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Champlain Housing Trust: Ground Lease

Champlain Housing Trust: Ground Lease. Knowledge Building Across Community Land Trusts In Europe and the United States. Belgium – July 1, 2 nd , 2013. Brenda M. Torpy, CEO. Presentation Overview. What is a Ground Lease? Challenges in using a Ground Lease Model

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Champlain Housing Trust: Ground Lease

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  1. Champlain Housing Trust: Ground Lease Knowledge Building Across Community Land Trusts In Europe and the United States Belgium – July 1, 2nd, 2013 Brenda M. Torpy, CEO

  2. Presentation Overview • What is a Ground Lease? • Challenges in using a Ground Lease Model • Key Components of the Ground Lease • Best Practices in Drafting a Ground Lease • Critical Decisions- Resale Formula • Questions and Answers

  3. Dual Ownership • Community Land Trust owns the land • Individual owns the home and the leasehold interest in land Ground Lease ties the improvements & land together

  4. Challenges to the Ground Lease Model in the US Legal Real Estate Finance & Industry Practice Culture & Social

  5. Legal

  6. II. Real Estate Finance & Industry Practice Challenge: Residential real estate never separates land and home Many years to gain acceptance from lenders and realtors to offer mortgages to CLT buyers. Challenge: Appraisers resist valuing house separately from land Very difficult to change an industry that is philosophically wary, if not hostile towards our mission

  7. III. Cultural & Social In Vermont, a rural state, owning the land had even greater significance and these attitudes needed to be overcome. Property law and industry practice reinforced cultural value of private ownership and freedom to profit. Solution: Affordability and access to the highly prized ownership of a home. CHT made CLT ownership as like the market as possible. This has deep and broad support now.

  8. Key Components of Ground Lease

  9. Best Practices (Exhibits to Lease)

  10. Resale Formula- Critical Decisions

  11. Critical Decisions Capital Improvement Credits Made by CLTs to compensate owners who upgrade the home • Appraisal Based Formula: • Owner gets 100% of increase in value due to the work • Determined by third party appraisal at time of sale • Index Based Formula: • Owner gets 100% of cost of improvements (regardless of value) • Many CLT’s add depreciation from time work was done

  12. Questions?

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