URBAN INNOVATION : ‘Partner’ Helps Buyers Grab a First Rung on Housing Ladder : Agency in Vermont buys the land, owner buys the dwelling. They split the ‘limited equity.’

Rob Reiber and his wife, Mary Rogers, had outgrown their apartment and felt it was time to buy a home. But when they started hunting for a place for themselves and their three kids, they couldn’t find anything decent to fit their pocketbook.

Eager-to-sell real estate brokers painted rosy estimates of their ability to afford what they dreamed of, recalls Reiber, 36, a social worker at a local community action agency. “When we figured our budget out, we said: ‘Wait a minute! What are we going to live on after the mortgage payments?’ ”

The plight of Reiber and Rogers is emblematic of a housing crisis affecting millions of low- and moderate-income Americans. Soaring real estate values, dizzying land speculation and a federal retreat from subsidized housing programs have conspired to create perhaps the most severe shortage of affordable dwellings in the country since the Great Depression.

Local governments usually have not helped matters. As long as the federal government was a ready supplier of money and ideas, affordable housing advocates say, municipalities made production of low-cost housing a keystone of their housing efforts. When the money dried up, many communities abandoned the effort.

But not so in Burlington, a northwestern Vermont college town of 39,000 that is the state’s largest city. Prompted by a local housing crunch that has seen real estate values quadruple since 1970, an activist city government has given affordable housing a top priority and fostered development of an innovative array of programs.

Underlying Burlington’s efforts is a unique philosophy that views housing as a ladder with a series of rungs ranging upward from shelters for the homeless to market-priced, single-family homes.

One rung: the program that permitted Reiber and Rogers to turn their dreams of home ownership into reality.

Operated by the Burlington Community Land Trust, a private, nonprofit housing agency created by the city in 1984, it is a so-called limited-equity initiative that Burlington pioneered and has since been adopted in varying forms by more than 120 communities nationwide. In Burlington’s “housing-ladder” scheme, it occupies the rung just below the top one: market-priced, single-family homes.

The $54,500 cost of the couple’s slate-roofed, four-bedroom home in a vintage north side neighborhood was split: Reiber and his wife put up $42,500 to purchase the house itself, while the Land Trust paid $12,000 to become owners of the land.

Ownership Rights

The couple retains all the usual rights and privileges of home ownership. But when they decide to sell, the Land Trust has the first option to buy and, after compensating the couple for the cost of any improvements they may make, receives 75% of any appreciation in the value of the house.

Because it retains land ownership and uses its share of the appreciated value to subsidize the purchase price of the house for the next owner, the Land Trust is able to keep the property permanently affordable for people of modest means.

“We couldn’t be happier,” said Reiber, whose wife is a day-care worker. “Our mortgage is only $309 a month. We have to pay the taxes on both the house and the land, but even when you add that to the mortgage and add the cost of home insurance and water, we’ve still got a great deal.”

Since its inception, the Land Trust has placed 45 single-family homes and several multifamily dwellings with a total of 11 condominiums and three cooperative units under such limited-equity arrangements. In addition, a co-op building with 28 units is set to break ground in the spring.

In all, more than 1,400 units of housing--or close to 10% of the total 14,680 occupied units in Burlington--are under one program or the other designed to control affordability, city housing officials estimate.

This number also includes a wide range of units in such structures as single-room-occupancy buildings for the homeless, public housing projects, senior citizen towers and apartment complexes for low-income families who qualify for federal rent subsidies.

One of Burlington’s proudest housing initiatives was engineering the $22-million tenant buyout and renovation of a sprawling, 336-unit apartment complex on the city’s far north side. It’s home to about 1,400 tenants--more people than in the typical Vermont small town.

Known as Northgate, the complex was among thousands of similar projects built during the ‘60s and ‘70s by private developers under a federally subsidized program to provide housing for low-income families. But government regulations allow such developers to opt out of the program after 20 years and transform their projects into much more costly market-rate housing.

Northgate’s developers, who were able to opt out in 1989, had plans to convert the complex into condos.

The buyout, which took place after a three-year campaign, was the first of its kind in the nation and provided a model for other similarly threatened projects to be salvaged for their low-income residents, said Helen Maciejewski, a spokeswoman for the Northgate Tenants’ Assn., adding that more than 80% of the families who lived here before the buyout still call it home.

Crucial to Burlington’s housing efforts is local government’s heavy reliance on the city’s active nonprofit sector to carry out its objectives. For example, Burlington housing officials worked closely with COTS, the Committee on Temporary Shelter, to enable the nonprofit homeless agency to acquire and renovate an abandoned downtown hotel and a former neighborhood social hall for use as single-room-occupancy buildings for the homeless.

Burlington’s innovative approaches to affordable housing have not always been an easy sell. Mayor Peter Clavelle recalls the pickets who ringed City Hall a few years ago to protest one of the Burlington Community Land Trust’s projects, chanting: “Give us a home and the land that’s it on!”

“Their notion was that anything different than the traditional model of home ownership was unacceptable, a socialist plot,” he said.

Landlords also bristle at the measures the city has imposed to curb soaring rents and discriminatory rental practices, while many private developers are not exactly overjoyed at having the city and its nonprofit allies as competitors in the housing market.

Voters Approved Tax

Still, four years ago, voters overwhelmingly approved a referendum to raise property taxes by 1 cent for every $1 of valuation to finance a city housing trust fund. For the average homeowner, this amounts to $12 extra a year in taxes. The fund uses the $120,000 raised annually through the levy to support housing efforts by the nonprofit housing sector.

Clavelle calls the vote “a strong reflection of public support for our programs.” He also maintains that Burlington’s successes in providing affordable housing could be duplicated by other cities, large or small.

“A program must be comprehensive,” he said. “We must abandon the piece-meal approach of the past.”

Times researcher Caleb Gessesse in Washington contributed to this story.