In less than a year, a nascent Oakland organization grew from a small staff with some bright ideas and a website into group that is stewarding two properties for permanently affordable housing, with plans to soon acquire a third.
How did they do it? By relying on a lot of people, a new model for investment and some innovative partnerships. But in turning a novel concept for developing affordable properties into a reality, the East Bay Permanent Real Estate Cooperative joined a growing number of organizations in the Bay Area challenging the status quo of the region’s skyrocketing housing costs.
The cooperative, called East Bay PREC for short, shares the same goals as many housing cooperatives and community and trusts: acquiring and maintaining properties as permanently affordable homes and businesses. But the for-profit company isn’t either a cooperative or a trust. It’s a combination of multiple existing models for investment and ownership all rolled together.
“It’s a very layered concept, and it’s very unique,” said Noni Sessions, the director and co-founder of East Bay PREC. “It’s never been done before in this form.”
The organization officially launched in December with a fundraising campaign to purchase a four-unit apartment building in East Oakland. Like a micro-financing organization, it relied not on donations to raise seed money for the project but on investments of up to $1,000 that get cashed out after 10 years, with investors turning a small profit. Then it partnered with the Berkeley-based Northern California Land Trust, one of the oldest community land trusts in the state, to purchase the property and hold it as permanently affordable housing. The group is now trying to raise another $200,000 for needed repairs to the property.
As in a housing cooperative, the residents are now homeowners, and they are in charge of collectively making building-related decisions, such as how to handle roof repairs and how to select future residents. Unlike a traditional housing cooperative, though, where the residents typically must fork over some amount of cash to buy in, East Bay PREC’s residents are allowed to use their rent as their stake in the building.
Not having to buy in made a big difference for resident Tia Taruc-Myers, who said that at the time, she wouldn’t have been able to scrounge up the $1,000 needed for investment. She’s lived in the building, located on 61st Street in East Oakland, for more than a decade, and benefited from having a rent-controlled unit, she said. But she never thought she’d become a homeowner.
“It’s really empowering, and it adds a level of responsibility we never had before,” Taruc-Myers said. “Instead of saving money for a rainy day, because I never knew when the landlord would sell and when I might become homeless, now I’m saving for roof repairs.”
The multi-faceted investment and ownership model, combined with a traditional land trust, offers more flexibility in how the cooperative can raise cash to acquire properties, said Janelle Orsi, a lawyer for the Sustainable Communities Law Center who also does legal work for East Bay PREC. And it’s a novel approach that hasn’t stopped at the East Oakland property, she said.
East Bay PREC is also working on a creating a small village of tiny homes in West Oakland that uses sustainable building practices and will result in positive-net energy homes to serve as a test site for future tiny home development across the city. And it’s breaking new legal ground in Berkeley by partnering with the Oakland Community Land Trust on a new type of residential easement called a “housing justice easement,” which will place a deed restriction on the home to ensure it is permanently affordable.
“Every project they take is piloting something that hasn’t been done before,” Orsi said. “What we’re creating with each property is a set of tools that a property owner could use to liberate themselves from the predicament of private property ownership.”
East Bay PREC is not alone in its quest to liberate property owners from the traditional housing market. It’s part of a statewide movement for a people-centric approach to owning land, said Ian Winters, the executive director of the Northern California Land Trust and president of the Board of Directors for the California Community Land Trust Network. Community land trusts and the number of homes and apartments under their control have doubled in the last five years, he said, and will double again in the next three.
“It’s really just reached the point where communities have no other option,” Winters said. “And at a certain point, they say, ‘This is something that really works.'”
Community land trusts, which have been around since the 1960s, buy homes, condos or apartments and then maintain ownership of the land so that it is permanently affordable. The buildings are sold back to low-income residents at a price they can afford, allowing them to build equity in their homes. And the homeowners can never sell the properties at the market price, but are required to sell them to other low-income home-buyers at a similarly discounted rate.
In the Bay Area, there are seven community land trusts with completed projects and three more that have recently incorporated or are in the early stages of organizing. Those seven land trusts are stewarding 364 homes and 12 commercial spaces for nonprofits or other groups, Winters said, with another 612 housing units in the pipeline for development over the next three years.
Those organizations could immediately buy another 1,200 units, he said, if only the groups had enough money to scoop them up. Like many nonprofits, land trusts rely on government subsidies and philanthropic donations to acquire, and then make improvements to, homes and buildings that are then sold at discounted rates. They can never take advantage of the wild windfalls in real estate prices because the whole idea, Winters said, is to remove the properties from the speculative market and maintain them as forever affordable.
In San Jose, the South Bay Community Land Trust incorporated earlier this year in response to the pressure that community members were feeling from Google’s massive office complex, planned for the city’s downtown, said Jocelin Hernandez, a board director for the trust. They were aghast at the lack of affordable housing in the plan and tired of seeing neighbors forced to move away because they could no longer afford the rent increases.
“After years of having to fight for tenant rights, to fight for tenant protections and now seeing the city was not comprehending how to use land for the community, we realized we needed to explore other options,” she said.
And in East Palo Alto, the PAHALI land trust, a group that formed in 2011 in response to the foreclosure crisis during the 2008 Great Recession, is reaching an inflection point, said Pamela Dorr, one of the PAHALI’s staff members. The trust completed two projects and is on the cusp of completing four more, she said.
For Leonora Martinez, a native of East Palo Alto, who moved into one of PAHALI’s first homes in 2011, being able to purchase her home at an affordable price has been life-changing, she said. Before she moved in, she and her husband, along with their six children, had been homeless three times. After they officially purchased the home from PAHALI, her husband died from an unexpected illness. A year later, her teenage son was involved in a serious accident, which rendered him almost completely paralyzed, forcing her to become a full-time caregiver.
“If we didn’t have this house, we would be homeless right now,” she said. “But whatever storm knocks us out, we know we can always come back here now. This is home.”
