Kor Community Land Trust is planning its first affordable housing development, five cottages on the east side of Bend.

The nonprofit land trust filed a site plan with the city of Bend this week for 21221 SE Hurita Place, a half-acre lot east of SE 27th Street. The 1,100 square-foot homes will be built under the city’s cottage code, which allows small, single-family houses to be clustered together.

The affordability of the homes hinges on Kor’s ground-lease business model, which has become more popular in Central Oregon over the past decade.

“It’s a permanently affordable solution for homeownership,” said Amy Warren, executive director of the land trust.

Kor will retain ownership of the land and lease it to the homeowners. When the homes are sold, Kor and the sellers will share equity under a formula that was devised to ensure that neither party loses money in the event of a sharp market downturn, she said.

The land trust will use its retained equity to keep the homes affordable for future buyers, Warren said. “One of our goals is to give people stable housing long term, and put their roots down in the area where they work and live.”

Kor is partnering with Housing Works, Central Oregon’s housing authority, on the Hurita Place cottages. Housing Works has used ground leases to promote homeownership over the past decade.Several houses in NorthWest Crossing were built on land donated to Housing Works and sold to families earning no more than 80 percent of the area median income, which is $55,680 for a family of four in Deschutes County.

More recently, Housing Works and NeighborImpact partnered on Skygate, a subdivision of seven single-family homes in Sisters that also follows the ground lease model. The houses were sold for about $180,000, and homeowners paid $85 per month for the land lease, according to The Bulletin’s archive. A Housing Works representative couldn’t be reached Thursday.

“Kor is a fledgling organization, but they’re basing their model on models that have worked really well elsewhere,” said Lynne McConnell, affordable housing manager for the city of Bend.

The unanswered question about any type of affordable housing is how to build more of it, McConnell said. “How do we bring these really great concepts to the scale that’s needed to meet the need?”

The city granted affordable housing money for 111 units, including the five Kor homes, this year. Kor received a combined $355,000 in local and federal funds, McConnell said.

The Hurita Place development, which Kor hasn’t yet named, will have broad eligibility criteria, Warren said. Buyers’ incomes could range from 35 percent to 125 percent of the area median.

“It was important to us not to create pockets of poverty,” Warren said. “We’ve always anticipated being of service to our workforce in Bend. That can range all the way from a teacher to the person who checks you out at Costco because of our income range.”

Kor hopes to break ground next spring, Warren said. The site plan calls for the five homes to be grouped facing a shared green space. Ten parking spaces will be located outside the cluster, adjacent to Hurita Place. The parking will be screened by slatted walls and with storage units, Warren said. “We all have stuff, and the houses aren’t huge,” she said. “It’s important that the stuff isn’t part of the landscaping.”

—Reporter: 541-617-7860, kmclaughlin@bendbulletin.com