Seattle-based Homestead Community Land Trust recently received a windfall of $10 million from one of its better-known residents. MacKenzie Scott, author, philanthropist, and former wife of Amazon founder Jeff Bezos, has committed to giving away at least half of her wealth. Homestead Community Land Trust called the donation “unprecedented.”
In its mission, the trust is worthy of such a donation. The organization operates on the community land trust model created in the 1960s by Civil Rights leaders. Essentially, the trust builds affordable and environmentally sustainable homes with prices ranging from $240,000 to $330,000 on land owned by the trust. Income-qualified buyers are able to purchase the homes, creating new opportunities for first time buyers, particularly those who have been historically marginalized.
According to Homestead’s website, “In exchange for the opportunity to buy a home far below market rates, homeowners agree to a resale formula that controls the appreciation of the home. This formula allows them to earn a fair return of equity while at the same time passing on an affordable price to the next owner if/when they sell the home.”
The trust also retains ownership of the land the home is built on, and homeowners must use the home as their primary residence, pay taxes and keep the home in good repair. Although they don’t receive the full market appreciation of their home when they sell, the community land trust model protects them from downward trends in the market.
Through this model, many first-time homebuyers are able to purchase a home and begin accruing generational wealth and stability.
According to Homestead’s CEO, Kathleen Hosfeld, Scott’s donation will allow the organization to bring significantly more land and homes into the trust. In Seattle’s increasingly competitive housing market, this is good news for those who have been priced out of homeownership in the past.
This article is based on information from Puget Sound Business Journal.
