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WHAT IS A COMMUNITY LAND TRUST?
Preserving land
Like a conservation land trust, a Community Land Trust preserves land for the common good. But whereas a conservation land trust aims to keep the land in its natural state, a community land trust uses the land to develop permanently affordable homes and, sometimes, commercial buildings.
A Community Land Trust (or CLT) is designed to correct one of the biggest problems with publicly subsidized affordable housing: Even though billions of dollars have been spent on affordable housing efforts over the past 70 years, home prices in many areas of the country grow more and more out of reach for the people who keep our communities running, such as teachers, fire fighters, nurses, and police officers.
‘Affordable’ no longer
This trend has been particularly alarming in recent years, and civic leaders across the country are speaking out about the “affordable housing crisis” in their communities. According to a 2005 report by the Joint Center for Housing Studies at Harvard University, titled “The State of the Nation’s Housing”, the increase in house prices outpaced per capita income gains in 2004 by more than 4 times in 31 metropolitan areas, 3 to 4 times in 19 areas, and 2 to 3 times in 32 areas.
In his 2004 report for the Fannie Mae Foundation, “Homeownership Affordability in Urban America: Past, and Future,” Zhong Yi Tong noted that, nationally, a first-time homebuyer with a median income and 10 percent down payment would not qualify for a mortgage on a median-priced home in 2005. By 2007, a median-income homeowner hoping to repurchase will not qualify for a mortgage on a median-priced home -- even with a 20 percent down payment.
Lost forever
Across the country, homes that were originally developed as “affordable homeownership” opportunities, and subsidized with public funds, have appreciated beyond the reach of current low-income buyers. Replacing this “lost” affordable stock with new homes typically requires a good deal more public subsidy than in the past, and many communities are further challenged with a dwindling supply of land on which to build.
A long-term solution
In this environment, the Community Land Trust model has emerged to offer a long-term solution to the affordable housing shortage by creating permanently affordable housing.
The CLT model works by selling affordable homes as leasehold estates rather than as fee simple estates. Rather than receiving a deed for their home, buyers receive a 99-year lease to the property, which guarantees them the security, legacy, equity building benefits, and tax advantages of homeownership.
They are required, however—by this same lease—to pass on the affordability to the next buyer. This means that when they sell their home, they take a share of the appreciation, based on a resale formula that also restricts the resale price. This keeps the home affordable for the next buyer.
Future trends
A particularly promising trend is the combination of the community land trust model with inclusionary zoning ordinances. A growing number of towns and cities are passing ordinances that require developers to include in their new housing subdivisions some homes that are affordable to working people.
This inclusionary zoning often results in affordable homes being integrated into expensive neighborhoods. The community land trust model ensures that those new affordable homes stay permanently within the reach of low- and moderate-income households. Without the CLT, the homes would rapidly become unaffordable.
The CLT model strikes a balance between the needs of the individual and the needs of the community.
It allows the homeowner to build some equity and enjoy the security of homeownership, but it also ensures that in the future there will still be homes affordable to working families.
Community land trusts hold broad appeal because they give working low-income families access to the benefits of homeownership, while at the same time making efficient use of taxpayer dollars.
Facts about the Community Land Trust Model
- CLTs are currently operating in 33 states and the District of Columbia.
- There are 172 CLTs in operation nationwide.
- CLTs have developed over 6,000 units of permanently affordable housing in the United States
- Interest in CLTs has grown in recent years: 40 municipalities are currently either researching the model or are in the preliminary stages of starting a CLT.
- The majority of CLT homeowners earn less than 80% of their area’s median income, with a significant portion earning less than 60% of the median.
- The CLT model is flexible and has been used in core city neighborhoods, suburbs, small communities, and rural areas. It has been used to revitalize some of America’s poorest neighborhoods (in Roxbury, Mass., and Syracuse, NY) and to integrate permanently affordable housing in some of America’s wealthiest communities (in Highland Park, IL; and Oakland, CA).
- Community Land Trusts are community-based, nonprofit organizations, governed by broadly diverse boards of directors that represent homeowners as well as the communities they serve.
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