Sawtooth Cottages

The Sawtooth Cottages development is still under scrutiny by the EDA and interested parties, and the discussion is not being helped by the misinformation being put out in the print media and to the community in general. Those who are trying to derail this project are not helping the community or the families who will be able to buy some relatively decent, low cost housing. The Sawtooth Cottages project may not be perfect, but it should be dealt with honestly; the community does not deserve to be misinformed.

The facts are that Northern Community Land Trust was the only organization that responded to the RFP the EDA put out. Others had ample time to put in their own plan, but failed to do so. Even now though, they can bid on the contracting, should the project get the go ahead it deserves, or they can come up with a project of their own. Hopefully everyone will try to come together to do something positive for the community.

It is important that the community have all the facts on this project. Here they are as they are generally understood:

The NCLT builds quality homes and has so for some time. It has built over 135 so far. These homes have helped over 150 low income folks own their own home.

The NCLT started work on this development over a year ago. There has been ample time for critics to review the proposal and to offer ones of their own. One of the present critics was part of the team that helped review the RFP and the NCLT proposal and endorsed it.

The present discussions have 10 homes being developed. The will be about 1450 square feet in terms of living space.

Bids will be sought from local contractors for their construction and it is yet to be determined if they will be framed on site or if there will be modular or panelized components. NCLT will bid out all techniques and the most cost effective solution will be selected. The purpose of this project is to deliver the best value to the home buyer, not to make the most money for a builder or a developer!

A local general contractor will be selected to super the job, should a qualified one apply, and local subs will be part of the project.

As for the homes and the homeowners’ equity, and the community’s equity in the project, the goal is to create homes that are permanently affordable TO THE COMMUNIITY. Because of the land trust involvement they will remain affordable to future buyers. The land trust owns the land and leases it for a small fee to the homeowner.

If a buyer sells their home, they will get the price they paid plus 30% of any appreciation. In a “normal” development, the buyer would be expected to realize the entire gain. In this case the buyer is buying the house, not the land, and so 70% of the appreciation stays off the table to keep the home affordable for future housing needs in the community.

In effect, the initial public subsidy is recycled for the benefit of future buyers and the community as a whole. If this approach was abandoned, and the project's critics were to get control, they would pocket the subsidy and there would be no “affordability” left in the development.

The land trust reports that so far about 22 of their homes have resold at about three years of ownership and the original buyers gained about $8500 in equity. The retained appreciation coupled with the affect of the other subsidies kept about $1,000,000 in equity in the community for the benefit of future buyers and the community as a whole.

What this means is that even though price increases in housing are greater than wage increases in the economy, there is still a great degree of affordability retained by the project.

These homes are going to be sold below current market prices because the land trust has gotten $167,000 in assistance to help make them affordable and will likely be able to combine that with $432,500 in affordability gap aid along with $1,000,000 in no and low interest mortgage money - all of this because the land trust is a non profit.

There is help from the EDA. They will be offering ten lots at $1. These lots have a $20,000 value as real estate and about $35,000 in improvements – would have, were there a more solid home market at this time. This subsidy is a whopping $1,000,000 less than what was written in a recent letter carried in the local papers.

This all results in $210,000 homes being sold for about $140,000 - all to the benefit of the buyer and to the community as a whole.

These will be quality homes, built to the building code to ensure lasting value, durability and safe housing for our families.

Even though the whole project is geared to delivering affordable housing solutions to the community, could it be a better proposition? Certainly!

• The homes could have been smaller. Their size makes them unaffordable for the truly needy.

• The community could have been better represented and better informed throughout the process, especially those who are in genuine need of real low cost housing options.

• There could have been an emphasis on infill housing – vacant lots could have been identified within the community as a first option for home sites.

• A better job could have been done to protect the site in terms of the environment and access.

Sawtooth Cottages is certainly not the last word in affordable housing for Grand Marais. There are local developers, property owners and builders who have not been heard from who can likely deliver even more creative and affordable housing solutions, but they are on the sidelines and have yet to come forward. In the meanwhile, the present deal is the best deal that can be gotten at this time and, considering everything, it is an overall good deal for the home buyer and for the entire community.

A. E., Grand Marais