Within days of moving into their community land trust (CLT) home, Anna’s daughters were running a lemonade stand with fellow neighborhood kids and taking their bikes out for a spin. Anna, a single mother and in-home health care professional, discovered the land trust through a colleague who recently became a CLT homeowner herself.
NeighborWorks Montana’s Real Estate Development and Acquisition (REDA) Program supports CLTs through a line of credit specific to CLT partners to preserve and develop this type of housing across the state.
There are two primary advantages to this line of credit:
First, it serves as a critical stopgap in situations where a CLT home may be at risk of foreclosure or delayed sale. By utilizing their right of first refusal, the CLT partner can acquire the home directly from the homeowner, preventing it from being lost from the land trust entirely, which is a likely outcome in a foreclosure. This allows the CLT to complete any necessary repairs and resell the home to another qualified CLT homeowner, thereby preserving long-term affordability.
A delayed sale occurred recently with a property in Kalispell. Northwest Montana CLT utilized their existing line of credit with NeighborWorks Montana to buy back a home, already in the land trust inventory, to facilitate its sale to another CLT homebuyer.
Kim Morisaki, executive director of Northwest CLT, explains, “Most of our sales to first time homebuyers involve a former CLT homeowner selling directly to a new CLT homeowner, but occasionally the needs of the two parties do not align and that is when we need help to bridge the gap for a few months. NeighborWorks Montana helps us with our unusual projects to make the process smoother, and we so appreciate their partnership.”
The second main advantage of this line of credit is that it can function as a short-term financing bridge to support the acquisition of new homes into the CLT portfolio. In cases where there is a timing gap between purchase and receipt of reimbursable funding (such as state funds), the line of credit provides immediate access to capital, enabling the CLT to act quickly and secure the property.
Northwest Montana CLT recently used their line of credit with NeighborWorks Montana to purchase a home in Whitefish, adding it to their CLT inventory and thereby ensuring permanent affordability for its future residents.
Overall, offering lines of credit to our CLT partners enhances their ability to respond efficiently to both risks and opportunities, while ensuring that land and housing assets remain within the CLT as permanently affordable resources.
More about NWMT’s Real Estate Development and Acquisition Program:
From pre-development and new construction to land or building acquisition, NeighborWorks Montana provides flexible financing to make a variety of affordable housing projects possible across Montana. NWMT provides needed liquidity that pairs with other financing to make projects viable. The REDA program has also provided multifamily cooperative development financing and alternate gap financing, knowing that every community and project may need something a bit different.
For questions about our REDA loan products or to talk about a project you are interested in getting funded, contact Larry Phillips, real estate development director, at [email protected].
