Community Land Trusts - Local Housing Solutions (2023)

Traditionally, CLTs have achieved and maintained affordability by maintaining lot ownership and requiring the buyer to purchase only the home that is on the lot. While many CLTs continue to operate in this manner, others provide accessibility through other accessibility mechanisms, such as B. Document Agreements. CLTs are usually administered by a not-for-profit or para-governmental organization and are governed by a board comprised of CLT property buyers, members of the public, and non-profit and government stakeholders to ensure they are based on community needs. . CLTs usuallyworry aboutlong-term affordability by incorporating resale terms into the long-term lease of land that accompanies the purchase of the structure. The lease usually includes a formula used to determine the home's price at the time of resale, provisions that restrict resale to eligible families, and give the CLT a purchase option if the home is offered for sale. Resale formulas vary from one CLT to another and generally reflect a balance between the goals of maintaining the long-term affordability of CLT units and allowing the owner to accumulate wealth. Homeowners accumulate wealth in two ways: through the forced savings they earn by paying down their mortgage principal, and through the portion of home appreciation allocated to them as part of the resale formula.

This section outlines some of the considerations for communities interested in developing a community land trust.

Getting closer

CLTs provide a mechanism to create home ownership opportunities and maintain long-term affordability. The CLT achieves these objectives by (a) allowing residential units through the use of a subsidy (or other mechanism such as aincluding zoningRegulation or incentives for the inclusion of units in developments for low- and middle-income families. Also called inclusive housing.) lower the initial purchase price of the units for qualified buyers, and then (b) maintain long-term affordability for potential buyers through a legally binding mechanism such as

(Video) Community Land Trusts 101

CLT is a form of shared housing. Other forms includerestricted residential property deedYLimited Liability Cooperatives. Shared ownership is an approach to ownership that balances the dual goals of maintaining homes' long-term affordability for future home purchases and allowing buyers to create wealth through home ownership. More information on shared ownership of residential real estate, including a discussion of continuing strategies under this umbrella, can be found hereshelter forceYJoint Center for Housing StudiesResources. (opinions differor a fourth policy,Divided Appreciation Mortgages, should be considered a form of shared ownership, as it focuses on recovering and preserving the purchasing power of public subsidies to help future homebuyers, rather than maintaining the affordability of specific homes).

CLTs buy or receive land within a community to create affordable housing. This country may or may not have pre-existing structures. In some cases, CLTs participate in housing development for the program. Sites owned by CLTs can be contiguous, grouped in one or more areas or dispersed throughout the community. Apartments can be single-family homes, multi-family homes, or individual residential units within a multi-family home. Residents typically own their homes, but a CLT may also lease their land for affordable rental housing, depending on the project and community needs.

The CLT manages its land as permanently accessible community housing. In the traditional CLT model, the property fund retains ownership of the land and rents it out for popular housing. This is usually done by selling the structure (whether a single-family home or a unit in a multi-family home) to a qualified buyer, along with a long-term (usually 99-year) lease that states (among other things ) the terms on which the house will be sold can be sold to the next buyer. In this model, buyers own the building (or annexed unit) and lease the land from CLT. Buyers are usually sole proprietors, but may also be co-ops or non-profit real estate companies or real estate developers. As the owner of the land, the Land Trust retains some degree of control over initial and subsequent use. These rights include an option to buy back the buildings if the owner wishes to sell them, control over the resale price, and restrictions on future eligible purchasers and the use of the building or unit. Landlords typically pay a base monthly rental fee that covers administrative costs and costs associated with owning the property (such as property taxes). The fee can also fund a long-term property repair reserve. Most land rents are low; Fees are often less than $100 per month, and sometimes as low as $1 per year.

While a long-term lease in conjunction with the sale of the building is the traditional and most common approach that CLTs use to maintain long-term accessibility, there are variations on the typical model. In a more recent variation, the Land Trust sells the land and property as a package and maintains long-term accessibility through deed agreements or other restrictions. This method is particularly useful in apartment buildings where the CLT purchases one or more units but does not own the entire building. In other cases, the CLT may choose to lease both the land and the building on a long-term basis, rather than selling the building.

(Video) Solving the Affordable Housing Crisis with Community Land Trusts

The CLTs also prescribe a resale formula that determines the sale price of the property in the event of a sale. Formulas are generally structured to balance the community's need for affordable housing with the opportunity for homebuyers to build wealth through equity. Common types of formulas are "indexed formulas" and "common appreciation formulas". Index formulas use economic indicators such asArea Median IncomeMedian household income for the region calculated by the Department of Housing and Urban Development. Often abbreviated as AMI., wages or consumer prices to determine the selling price of the house. These indices tend to more accurately reflect the purchasing power of households than changes in property values. Common valuation formulas calculate the sales price by adding a percentage of the home's valuation to the original sales price. For example, imagine a homeowner purchasing a $200,000 CLT home. If the market value of an equivalent home increases by $40,000 during the ownership period and the CLT uses a shared valuation model that allows the homeowner to keep one-quarter of the home's valuation, the sale price would be $210,000 (the initial purchase price of $200,000 plus one-quarter of the $40,000 valuation).

CLTs are generally not-for-profit or quasi-governmental organizations with a specific board structure. Panels generally consist of a mix of three types of community members: buyers of CLT properties (or other occupants of CLT properties), the general public (to represent potential buyers), and public representatives (e.g. government officials, funders ).) . and nonprofit leaders in the community). By balancing the voices of these groups, the CLT holds itself accountable to the wider community. Some CLTs are part of an existing organization, such as a local foundation or other community not-for-profit.

CLTs often rely on grant funding to provide the subsidy that allows units to become available to homebuyers at below-market levels. Common sources of grant funding include local state funds or allocations from federal sources such as CDBG and HOME funds, as well as donations and local philanthropy. Some CLTs aim to preserve the long-term affordability of affordable housing units through inclusive zoning,density bonusA zoning exemption granted by a municipality to allow more housing units to be built in a given location, for example, B. an increase in housing units per acre, area ratio, or height. It is often awarded to buildings that house their fair share of affordable units for working families.es or other local accessibility incentives or requirements. In these cases, popular units become part of the CLT, while commercial units remain unrestricted and can generate revenue to support the cross-subsidy of popular units. As the CLT portfolio grows, many programs generate revenue by charging rental fees or membership fees that allow them to continue operating.

Many CLTs offer ongoing support to homebuyers. These programs can include home ownership classes and resources for property maintenance and improvement. They may also include financial education or training programs. As mentioned above, CLT property owners often play a leadership role in CLT management as well.

(Video) Community Land Trusts: A Model for Reparations?

authorization

CLTs typically cap buyer income and define "affordable" housing for their communities based on local conditions and priorities. Many CLTs require homebuyers to earn no more than 80% of the Median Area Income (AMI). This is especially true for projects that use federal funds, as long as it is the maximum allowable income. However, different programs set different limits. For example,Community Housing Fundin Orange County, North Carolina, limits homebuyers to an income between 80 and 115 percent of the AMI.

Some CLTs favor families who work in the community. Other programs are for first-time homebuyers (generally defined as people who haven't owned a home in the past 3 years). Most CLTs also require homebuyers to participate in ahome buyer educationPre-home or financial literacy course that can be offered directly or in partnership with a local non-profit organization.

Buyers of CLT properties may also be subject to other restrictions. For example, the hereditary building right contract often stipulates that the buyer cannot sublease the property and that the structure of the building must be preserved to a certain extent. If these conditions are not met, the CLT may determine that the buyer is in breach of the lease agreement.

local functions

Local governments can play a critical role in CLT development and work closely with existing CLTs in their community to promote and maintain affordable home buying opportunities. Some communities acceptedIncluding building regulations, which encourage or require developers to develop affordable housing as part of turnkey development. In communities with these programs, new accessible units can be assigned to a local CLT for management, for example. BChicago. Local governments can also prioritize CLTs for the allocation of local and federal resources that the community allocates, such as B.HOME and CDBG funds. In addition, local governments can help advertise CLT homes by working with potential buyers and funding homeowner education and advice.

(Video) Community Land Trusts for Affordable Housing with Brenda Torpy

Other considerations

Like most other homebuyers, homebuyers in a CLT must qualify for a mortgage. To do this, they must meet actuarial requirements, which often include solvency limits and income verification. Mortgaging a CLT property can be challenging for lenders who may not be familiar with the financial structure. Many CLTs maintain relationships with local lenders and loan officers so they can refer interested homebuyers to lenders with experience in the Land Trust model.

examples

Champlain Housing FoundationEmVermont(formerly Burlington Community Land Trust) is the largest community land trust in the United States, with approximately 565 owner-occupied units and more than 2,200 rental units. The Land Trust offers equity programs to potential homebuyers, as well as ongoing support for residents through homeowner training, financial advice, and loan programs for energy efficiency upgrades and rehabilitation.

first housesCommunity land trust inRochester, Minnesotasupports affordable home ownership in the Rochester area. CLT receives significant support from the Rochester Area Foundation and the Mayo Clinic, the region's largest employer. First Homes' board structure differs from other community land trusts in that the foundation plays an important role, a topic discussed here.case study. First Homes is also a member ofMinnesota-Koalition Community Land Trust, which supports ten municipal land trusts across the state.

HeChicago Housing Trust(formerly Chicago Community Land Trust) is a not-for-profit organization that works closely with the city to maintain the long-term affordability of homes created through city programs. The mayor appoints council members with the approval of the City Council, and the city provided staff and funding in the Land Trust's early years. The organization maintains long-term accessibility throughrecording limitationPrivate contracts that restrict the use of the property registered in the deed. It helps maintain the long-term affordability of homes built with significant subsidies.s for a 99-year term, rather than a traditional lease. The organization also offers pre- and post-sale workshops for homeowners and works with local lenders and attorneys to facilitate the successful purchase of units in the program.

(Video) Community Land Trusts (Hot Topics in Small Housing)

similar features

  • Burlington Associates provides a variety of informational documents and tools at itsResources from the Community Land FundWebsite. Presentations, fact sheets and interactive tools will cover topics such as: Community Land Trusts 101, Choosing a Resale Formula, Developing and Marketing Land Trust Homes and CLT Financing. the electronic bookCreation of a Community Land Fundis also available.
  • soil solutionsis a national network that supports community land trusts and other forms of shared ownership of homes. From himCLT Commissioning Centerprovides resources for organizations interested in developing a new CLT, including suggested activities for each step of the journey from idea to implementation.
    • it's 2020Interview with Tony Picket, CEO of Grounded Solutions, explores how CLTs can be used to advance racial and economic justice.
  • HeArticle from the Zoning and Planning Law Reportdescribes how local governments can develop and work with community land trusts to provide affordable housing. The article highlights community land trusts in Chicago and Irvine, both established by local government. It also includes recommendations for municipalities to roll out the CLT across the city.
  • street level counselorShare Share Resale Formula ComparisonThe tool is designed to help community leaders understand the relative performance of different share resale formulas. This tool allows for a direct comparison between multiple models and allows the user to change these input assumptions to instantly see changes in the relative performance of each of the models in terms of continued accessibility and equity accumulation.
  • Highlight: Community ownership is the focus, Shelterforce (July 2021) Shelterforce has released a series of articles to examine how municipal land trusts, limited equity housing cooperatives, and other models of community ownership are changing. The series profiles individual local housing initiatives, including a description of aCommunity Land Trust em Durham, NC, and analysis of recent innovations in community ownership, such as B. the feasibility ofUsing the community land trust model to maintain limited-stakeholder cooperative affordability.

FAQs

What are the cons of a community land trust? ›

  • Homeowners do not own the land that their home is on.
  • There is a cap on resale profits when a homeowner decides to sell.
  • CLTs must compete with other nonprofit housing organizations for limited resources.
Nov 30, 2022

What are the advantages of community land trusts? ›

Community land trusts improve housing affordability by separating the ownership of land and housing. The CLT has permanent ownership of the land, which is leased to low- and moderate-income households. The land may also be used for affordable rental housing and other purposes.

What is the purpose of community land trust? ›

Community land trusts are a form of community-led housing which hold land collectively in a not-for-profit trust. They allow land to be put to community use by ensuring affordability in perpetuity, which they do by tethering the cost of houses to local income, rather than to the dysfunctional property market.

Can community land trusts slow gentrification? ›

Moreover, CLTs can prevent excessive speculative investment from gentrifying areas by preserving housing affordability (Davis, 1991. (1991).

What are the problems with CLTs? ›

The challenges faced by the CLT movement are primarily the result of two specific problems: the model's dependence on external funding, and the stipulations for receiving that funding. To address these two challenges, I offer two directions forward for land and housing struggles.

Who owns community land? ›

Community land trusts – or CLTs – are democratic, non profit organisations that own and develop land for the benefit of the community. They typically provide affordable homes, community gardens, civic buildings, pubs, shops, shared workspace, energy schemes and conservation landscapes. Run by ordinary people.

What are three advantages of living on land? ›

Studies show that those who live a rural area are less stressed due to the close proximity to nature, reduced noise, cheaper cost of living, cleaner air and more room to breathe.

What is a unique feature of a land trust? ›

The Nature of the Land Trust

A land trust is a real property title-holding vehicle, a trust agreement under which the beneficiary directs the trustee in all matters affecting title to the trust property. The beneficiary also holds the trustee free from liability.

What is the advantage of land ownership? ›

There are many benefits to owning land. First, land ownership gives the owner peace of mind. As a long-term, tangible asset, raw land doesn't wear out or depreciate, and there is nothing that can be stolen or broken on it. It is a limited resource that is relatively inexpensive to own and requires little maintenance.

What are the disadvantages of a land trust in Florida? ›

Disadvantages: NO ASSET PROTECTION:While an individual who has a Beneficial Interest in a Land Trust is considered to own personal property and is not subject to the Liens of Creditors (at least in Florida), such Beneficial Owner is still subject to Civil Judgements and IRS Federal and Local Tax Liens.

What is the difference between private land and community land? ›

Private land is owned by individuals whereas, community land is owned by the community for common uses like collection of fodder, fruits, nuts or medicinal herbs. These community lands are also called common property resources.

How many community land trusts are there in the US? ›

As of 2021, there are more than 260 community land trusts (CLTs) in the US21, 22.

Videos

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2. Community Land Trust for affordable housing in the Waikato
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3. Ep 049 Community Land Trusts (CLTs) solve affordable housing
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4. Federal Funding, Local Impact: Shared Equity as a Housing Solution
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5. Community Land Trusts: Preserving Affordable Housing
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