harder to work when the interest rates are higher just because it makes it harder for somebody to build that equity. You know, they're paying so much in interest. But, but it's still a leg up. I mean, it's still a start. No, that's— I think, and I think the whole issue of the fact that developers are not building starter homes anymore, they're building 2,000, 3,000 square foot homes, and we need starter homes.

You know, that's what has not been happening for 30 years. So, yeah, that's what we've got to figure out. And I It was interesting, that discussion about property tax and kind of what their policy is. Do we ask people to pay it? Do we not?

And I, you know, I think some people are probably thinking, well, if the city gives land, of course we should ask for property tax. But I also think there's a whole case to be made for community stability. You know, we're contributing to community stability. We're trying to give young families a chance. To get started and to become income earners in our community, have kids in the schools, all those things.

And so it's— I think there are— you maybe can't equate those in exact dollars and cents, but that's part of the— that's still part of the formula. Yeah, Barb? Yeah, so a couple things. So one is with the interest rates, which— Ken, you asked some great questions. There were things I never would have thought of, so I was really grateful for that.

Um, the piece with the property taxes for me, and I get it, but they're also only like— they would only be— I'm sorry, not property taxes, interest rate. They would only be paying the interest rate on the house, which makes it much lower than if it was the house and the land.

Um, and it is a leg up. The other piece for me with the property taxes is, you know, he said they have a $6,000 property tax. Ours is $12,000 now, I think. So it, it could be a substantial amount of property taxes, and it made me wonder if there was a way, if there's a community land trust, either that the land trust, part of its operation cost includes helping with that property tax, or if when he talks about subsidies and grants and things like Rasmussen or whatever, we build that into the grant request. To help pay those property taxes.

So the city still gets it, but the homeowner doesn't have to pay it on the land that they don't own. So just a thought.

Thanks. Kenneth, you want to go ahead? Yeah, I like, I like the general concept. I think one thing I would like to see if we are going to go down this road of creating a land trust One thing I would like to see is, uh, try to focus on finding a piece of city land that the trust can put in the utilities for, because one of the biggest costs of development in Cordova is all the septic and the well. And then that's also like, this is only going to work with the density that they're showing in Sika, um, if you have the sewer lines and the water lines ran to the lot, because of all the different, you know, like lot size restrictions, state, D&B puts on, if you're going to use a septic and you're going to use a well, same lot, you have to have like a, you have to have almost a full acre to fit a well and a septic on the same lot, because you have to put them at different corners of the lot, and it just raises that cost of your land, which raises your cost per square foot on your finished house.

So, that's definitely a challenge. I, I would like to see almost a little bit of a mix, you know, really like, uh, get some— get a road punched in, get utilities punched in, get sewer punched in, and then, you know, maybe we build some of the spec homes, the trust builds, you know, hires the contractors. But maybe you just sell— or maybe not sell, but you, you know, I don't know how you do it, but you have the land available and somebody can build their own home on it, because that's going to be your most effective way to get affordable out here, somebody builds their own cabin. Um, and there's plenty of people who would do that, like the self-help thing that Shay's talking about. But just having the land is such a— it's such a problem in Cordova.

Having land and having the utilities, um, is honestly the biggest problem I see for people. And, uh, that and contractor availability is another really big problem. But, um, I know, like, for me, just getting my foundations and my septic in, I'm going on like 3 years, you know. So it's like takes forever just to get that part off the ground. Um, and so yeah, anyway, I like the idea.

I think it's worth pursuing. Anything we can do to get more housing in town, I'm in favor of. But, uh, I, I do have a little bit of a problem with that 25% cap. I think we should maybe evaluate a 50% cap, because at these current interest rates, even if it's 6%, uh, you know, 6%, you— if you hold that home for 5 years, you're going to be losing money if you're capped 25%. So, um, it's going to be a negative equity draw on folks who hold it longer than 4 years is what I see at 25%.

But if it's 50%, then maybe, you know, it can still be that stepping stone that we want it to be for people. Um, so yeah, I just don't want to see somebody get into it, think it's a great deal, and in the long term they actually end up losing money on their interest rates and their, and their, uh, their property taxes paid. There's some cost into this place is going to be $100,000, so they can only sell it for $200,000. It could be an issue. But yeah, anyway, overall, it's important.

Yeah, yeah, we can certainly do some modeling and run different numbers, different scenarios. I think that would be important to do it. I mean, that's just part of due diligence anyway. So I guess it would also, in theory, you know, be our nonprofit, so you can set your own rules. And you could set a rule like you can't allow somebody to go negative.

Yeah. Yeah. I feel like these also aren't really like investor kind of marketed properties. Like, obviously me or Kenny wouldn't be interested in this sort of model, but there's a lot of people who are renting where this is probably still better than just renting. It's kind of the list market for it.

At least that's what appears to be for me. Yeah. Yeah. It's a non-rent. Ownership.

Yeah, well, again, like, I'm not sure I understand the math, what Kenny's talking about, right? But what I heard him say was they got their equity, right, plus they got whatever monthly payments they made. So their monthly payments would include that 6%, and they would get that all back plus their 25% of whatever profit. So I'm not sure that they would lose money. And again, I'm not sure I understand all the math, But if they get back all their monthly payments, their monthly payments include their interest.

I thought that's— wasn't it just the monthly payments on the land? They just get back the equity. No, the monthly payments on the mortgage. The monthly payments on the mortgage because they don't pay on the land at all. Principal and interest.

Principal and interest. So do they separate that out? Yeah. Additional mortgage. Your mortgage is sometimes over half of your monthly payment.

So if you held something for 4 or 5 years, say you're paying $2,000 a month, sometimes $1,000, $1,200 of that is interest. And so they would, they would be able to recapture their principal, uh, their equity, plus the 25%, but they wouldn't recapture all that interest. So if somebody held this thing for over 5 years, they would end up losing money. So what— so how do you know that they wouldn't get their interest payment? Is that what he said?

Well, that's— no, that's in his slide, they get all their equity plus 25% of the increase in the—. It said they get their equity plus their monthly payments, right? But the interest is paid to the bank and it's not— it's not— it just goes away. That's a sunk cost of owning the property. So, um, I mean, paying interest is still cheaper than paying rent because technically rent is 100% interest if you look at it that way.

But yeah, it's just, that's one thing I see as an issue. I think it worked for the lady who held it for 2 years because she probably got it at 3% and only held it for 2 years. But if you have somebody who gets it now at 6% or 7%, because these are going to be a non-traditional financing option, they're not going to qualify for the Fannie Mae 4.5% or 5.25%. They're going to qualify for the non-traditional. So it's going to be more like a 7%, 7.25%.

And even if they buy down the points, maybe they get it for 6.5%, but I just, yeah, I see it being if you hold this thing longer than 5 years, you could end up being upside down when you go to sell it under that 25% cap. Well, I think it would help to, I mean, maybe one thing we do is with some modeling is do some work up some sample amortization tables that, you know, what does it look like over a certain amount of time at different interest rates? And yeah, I think that would help all of us understand it a little better. So. That might be something we could get.

Yeah, good idea to look at that. I also think it'd be a really good idea to maybe even bring in like an investment banker or somebody who can explain it better than I can, because like I, I can think it and I can— I, I have a tough time explaining the math that's going on in my head. So, um, like I understand it and I, I can see it being a potential issue, but somebody who might be able to explain it better than me would probably be smart to bring to the table. Yeah, and maybe a mortgage banker as opposed to an investment banker.

I think that, uh, you hit it on the head. The amortization table is going to exactly show you what you're going to have to pay. I mean, even with a low-interest mortgage, you still end up paying most of your interest in the first few years. Um, but I— if you go to this conference, um, I would really be interested in Hearing more about which banks are loaning on the, you know, no-titled land, I think that's a big— I think that'd be a big benefit and even something that you could share with, you know, some people that have Native land too, what banks are helping out in situations like this. Yeah, that's a great question.

Okay.

Okay. Um, what else?

I guess, uh, I, I was thinking about, um, next steps. I mean, obviously the conference is coming up, and we can certainly talk about this at a council meeting. I mean, I feel like we want to start kind of cultivating a little bit of support for the possibility of, like, looking at what might be some appropriate property to— that might be something the city would consider. Like Kenneth said, the big issue is getting the utilities in and figuring out how to make that workable in the whole formula. But maybe part of what Shea is saying, and I Yeah, I mean, maybe we try to start off with a piece of property that I keep thinking about is that section that's like a shoebox shape above the cemetery on Lake Avenue, up above Power Creek Road, which is going to be expensive because there is not road access up there right now and there aren't any utilities.

But there is a lot of land. I think it's over 100 acres or somewhere. It's a big chunk, but you certainly don't have to, you know, you wouldn't do all that in one fell swoop. You might do 5 acres. And also, like Kenneth was proposing, what if there was some kind of a mixed income level development, if some of it were just sold as developable property and those people were helping to contribute to the cost of putting in that access and those utilities.

And then, yeah, then she had the suggestion of combining it with the self-help program so that you're getting the sweat equity labor from folks who want to build their homes down. So a few different—. What about the land on Davis? Mm-hmm. The hillside where Van is building?

Mm-hmm. Beyond that. Yeah. Which just seems in town, close by. Mm-hmm.

And if these houses are on top of each other, the utilities are going to be a little less expensive because it's so consolidated. What did he say he got? So 1.5 acres of usable land of the 3 acres and how— and 19 homes? I thought so. Yeah, 19 or 21 at the end when it's finished.

Crazy. Yeah, yeah. But you saw how close they were. They were, they were right on top of them up there. But they don't share a wall.

They do not. Exactly. Okay. But it's still a house. It's your own home.

Yeah. Very cute. Yeah.

Sometimes making them townhouses is even better because then the utilities are usually a little bit less because you're sharing 5 walls.

And when I'm thinking of property, I'm thinking of the population that we're trying to serve too and having something far away or out the road where they might not have people or access, things might be an issue. So yeah.

What was that? What was the chat? Put something on the chat. Well, hopefully, I think you—. That gets—.

If you're recording, that will get saved chat. I think so, yeah. I just asked him for his presentation too, so we can see that slide again. Yeah. And maybe explain that a little better.

Okay, great. All right.

All right. Well, um, meet again in a month. Yeah. Where does, where would that put us? Oh, right when you're leaving, probably.

No, today's the 25th. September 22nd is a month. Well, we've been doing the last Tuesday. Right, the 29th, right? So I would, yeah, I mean, you all are welcome to meet that day.

I don't know that I, I might be able to do it by Zoom. You're flying that day? Yeah. We can try for the 28th instead. Or we can do it after you come back so that you tell us about it.

Report back.

Santa Clara, October 6th is happening.

Is council meeting set aside?

Then you'd have the information for council. Yeah, well, that's for October 6th. Sure, if folks are okay with that. Does that sound okay? Is it too long away to talk about October 6th, guys?

We're going to go with—. Okay. I think that's okay. That is a little far away, but I'll commit now.

I think it's a great idea to have it after Kristen goes to the conference. Kristen, Barb, or Diana, or anybody else who wants to go.

I, I will take a look. What—. Tell me what the dates are again. Um, the, the, uh, the 30th, the 1st, and the 2nd. Okay, I, I will look at it.

I just tried to look at tickets and I felt like now the tickets are 25,000 miles or $813.

Um, I'll take a look again. I did a fast look, so I might not have put the right dates in. Do that dynamic pricing where things go up because people are showing up. Exactly. Yeah.

And I didn't know the exact dates, so I'll put the exact dates in and see. Yeah, I'm flying down on the 29th and coming back on the 3rd. Back in 1 day. Yes. Yeah, on the 3rd, 6 AM.

Yeah. Okay, good luck getting to the airport. They probably have Uber.

All right, well, thanks everybody. It seems really productive and informative. Really good. Thank you. And can I just make a suggestion in terms of next steps and stuff?

So this is, this is a really, um, interesting idea and looks like could really work well, and are we gonna look at other options too?

Yeah, I think this is one potential tool in the toolbox.

But yeah, I mean, Shay has talked about the, the self-help program and Shay's been doing a lot of work trying to find out potential applicants for the rural professional housing and it turns out that Um, Cordova Telephone Cooperative is interested in submitting an application so they could put some apartments on top of their warehouse building.

That'd be awesome. Yeah. Um, and yeah, and I think we want to keep working on— I mean, obviously we need to work on recruiting the labor force, like more contractors and builders and trades, or figure out a way to— yeah. So, yes, I think there's a— and then kind of following like Kenny's model, cultivating more small-scale developers. Exactly.

Yeah. So just thinking about in terms of our next agendas.

Yeah.

Yeah.

Thanks, Shay. Good luck.

Thanks, everyone. Yeah, be well. Thank you.

Okay, good night, everyone.