As the tight real estate market persists in northwest Montana, two local housing nonprofits have officially partnered to create permanent affordable homeownership opportunities in the Flathead Valley.
Habitat for Humanity of the Flathead Valley and the Northwest Montana Community Land Trust (NWMTCLT) earlier this month signed a collaborative memo of understanding (MOU) and will work together to build homes on selected land trust lots.
The land trust will own and lease the property under the homes built by Habitat Flathead’s staff and volunteers. By subtracting the cost of the land from the purchase price of the home and providing their own sweat equity with Habitat’s volunteers, the homebuyers can purchase the home with only a small mortgage, well-below market prices.
Habitat Flathead Executive Director MaryBeth Morand and NWMTCLT Executive Director Kim Morisaki met last year and began talking about a collaboration and came together at the start of this year to form the partnership.
“We realized that working together, we could probably get more houses built in a year than if we worked individually,” Moriskai said.
In Columbia Falls, the housing leaders plan to build six houses and two townhouses on a Railroad Street East lot that is currently a baseball field used for youth sports.
The project is currently on hold until city officials approve the project, but both housing directors say the development will likely begin sometime this year.
The partnership will be a new venture for the land trust, which has historically purchased existing houses. With the collaboration, Habitat will give the land trust an opportunity to utilize its construction and labor resources.
As the sole staff member at the community land trust, Moriskai said with Habitat’s help, she will be able to focus on her other roles like fundraising, managing leases and buying and selling houses.
“They have all this paid staff and volunteers to build things,” Morisaki said. “It’s a really great match for trying to get things done. There are a lot great subcontractors in the Flathead Valley but people are so busy and it’s not always easy to get them on our time schedule. Working with Habitat is a wonderful opportunity and they’ve got a system in place. They are ready to go.”
At Habitat, Morand says the partnership allows each nonprofit to lean into their strengths with her agency focusing on the construction aspect while the land trust continues to focus on fundraising and acquiring properties.
“It really speaks to both of our roles,” Morand said. “We both end up doing what we’ve always done but we have so much fire power doing it together.”
With the collaboration, Morand can funnel more resources into building the homes instead of land purchases. The organization was able to bring on two additional AmeriCorp volunteers and another construction supervisor to help build homes.
“Because of the agreement, we can work with the land trust, and they can secure the land,” Morand said. “I’ve been able to devote more resources to construction capacity.”
With the two models working together, Morand and Morisaki say they will be able to streamline more affordable homeownership opportunities to the Flathead Valley.
As part of the Habitat model, families and individuals who qualified for the program will pay a mortgage payment that does not exceed 30% of their gross income. The system is also set up with three separate mortgages, with the first mortgage at a 2% interest rate. If the homeowner makes consistent payments, the second mortgage is forgiven while the third mortgage is the value of the land.
For example, if a home value is $300,000, the homeowner pays $150,000 with a 2% mortgage rate. The “silent second mortgage” is $100,000, which is forgiven if the homeowner keeps up with payments. And at the end of 30 years, the homeowner then pays $50,000 to acquire the land.
Meanwhile with the community land trust model, new homeowners can purchase the home below market rate and, when they sell, they are able to make a profit restricted to just 25% of the increase in the market value of the home during the period of ownership. This allows the next homebuyer to also purchase the home below market rate. The land that the house sits on is leased to the homebuyer for $25 per month.
“The scope of the problem is so large, and no agency can really tackle it by itself,” Morand said. “Let’s all get together and more efficiently solve the problem.”
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