Colorado: Invest wisely to fix real estate crisis

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Aaron Miripol

Published August 11, 2008 at 6 p.m.

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The extraordinary bi-partisan federal housing bill approved by Congress and signed by President Bush this week is a huge win for homeowners nationwide – and for all of us here in Colorado.

While it’s not a cure-all for the current real estate problems, it is needed funding to support housing markets hit hard by foreclosures.

Colorado must step up efforts not only to lend first-time and struggling homeowners a helping hand, but also to get our own house in order, so to speak.

This undertaking holds much promise for Colorado, which unfortunately has ranked among the nation’s top states in foreclosure rates for several years.

Foreclosures hurt all of us – not just those who lose their homes and properties. For the rest of us, our own home values decline, and it becomes more difficult to get new financing.

That’s because according to industry studies, the cost of each foreclosure – up to $50,000 in lost economic development – impacts the entire credit industry, which makes everything more expensive, including how we finance our homes and commercial properties.

Now is the time to impact our state’s high foreclosure rates by being wise about investing Colorado’s share of the dollars this historic federal housing act provides to communities hit hard by foreclosure.

Part of the legislation allocates $4 billion specifically to purchase and fix up homes and land that have been abandoned or lost to foreclosure. The details of how much Colorado will receive are still being worked out.

This is the first time our state has an opportunity to invest significantly in helping to stabilize neighborhoods hit hard by foreclosure.

That’s because Colorado’s share of federal funding for housing and community development is among the lowest in the nation, and we get less each year.

State spending for housing is decreasing steadily, too.

In fact this year, Colorado is investing barely $2 million for sustainable, affordable housing statewide – not even the cost of 10 homes in most parts of the state.

To its credit, the Colorado Division of Housing has done an excellent job of getting the most out of too little funding. It’s rated second in the country for successfully leveraging federal and state funding.

Now is the time to capitalize even further.

Here’s one proven solution to help address our real estate problem: community land trusts.

Community land trusts (CLTs) are an innovative way to guarantee permanently-affordable homes, buildings and properties now and in the future. They manage real estate using land stewardship as the tool to prevent properties from being foreclosed upon or abandoned.

What’s especially compelling is that the foreclosure rate among CLT homeowners is 33 times lower than the national foreclosure rate, according to the National CLT Network.

Clearly, CLTs are powerful tools in preventing the widespread and damaging effects of foreclosure.

CLTs also make ownership possible for more people. They purchase the land and own it in perpetuity, guaranteeing that it will be put to good use over the long term. Homeowners own their houses and lease the land from the CLT for a minimal amount.

This provides homeowners an affordable investment they can use not only to save money, but also to build personal wealth and gain from their home’s appreciation – ensuring the continued economic stability of our community and our neighbors.

In our state, four nonprofits that are members of the CLT Coalition of Colorado already have created over $90 million of permanently-affordable real estate – Thistle Community Housing, Rocky Mountain CLT, Colorado CLT and the Urban Land Conservancy. And a fifth member, Chaffee Housing Trust, is kicking off its CLT program.

Utilizing funds from the federal housing act would let organizations like ours ensure that foreclosed homes and properties never again contribute to a crisis of the magnitude we’re seeing today.

Investing in CLTs is a smart move. It’s a common-sense principle that will lead to a stronger Colorado economy. And a strong economy is good for all of us.

Aaron Miripol is president and CEO of the Urban Land Conservancy, a supporting nonprofit organization to the Denver Foundation, and a member of the Community Land Trust Coalition of Colorado.

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