Sitka land trust breaks ground on affordable cottage neighborhood

The Halibut Point Cottages will range in size from 800-1,200 square feet. The larger ones will be two-story. The floor plans are by local architects Northwind. (Image via KCAW)

The Sitka Community Land Trust on Oct. 11 broke ground on the first home in what it hopes becomes a neighborhood of 14 affordable cottages.

The project has been years in the making.

The groundbreaking was really more of a rainy photo op than a formal ceremony, with Sitka Mayor Gary Paxton and Hardrock Construction contractor Sam Smith shaking hands in front of a group of land trust board members — and one clearly excited future homeowner — who had gathered by an excavator.

The plan is to build a 2-story, 2-bedroom home on a 4,000-square-foot lot here. The cost to the buyer is $226,000 — far below the average list price of $374,000 for a home of this size in Sitka, according to the Sitka Economic Development Association.

First Bank is financing the project. Sitka branch manager Sarah Allison is on the board of the land trust, but she credits the bank’s home office in Ketchikan with rallying behind the idea of financing affordable properties.

“It’s not a fix for the whole affordability problem in Sitka,” Allison said. “It’s one piece of a much bigger puzzle. But it’s important for those young families who can afford a mortgage — but maybe not a $400,000 mortgage — people who are currently renting and paying $1,300 a month — $1,000 a month, even — to put money into something that can come back to them in the future.”

The price is below market for a house of this size because the homeowner is buying just the house — the lot remains the property of the Sitka Community Land Trust. When she sells the house, she’ll split the equity — or the increase in value over her original purchase price — with the trust. In theory, the homeowner’s share of the equity would be enough to put down on a house in the open market. The land trust’s share would go into developing other affordable homes.

The simplicity of the idea was attractive to Randy Hughey, a retired vocational teacher at Sitka High School, who now is co-director of the trust. But progress has been slow, and there have been setbacks. Even now, the trust’s plans are incremental.

“We’re going to build them in sequence, one after the other, and one at a time for a bit,” Hughey said. “First Bank, which is providing the construction financing, wants to make sure that we can do this, because we’re a start up. And in an ideal world, after a few houses go up, there are going to be lots of people trying to buy houses from us, and we might have two at a time.”

Those houses will range in size from 1-bedroom studio homes at just over 800 square feet, to three-bedroom homes at around 1,200 square feet. If the first six prove successful, the land trust hopes the city will offer the two adjacent properties, which will allow the construction of seven more.

The city sold this current land to the trust for $1 in 2015; a Rasmuson Foundation grant funded the site prep and utility installation — so two of the largest up-front costs in homeownership are covered. Still, residents have been wary of embracing ownership under the land trust program.

Sarah Allison, the banker, thinks the Sitka Community Land Trust could do more to sell itself.

“I think more marketing by the SCLT, putting the information out there in a way that’s accessible to more people, to just clear up some of those misunderstandings, and really make it clear how the model works,” she said.

The home begun today should be finished and ready to occupy by May. Randy Hughey says a second buyer is currently seeking financing for the next home, which should be under construction sometime after the first is finished.