Professional Documents
Culture Documents
HS/006/12E
ISBN (Series): 978-92-1-132027-5
ISBN(Volume): 978-92-1-132367-2
Sec1:i
The Global Urban Economic Dialogue Series
Community Land Trusts: Affordable Access to Land and Housing
HS/006/12E
ISBN (Series): 978-92-1-132027-5
ISBN(Volume): 978-92-1-132367-2
Disclaimer
The designations employed and the presentation of the material in this publication do
not imply the expression of any opinion whatsoever on the part of the Secretariat of
the United Nations concerning the legal status of any country, territory, city or area
or of its authorities, or concerning the delimitation of its frontiers of boundaries.
Views expressed in this publication do not necessarily reflect those of the United
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Acknowledgements:
Director: Naison Mutizwa-Mangiza
Chief Editor and Manager: Xing Quan Zhang
Principal Author: David Harper
English Editor: Roman Rollnick
Design and Layout: Andrew Ondoo
ii
FOREWORD
iii
Community Land Trusts: Affordable Access to Land and Housing
table of Contents
FOREWORD iii
table of Contents iv
Introduction 1
CHAPTER 1 THE CONCEPT OF COMMUNITY LAND TRUSTS 4
Definition 4
Philosophy 5
Purpose 5
The history and development of Community Land Trusts 7
The First Community Land Trust 7
CHAPTER 2 HISTORY 7
Strategic Business Plan 9
iv
Contents
v
Community Land Trusts: Affordable Access to Land and Housing
vi
Introduction
Introduction
A new system of fair, affordable allocation By removing the cost of land from the
of land and housing has been developing in equation, and providing safe, affordable
the United States (U.S.) over the last 50 years. access to housing and land for thousands of
The federal government has spent more than Americans, CLT’s are demonstrating that
societal demand should take precedence over
$1 trillion on housing programs during that individual profit or misguided government
same period to address a chronic problem of subsidies.
housing affordability, yet it continues to show
a legacy of marginal success or outright failure In its most basic form, the Community
to provide decent housing for those in greatest Land Trust is a community-based, non-
need. In this relatively affluent society, more governmental organization (NGO) with non-
than 15 million American households spend profit tax-exempt status, chartered to own land
more than half of their income on housing in a given community so that low-income or
– almost half of whom are homeowners -- middle-income local residents can afford to
severely limiting their ability to meet other own or rent decent housing, establish small
basic needs. (Schwartz, 2006) Median businesses, practice sustainable agriculture or
incomes in the U.S. have not kept pace with forestry, or other ecologically-sound uses of
median housing prices. the land without having to own the land or pay
an unreasonable rent for the land. In place of
It has become clear that new solutions are needed owning land, residents enter into an affordable,
to move beyond this legacy. The Community long-term (often 99-year) land lease with
Land Trust is fast emerging as an exciting strategy the CLT which can be renewed, or passed
for lower income communities to gain control of on to their heirs. A land stewardship plan
the development process and promote healthful, administered by the CLT governs the overall
affordable living environments in urban or rural use of the land for the long term, no matter
areas. who owns the homes or businesses. The CLT
The Community Land Trust (CLT) concept ensures that the housing remains affordable
is rooted in the understanding that the cost for future buyers through a mutually-agreed
of land, driven by a combination of societal upon limit on resale value, and through the
demand and investor expectations of profit, option to purchase the housing from the seller.
is a significant factor in determining the The Community Land Trust model has its
ability of individuals and communities to roots in the land tenure systems of indigenous
thrive. A popular American saying, “the cultures and land reform movements
three most important things to know about around the world, and has great potential
real estate are: location, location, location,” for application in communities everywhere
acknowledges these forces as they manifest – particularly communities which are
in specific real estate markets. Speculative determined to offer their residents affordable,
real estate market eventually erodes public secure land tenure for housing, agriculture,
funding subsidies for affordable housing. forestry, and other sustainable land uses so
1
Community Land Trusts: Affordable Access to Land and Housing
that they may prosper as part of a sustainable, CLT acquisition of foreclosed properties have
local economy. been recommended as a strategy to stabilize
the current housing market by groups such as
The Community Land Trust movement the Lincoln Institute for Land Policy (www.
is emerging across the U.S. from a growing lincolninst.edu)
network of grassroots, community-based
NGO’s, and has focused on nothing less than This report provides an overview of the CLT
addressing the root causes of the land and model, starting with the concept and its history
housing problem. The growing strength and origins, and serves as a how-to guide for
of this system is represented by the newly- forming, financing, operating, and managing
formed National Community Land Trust a CLT. Finally, a series of case studies is
Network (www.cltnetwork.org), with over 200 offered, representing a diverse sampling of
members serving urban, to suburban, to rural successful CLT’s providing equitable living
communities across the US. Most recently, arrangements in communities across the U.S.
A nationwide network of CLT’s includes concentrations in urban areas of the northeastern and northwestern
U.S., as well as rural areas where poverty or artificially inflated real estate markets price average residents out of
decent housing. (National CLT Network)
2
Introduction
fig 1.1: Community Land Trusts in the United States 1970- 2008
220
200
180
160
140
120
100
80
60
40
20
0
1970-74 1975-79 1980-84 1985-89 1990-94 1995-99 2000-05 2005-10
The rapid growth over the last 40 years shows no signs of slowing. (National CLT Network)
3
Community Land Trusts: Affordable Access to Land and Housing
4
CHAPTER 1 THE CONCEPT OF COMMUNITY LAND TRUSTS
5
Community Land Trusts: Affordable Access to Land and Housing
FIG 1.2: Median House/ median Household Income (Source: Havard JCHS)
United States Los Angeles Maimi New York Chicago Kansas City
11
10
8
Ratio: House Price to Income
0
198 199 199 199 199 199 199 199 199 199 199 200 200 200 200 200 200 200 200 200
9 0 1 2 3 4 5 6 7 8 9 0 1 2 3 4 5 6 7 8
http:// calculatedrisk.blogspot.com/
The cost of land in many communities The world population and U.S. population
has far outpaced incomes. New York City in 2007 shifted from predominantly rural to
and Los Angeles, the first and second largest predominantly urban. The fact that over 50%
cities in the U.S., respectively, have median of the population of 6.7 billion people are
house prices that are between 7 and 10 times living on less than 10 % of the land points
higher than median household incomes. The to the need for new models for achieving
national average is closer to a 4:1 ratio. These sustainable use of land as a cornerstone of a
escalating values demonstrate the effect of healthy economy, and to reduce chronic levels
increased demand for limited land in specific of urban and rural poverty. Community Land
locations. The past century has seen these ratios Trusts offer an approach to land tenure that
increase, as the industrial era has generated supports sustainable land use and equitable
vast populations and placed increasing distribution of resources.
demands on a limited land base. The current
U.S. credit crisis is tied to the large amounts of
mortgages and debt needed to finance housing
costs which are out of proportion to incomes.
6
Chapter 2 HISTORY
CHAPTER 2 HISTORY
The history and development of those who previously had no land access
Community Land Trusts and no land security on which to build
their lives.
The Community Land Trust (CLT) is
a recent innovation that has grown in the • The Moshav communities and Jewish
United States from ancient roots in the earliest National Fund in Israel also demonstrate
human cultures around the world, who a community-based alternative to private
understood the land as a commonwealth, and property and government land.
who created shelter where and when it was
needed. It is a response to the treatment of • Celo, a Quaker community established in
land as private property -- a relatively modern 1937 by Arthur Morgan in the Blue Ridge
concept brought about by the use of military Mountains of western North Carolina was
force to concentrate power and wealth. an early example of commonly owned land
and considered by some to be the earliest
Earlier 19th and 20th century examples of example of a CLT, though not by the
land held “in trust” formed the basis of the current definition.
CLT model we know today. Many of these
examples shared a connection to Henry These early examples of community
George, the 19th century economist who based land tenure had a major influence
achieved great notoriety for his writings on on Robert Swann and Ralph Borsodi in
the connections between widespread poverty their development of the CLT model
and concentrated control of land and natural through the Institute for Community
resources, and his advocacy for a single land Economics, but they do not meet the
tax. These included: criteria accepted today for defining a CLT
– a tripartite board, nonprofit status,
• the Garden Cities in England, the single land held separate from buildings, and a
tax communities of Arden, Delaware and long term ground lease that is inheritable,
the Amana Colonies in the United States. transferrable, and renewable.
7
Community Land Trusts: Affordable Access to Land and Housing
Communities Farm on 5,000 acres of farmland Today, the missions of both the School
near Albany, as a place where black families, of Living and the E.F. Schumacher Society
many of whom were descendants of slaves center around educating others about the
and sharecroppers, could affordably access value of Community Land Trusts through
farmland, build farmhouses and barns, and their websites, publications, and events. Both
produce crops for local and regional markets. groups provide free, how-to handbooks and
This project came at the height of the Civil legal documents for groups and individuals
Rights Movement, when black farmers faced interested in forming and managing CLT’s.
great obstacles in securing land and financing. Since 2005, the National Community Land
Swann and others went on to found the E.F. Trust Network (www.cltnetwork.org) has
Schumacher Society in 1980 on CLT land served as an umbrella organization for the CLT
in Great Barrington, Massachusetts, one of movement, which has grown to include nearly
the strongest champions for the Community 200 community land trusts following a well-
Land Trust model. established legal framework for owning land
as a commons. While many of these CLT’s
New Communities, Inc. is generally are devoted to providing affordable housing in
considered to be the first community land trust urban neighborhoods, an increasing number
to embody the characteristics that are widely include community gardens and greenways,
accepted, and to be labeled “community land and larger open spaces in semi-rural or rural
trust” The organization was self described as areas.
having a mission “to hold land in perpetual trust
for the permanent use of rural communities.” The oldest CLTs tend to be those in more
Robert Swann is generally considered to have rural locations, such as the Woodland CLT,
developed these characteristics. He developed which includes 25 affordable homes on 450
these ideas in part through his collaborative acres of mountain woodlands and valleys in the
work with Ralph Borsodi in the International Appalachian coal fields of eastern Tennessee.
Independence Institute(III), which was Woodland was formed in 1978 to provide
renamed the Institute for Community affordable land access and land security for
Economics (ICE) in 1972. III was formed rural populations affected by strip mining and
to promote economic development in rural rural poverty. The oldest urban CLT devoted
communities around the world by offering to affordable housing is considered to be the
training and technical assistance. Burlington Community Land Trust (now
the Champlain Housing Trust), formed in
1984 to address housing needs in Burlington,
Vermont.
8
CHAPTER 3 THE PROCEDURE OF FORMING A COMMUNITY LAND TRUST
Forming a Community Land Trust requires housing prices, rents, and ownership and
careful analysis and forethought by those demographics in specific neighborhoods
groups or individuals deciding to take this that the CLT will serve?
step.
−− Identify the need for a CLT. Do these
As with most start-up non-profit statistics establish a solid case for forming
organizations, one of the fundamental steps a CLT to open up opportunities for those
in this procedure is to first consider if a new otherwise limited by the trends in the
organization is necessary – or if another real estate market, or otherwise shout out
organization or partnership of organizations from access to decent, secure, affordable
can fulfill this role in the community. For housing. Can a CLT fill a niche that is not
example, if the community already has being filled in the community?
strong affordable housing organizations −− Establish short-term and long-term goals
and community development corporations and objectives for the CLT. What do
– can these entities fulfill the role of a CLT the founders of the CLT hope to achieve
without having to start a separate non-profit in years 1 – 5, what specific tasks are
organization? Would they start a CLT as a necessary to achieve these goals, and who
joint-program of both organizations? The will perform these tasks? The same can be
answer may depend on how willing these estimated for years 5 – 10.
organizations are to expand their programs
into owning more land and structures. Is −− Assess potential projects for the CLT to
there already a CLT operating in the area and, begin working on. Are there specific tracts
if so, how would forming another CLT benefit of land and/or structures in the community
the community? which present opportunities for strategic
acquisition to advance the mission of the
CLT?
Strategic Business Plan −− Assess potential and partners that
Preparing a strategic business plan is a the CLT can work with to achieve its
valuable first step in outlining the procedure goals. Are there non-profit housing
of forming a CLT. This can help the founders organizations, community development
to prepare a strategy for how to move forward, corporations, and government agencies
and will provide a valuable document for who share a commitment to supporting
marketing, fundraising, and presenting to the community? Can their missions,
investors and lenders. Such a plan can include: programs, and skills complement those of
the CLT on specific projects?
−− Assess and document the problem with
−− Outline organizational details and
affordability of land and housing in
management procedures for how the CLT
their community. What statistics can be
will operate. Will the CLT incorporate
compiled regarding trends in land and
as a non-profit organization or another
9
Community Land Trusts: Affordable Access to Land and Housing
type of entity? Will it have a board and • Local governments that are seeking
a staff or volunteers? How will the board alternatives to public housing programs –
make decisions (this provides the initial alternatives that provide more permanent
draft for the By-Laws). How will the CLT ways of preserving the value of housing
raise funds, manage projects, publicize its subsidies and to continue the ongoing
work, partner with homeowners and other role of stewardship of land and housing
leaseholders, and uphold its obligations through successive residents.
for long-term stewardship of land and
structures. • Communities where gentrification is
a problem and property values are
−− Prepare an initial operating budget and pricing local residents out of their own
identify potential funding sources and neighborhoods. A CLT can be an
financing strategies for the CLT. important tool for maintaining decent,
affordable housing stock by limiting resale
prices. This demonstrates the central
Why start a CLT??
principle of preserving subsidies.
Before starting a CLT, it is important for
the potential founding members to be clear • Communities where the high cost of
on why they feel this type of organization farmland or community garden space
is necessary in their community. CLT’s can inhibits the ability of new farmers to grow
be started for different reasons in different food for the community. A CLT can
communities, depending on the land use be a valuable approach for community-
and real estate challenges they are facing. supported agriculture, allowing the farmers
But the root causes -- the inequities in the to own the farm buildings and build the
ownership of land that lead to inequities in the soil and their equity without having to
distribution of wealth – are the same wherever purchase the land.
CLT’s are needed. All communities where • Communities struggling to regain control
CLT’s exist recognize that just producing of corporate-owned forests. A CLT can
affordable housing isn’t sufficient – they need offer a unique ownership model so that
some way to control the cost and condition community forests can be managed for
of housing over a long period of time, as sustainable harvesting of timber, and
successive owners move out and new owners development of alternative, community-
move in. This requires an organization with a owned energy strategies such as wind
commitment to both stewardship of land and power.
housing, and preserving the original subsidy
investment to create affordable housing. • Communities where residents are seeking
to avoid being displaced for development
Some of the reasons that CLT’s are formed projects. CLT’s (at least in one instance)
include: can be used to acquire property (including
Low income communities that are suffering structures) as a strategic move. The San
from disinvestment. A CLT can be a critical Francisco Community Land Trust recently
strategy for sustaining owner-occupancy of acquired an apartment building for this
homes and preventing a return to absentee purpose.
ownership (slumlords). This demonstrates the • Communities seeking to rebuild in an
central principle of stewardship. equitable manner from natural or man-
made disasters. The North Gulfport CLT
on the Gulf Coast of Mississippi was
10
CHAPTER 3 THE PROCEDURE OF FORMING A COMMUNITY LAND TRUST
11
Community Land Trusts: Affordable Access to Land and Housing
In some cases, the CLT will continue to own serving the pubic good through the provision
and manage structures as rental properties. A of affordable housing. Some may be for
buyer may also initiate a CLT project after educational purposes, and others may be for
purchasing a house and lot then selling or affordable access to land for community use.
donating the land to the CLT. In most cases, The By-Laws must also be developed and
CLT’s retain the right to repurchase structures filed, and these will generally outline the
that are proposed for sale, both as a means of operational procedures that the CLT will
reducing speculative increases in sale prices follow as it does business.
and ensuring that future buyers meet the
thresholds for income. Governance
The type of development a CLT pursues (or Forming a board is an essential step in
that leaseholders pursue on CLT land) varies organizing a CLT. Key considerations for
depending on the affordable housing needs board formation include the number of
of the community. Single family detached members, the diversity of skills and experience
houses are common in cases where CLT’s they bring, and their affiliations. These will be
are buying and refurbishing existing housing discussed in more detail in Chapter Five.
stock. Often, when new affordable housing
units are constructed in urban areas, there are Identifying Projects and Partners
“multi-family” attached units. Cohousing
neighborhoods are increasingly popular with Most CLT’s form because of a certain tract of
CLT’s, and may include shared common land or a specific community concern. Since
structures such as dining halls, laundry and CLT’s are typically focused on securing land
day care facilities. Some CLT’s in urban areas and housing in a given area, it is important to
own larger apartment houses and maintain a have a sense of what types of sites the CLT will
number of affordable rental units for lower be looking to acquire, and what organizations
income tenants who may not be ready to will make the most compatible partners for
purchase a home. Still others have added working to acquire, develop, and steward the
mixed-use structures with some commercial land and structures.
space and some residential space. Some of
the more established CLT’s maintain a diverse Funding and Acquisition Opportunities
portfolio of properties including various
Raising funds to purchase real estate in
combinations of structures and tenure options.
expensive markets, or to purchase significant
tracts of land in less expensive markets, can be
Incorporation a daunting task for a new CLT.
The decision to establish a non-profit
Fortunately, it is still true that individuals
organization requires that actions be taken
and organizations will give land away (with
to incorporate the CLT in the state in which
or without structures) to specific charitable
it is located, and to file for tax exempt status
organizations. CLT’s are ideally suited for
with the U.S. Internal Revenue Service and
land gifts, and should stress this as a preferred
the state government. These filings generally
strategy for acquiring property. CLT’s such as
require that the CLT has prepared its “Articles
the School of Living have acquired all of their
of Incorporation”, which will specifically state
land through gifts.
the mission and purpose of the organization.
This is a key statement in determining the tax
exempt (and therefore charitable) status of the
CLT – most are organized for the purpose of
12
CHAPTER 3 THE PROCEDURE OF FORMING A COMMUNITY LAND TRUST
13
Community Land Trusts: Affordable Access to Land and Housing
CHAPTER 4 CHARACTERISTICS OF A
COMMUNITY LAND TRUST
Perhaps the most accurate overview of CLT 3) Leased Land – long-term ground
characteristics can be found in the publication, leases are key contracts between the
“Key Features of the “Classic” Community CLT and the owners of any buildings
Land Trust”, available from the CLT Resource located on CLT land. This allows
Center, Burlington Associates (www. the building owners to retain secure,
burlingtonassociates.com). The following private, equitable interests while the
ten key features are commonly found in most CLT’s interests in preserving the
CLT’s: appropriate use, structural integrity, and
continuing affordability of buildings are
1) Nonprofit, Tax-exempt Corporation maintained.
– a CLT is an independent, non-
governmental organization (NGO) that 4) Perpetual Affordability – option to
is legally chartered as a not-for-profit repurchase…agreed-upon cap on resale
organization in the state in which value.
it is located. Under section 501(c) 5) Perpetual Responsibility – CLT has
(3) of the Internal Revenue Service continuity, whereas homeowners/lesees
Tax Code, CLT’s may achieve tax- come and go. CLT can step-in in
exempt status for charitable activities cases of serious neglect, defaulting on
such as providing affordable housing mortgage…
or community development in low-
income neighborhoods. Non-profit 6) Community Base – CLT’s are
status also means that CLT’s can receive guided by the people who live both
tax-deductible, charitable donations on CLT land and in the surrounding
of cash, real estate, securities from community. Any adult who lives
individuals and companies, and may within a CLT’s program area can
be eligible for certain grants and low- become a voting member, and may be
interest loans. elected to the board.
14
CHAPTER 4 CHARACTERISTICS OF A COMMUNITY LAND TRUST
of one third who are leasholders, one the buildings ensure that the land value of a
third who live in the surrounding site is not included in future sales, but rather
community, and one third public held in perpetuity on behalf of the regional
officials, local funders, nonprofit community.
organizations, or other public
representatives. CLTs buy and hold land permanently,
preventing market factors from causing prices
9) Expansionist Acquisition – CLT’s to rise. CLTs build and sell affordably-priced
are generally focused on an ongoing homes to families with limited incomes—
process acquiring land for affordable the CLT keeps the price of homes affordable
housing and other uses throughout by separating the price of the house from
the community where they are active. the cost of the land. When a family decides
The landholdings of CLT’s are often to sell a CLT home, the home is resold at
scattered in a given area to avoid being an affordable price to another homebuyer
segregated by class, as is often the with a limited income. The goal of CLTs is
case with public housing projects and to balance the needs of homeowners to build
market rate developments. equity and gain stability in their lives with the
needs of the community to preserve affordable
home ownership opportunities for future
10) Flexible Development – CLT’s may generations.
act as developers of housing and other
structures, or work in partnership (E.F. Schumacher Society, ,2008)
with developers (non-profit or for
profit). Others focus solely on land
and affordability, leasing the land to
developers or individual homeowners.
The variety of housing types on CLT
land ranges widely, from single-family
owner-occupied homes, to multi-unit
apartment buildings and many options
in between. Non-residential uses on
CLT land may include local businesses,
nonprofit organizations, community
gardens and parks, and social service
agencies.
In most CLT’s the is held in trust by a
democratically-governed, independent, non-
profit corporation. Through an inheritable
and renewable long-term lease, the trust
removes land from the speculative market
and facilitates multiple uses such as affordable
housing, village improvement, commercial
space, agriculture, recreation, and open space
preservation. Individual leaseholders own the
buildings and other improvements on the land
created by their labor and investment, but do
not own the land itself. Resale agreements on
15
Community Land Trusts: Affordable Access to Land and Housing
16
CHAPTER 5 THE STRUCTURE OF A COMMUNITY LAND TRUST
19
Community Land Trusts: Affordable Access to Land and Housing
20
CHAPTER 6 THE OPERATION AND MANAGEMENT OF A COMMUNITY LAND TRUST
The main target audiences and messages the each of which are essential to the success of
Network recommends for CLTs to use in their CLT programs. They must also each include
presentations and marketing materials are: a few key facts or statistics demonstrating
the effectiveness of CLTs at keeping people
1) Moderate- to low- in their homes and avoiding foreclosure. By
income homebuyers keeping these messages in mind when writing
The message should recognize that they letters, delivering presentations, developing
value quality, affordable homes in a websites, email announcements, digital and
neighborhood they like, a home they printed newletters, flyers and brochures, and
would stay in for years. It should give other materials, CLTs can be sure to build
them a few key points about something their network of supporters and partners by
new that could help them to reach this reaching the right audience with the right
goal, by explaining about CLT homes message.
and the reasons they are desirable.
Finally, the message should ask them to
take one step now to learn more, and Land Acquisition and Leasing
that will help them move toward that CLTs are landholding organizations, first
vision. and foremost, which primarily function as
affordable housing organizations. Acquiring
2) Agency staff in charge land and keeping it in CLT ownership as a
of housing grants community asset is an essential function of
The message should acknowledge land trusts. Once the CLT has defined the
that they want to carry out their geographic program area where it will operate,
department’s mission to keep people it may begin acquiring land through a variety
in their homes, especially through the of means. Tracts of land that are vacant or
foreclosure crisis, and that CLTs are a have buildings may be acquired as gifts,
proven way to keep homeowners out of discounted bargain sales, land swaps (the
foreclosure. By meeting with your local CLT and another landowner trade tracts for
CLT you will learn how it can help you mutual benefit), and purchases at full-price
do your job of keeping homeowners in or bid at auction. Financing mechanisms
their homes. for these acquisitions can vary from public to
private, and from donations to grants to loans,
3) Private place-based foundations or some combination thereof, as described in
with an interest in building stronger Chapter 7.
and more stable neighborhoods.
Once a CLT holds title to land with
The foreclosure crisis has taken a structures, it may decide to renovate existing
heavy toll on some neighborhoods, buildings to meet local building codes and
and the CLT model is showing how desired functions as housing, commercial, or
to rebuild these communities and community space. If the CLT chooses to sell
resist foreclosure. By meeting with a or donate the buildings, and whether the new
CLT and partnering on a project, your owners are an individual, family, organization,
investment will have lasting results. or business, the CLT will enter into a Ground
Lease to rent out the land on which the
Each of these messages presents the buildings stand. This ground rent may be
value of CLTs in dealing with a concern or based on a formula such as determining the
perspective of a specific target audience, Land Use Fee for reasonable use of the land
21
Community Land Trusts: Affordable Access to Land and Housing
on which the building is situated, a Repair Many more established CLTs have excelled
Reserve Fee to set aside funds for building as developers of new affordable housing stock
maintenance or repairs, and the affordability ranging from single family to multifamily,
needs of the homeowner or tenant. Often, from apartments to condos, and commercial
a 30 year mortgage is used to help calculate buildings, or a mixture of two or more of these
what the land rent is worth. For example, if uses.
a given homeowner can only budget $500
per month for their home with a 30 year
mortgage, and $475 must be paid each month Sale and/or Leasing of Buildings
on the mortgage for the house, the CLT may Unlike housing developers which build a
determine a $25 Ground Lease can be used product, sell it, and move on to the next project
rather than more common $40 lease fee. and neighborhood, CLTs are created by and
The National CLT Network website for the community, and their role as developers
includes a sample 2011 Ground Lease, and owners of land and buildings continues
which is 47 pages in length and can be year in and year out. CLTs establish ongoing
accessed in PDF format at the following link: relationships with homeowners, residents,
http://www.cltnetwork.org/doc_library/p454- business owners, community organizations
11-A%20Model%20Lease%2001-2011.pdf and institutions, and government officials.
Their specific tasks are outlined as follows:
In some cases, CLTs work in partnership with
other non-profit housing developers, including Pricing – a CLT is responsible for determining
Community Development Corporations and how to price the housing units or commercial
Habitat for Humanity chapters. The National space it sells or leases. It may include a mix
CLT Network and Habitat for Humanity are of housing types and price points based on
working on protocols for CLTs and Habitat market surveys for the area, some of which
chapters to work together. A CLT may hold may be closer to market rate prices, and
title to the land, while the other developer others which may be more heavily subsidized.
invests in developing housing such as single If the CLT is also developing affordable
family homes, townhomes, condominiums, commercial space for rental to local small
or rental units. The CLT may sell existing businesses, these rents would typically be
multifamily or apartment buildings to an priced to allow the business to grow without
affordable housing organization which then spending too much on rent. In any case,
rents them out to tenants at an affordable the prospective homeowner’s ability to pay
price. monthly ground rent and mortgage payment
would have to be factored into the price of
the home. For example, if a CLT intends to
Acquisition, Renovation, and serve a target population that includes single
Development of Buildings mothers with one or two children and part-
time employment, the CLT may establish a
Development of new affordable housing number of 2-bedroom condominium units
stock or commercial buildings is a desirable for sale at 30% below the market rate price for
and fundable goal of many CLTs, yet the the same size unit in the same neighborhood.
complexities involved with new development If the market rate was $120,000, the CLT
are such that many start-up CLTs favor price could be set at $84,000.
acquiring and renovating existing single family
homes as less risky and challenging place to
start.
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CHAPTER 6 THE OPERATION AND MANAGEMENT OF A COMMUNITY LAND TRUST
Marketing (New) – Marketing of new homes and the Articles of Incorporation and terms
or commercial space is one of the most of membership, the CLT is responsible
important functions for CLTs, particularly for enforcing the resale price as calculated
in reaching the target demographic, typically according to the resale formula. Even if a
moderate- to low-income individuals buyer wanted to pay more to be first in line
and families in a given neighborhood or for a particularly desirable home on CLT land
community. New CLT homes being built in a particularly desirable location, the CLT is
each year across the country are desirable obligated to enforce the resale price limit to
to buyers of higher incomes as well – well ensure the long-term affordability of the home
designed, attractive, energy efficient, and and the neighborhood for future buyers.
often strategically located in or near “up and
coming” neighborhoods to help reduce the Homebuyer Education – The National CLT
impacts of gentrification. Unlike conventional Network has made headlines in recent years
real estate marketing, the CLT can’t run typical with its pronouncements about the strong
newspaper ads or put up realtor For Sale signs record of CLTs in minimizing foreclosure
that would attract buyers of any type. CLTs rates among homeowners. CLT homeowners
generally market new homes through their are more than 8 times less likely to be in
own ads in local newspapers, through their foreclosure than conventional homeowners.
websites, through networks of community In stark contrast to the lending practices
partners, and with their own For Sale signs. All of conventional banks that led so many
marketing materials are carefully designed to homeowners to default on their mortgages,
explain that these homes are only for qualified CLTs take great care to educate and council
buyers, but also that affordability does not potential buyers about the way a CLT works,
have the old stigma of public housing. CLT the responsibilities of homeownership, and
for sale signs typically have the name of the how to do proper financial planning to ensure
CLT, and let potential shoppers know that the their ability to pay their mortgages based
property is not listed by a conventional real on current income before they purchase a
estate agent. home. Following the purchase, many CLTs
offer ongoing counseling and workshops to
Resale Marketing and Management – one of assist homeowners with financial planning.
the CLT’s main ongoing stewardship roles is CLTs may direct homebuyers to responsible
in overseeing and enforcing the terms of the lenders in the community, particularly those
resale of homes from one buyer to the next. familiar with the CLT model. Most CLTs also
One of the key terms is ensuring that the inform homebuyers, as a last resort, that the
buyer meets the income qualifications as set CLT may purchase a home before a buyer
by the CLT. This requires a similar targeted defaults on a mortgage – a practice known
marketing effort to the one described for new as “backstopping.” These differences, and
construction. As holder of the land on which the inherent philosophy of responsibility
the buildings are situated, and holder of the among CLTs for supporting communities
Ground Lease (often 99 years, renewable, and individuals through homeownership,
and inheritable) which is transferred from are a primary reason why the foreclosure
the seller to the buyer as part of the sale, the rates among homeowners on CLT land are
CLT has a real property interest that must relatively low (1.6% as of 2009) compared to
be acknowledged as part of the transaction. those of conventional homeowners (between
In this role, the CLT will collect a transfer 5% and 30% in some markets).
fee for the Ground Lease as part of the sale
price. In accordance with the Ground Lease
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Community Land Trusts: Affordable Access to Land and Housing
Homebuyer Screening and Selection – CLTs could leave the home available to any bidder,
balance the interests of individuals in building including investors or speculators, which
equity and enjoying the pride and security of could greatly undermine the CLTs ability to
homeownership at a price they can afford, and preserve affordability.
also the interests of communities in preserving
that affordability for future homebuyers and Financing – In general, CLTs are proactive in
the economic integrity of their program area. pursuing appropriate financing tools to cover
This requires CLTs to establish and follow their operating costs and project costs associated
screening and selection criteria to ensure with acquiring land and buildings, renovating
that, in meeting the short term interests existing structures and developing new ones.
of homebuyers, the long term community These may include a wide variety of public and
interests are upheld as well. Documenting private sources in various combinations, such
income is a central consideration, to ensure as federal block grants distributed through
that potential buyers qualify as moderate- municipal housing agencies, private sources
or low-income relative to the median such as foundation grants and bank loans,
household income for the area. The average and charitable donations from individuals
CLT responding to the 2010 National CLT or companies. CLT financing is described in
Survey indicated that their homeowners are detail in Chapter 7.
typically earning 65% of the Area Median Monitoring – the long-term stewardship
Income in their community. (NCLTN, 2011) responsibilities of a CLT, including its interest
Credit records and job history are also looked as a landowner and protector of community
at carefully, so that potential homebuyers integrity, requires periodic monitoring of
demonstrate their ability to make payments CLT properties to ensure compliance with
consistently. While the CLT is typically not terms of the Ground Lease, associated land
the lender, its screening process helps to ensure use standards, and CLT membership criteria.
that most potential homebuyers would qualify In general, CLT monitoring involves an
for a mortgage from a reputable lender with opportunity for staff or board members to
CLT experience. periodically meet with homeowners to discuss
Backstopping – through their Articles their experience in the neighborhood, go over
of Incorporation, Ground Leases, and any questions or concerns they may have, and
membership requirements, CLTs may to reinforce the terms of the agreements and
include a “backstopping” option to purchase the roles of the CLT. Monitoring may be done
a home on CLT land prior to foreclosure at various intervals, depending on the CLT.
proceeding. This option serves a dual role Yearly visits are recommended at a minimum,
that balances individual and community whereas quarterly visits may be better for
interests. Backstopping potentially helps a establishing and maintaining a relationship
homeowner to avoid foreclosure and eviction, that is more supportive than a landlord-tenant
and to get back on their feet financially with relationship.
the CLT as temporary landlord, rather than Enforcement – one of the challenges of a CLT’s
an impersonal bank as mortgage holder. In monitoring role is the periodic need to enforce
some cases, the homeowner may not be able against a violation of the Ground Lease, land
to stay due to financial limitations or other use standards, or CLT membership criteria.
factors. At the same time, backstopping allows Violations may vary widely, from minor
the CLT to have control over the future of the infringements that can be easily remedied,
home and its influence on the neighborhood. such as a homeowner falling behind on
A bank sale to settle an unpaid mortgage debt maintenance and needing to paint the house,
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CHAPTER 6 THE OPERATION AND MANAGEMENT OF A COMMUNITY LAND TRUST
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Community Land Trusts: Affordable Access to Land and Housing
26
CHAPTER 7 THE FINANCING OF A COMMUNITY LAND TRUST
Acquisition and Stewardship Costs HOME grants are the primary financing
sources CLTs use to develop housing.
As nonprofit developers of affordable
They are generally allocated through local
housing, CLTs face many of the same project
governments. The HOME investment
costs as for profit housing developers, such as:
partnerships program provides federal dollars
• Land and/or building acquisition as a subsidy for the development of affordable
housing, and represent the largest block grants
• Phase I environmental assessment allocated to states and local governments for
• Feasibility assessment/pro forma this purpose. These funds, totaling over $2
billion per year, are administered through
• Architectural design and engineering the federal Department of Housing and
• Municipal zoning and planning Urban Development (HUD). CLTs which
review and approval have qualified as Community Housing
Development Organizations (CHDO’s) may
• Site preparation
be eligible to receive HOME funds.
• Infrastructure development
The Neighborhood Stabilization Program
• Renovation existing housing (NSP) was created in response to the housing
• New housing construction foreclosure crisis of 2008 – 2009. HUD
developed the NSP to direct emergency grant
• Down payment assistance for funds to affordable housing organizations
first-time homebuyers in areas of relatively high foreclosure rates
• Permanent financing for first-time and abandonment. The funds enable these
homebuyers or other buyers organizations, including CLTs, to purchase
and redevelop foreclosed and abandoned
Project costs for acquisition and stewardship
properties. 28% of respondents in the 2010
of properties may be covered based on a
CLT survey reported that they are receiving
combination of factors, with grants, acquisition
NSP funds, and 79% reported that they
loans, construction loans, and ground leases
are receiving technical support through the
paid by CLT residents being primary sources
program.
for many CLTs. In some cases, land or buildings
may be donated or purchased at a discounted
price (bargain sale). The most complete list of
Low Income Housing Tax Credits
CLT financing options has been compiled by
Burlington Associates, and the following list is The US Treasury’s Internal Revenue Service
summarized from their publication, Starting a allows Low Income Housing Tax Credits for
Community Land Trust (Davis, 2007): owners of certain qualifying rental properties.
These credits are calculated based on the value
of the structures (not land). To take advantage
CDBG, HOME, and NSP of these credits, participating CLTs generally
collaborate with other investors who own the
Federal block grants such as Home and
buildings as a limited partnership.
the Neighborhood Stabilization Program are
administered through the regulatory structure
of the Community Development Block
Grants program.
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Community Land Trusts: Affordable Access to Land and Housing
Federal Home Loan Bank – Affordable states to assist CLTs in leveraging federal and
Housing Program local dollars.
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CHAPTER 7 THE FINANCING OF A COMMUNITY LAND TRUST
A typical CLT may charge between $10 and Sample Calculation of Annual CLT
$100 per month as a lease fee for the land it Income
owns and which is used by residents who own
or lease homes, or businesses on CLT land. 25 units on CLT land
Lease fees at the higher end of this range can $45 monthly ground lease fee
lead to greater sustainability for the CLT, but
can undermine the mission of the organization $3,500 lease transfer fee
by reducing the affordability of homes or 2 sales per year (8% turnover rate)
businesses on CLT land. Up-front subsidies
___________________________________
such as grants and low-interest loans can allow
the CLT to charge higher lease fees without $7,000 in resales (2 x $3,500)
directly impacting residents or reducing their $13,500 in annual ground lease fees
ability to make mortgage payments. (25 x $45 x 12)
___________________________________
Assuming a 30 year mortgage at 6.0% $20,500 total
interest.
Monthly Fee Reduces Borrowing By:
This amount may cover one-third to one-
$25 $4,170
half of an Executive Director’s salary, or cover
$45 $7,506 office rental, equipment, and supply costs for
$65 $10,841
the year, or be used to establish a revolving
loan fund for homeowners to access for small
$100 $16,679 home repairs.
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CHAPTER 8 INCENTIVES TO FORMING A COMMUNITY LAND TRUST
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Community Land Trusts: Affordable Access to Land and Housing
32
CHAPTER 9 THE CONTRIBUTION OF COMMUNITY LAND TRUSTS TO AFFORDABLE HOUSING
The U.S. has had a long, expensive history Development (HUD) was established under
of federal, state, and local housing programs the Johnson administration as part of the
that have achieved some successes, but a far “war on poverty”, taking a more central role
greater number of moderate successes and in developing, funding, and administering
outright failures. Community Land Trusts public housing projects across the country.
are the only affordable housing strategy that Over the years, HUD has become a huge
retains subsidies and results in long-term bureaucracy that has suffered from rampant
stewardship of neighborhoods, and one of corruption and mismanagement.
the only strategies that is created by and for
residents of the community. To understand The low point of public housing in the US
the important contribution that CLT’s are was reached in the mid- to late-20th century,
making to the housing affordability crisis in with the construction of massive, high rise
the U.S., an overview of federal housing policy public housing projects subsidized through
is warranted. HUD. By their unsympathetic design, these
projects segregated thousands of low income
residents into crowded, poorly designed high
Shifts in Federal Housing Policy and rise structures separated by vast, indefensible
Growth in the CLT Movement concrete spaces and isolated from the rest of
the city -- conditions that allowed a thriving
Several major shifts in federal housing gang subculture to control the community
policy over the past 40 years have helped to through violence and drug dealing.
generate a need for alternative, local affordable
housing models, including the innovation Projects such as Chicago’s notorious Cabrini-
of CLT’s as a strategy for affordable housing Green, with their bare concrete, chain-link
in a number of urban areas. To understand fencing on all balconies, malfunctioning
the importance of the contribution the CLT elevators, water lines, and trash service, and
movement is making to the ongoing housing gang-control, looked and functioned more
crisis in America, an understanding of the like poorly-run prisons than as neighborhoods
public housing context is necessary. of decent, affordable housing. Cabrini-Green
was begun on a 70-acre site in the 1940’s with
the promise of becoming a model, master-
Context: US Public Housing Policy in the 20th
planned, federally subsidized urban renewal
Century
project of the Chicago Housing Authority. At
The federal government began housing its peak in the 1970’s, Cabrini-Green housed
programs with formation of the House and 15,000 of the city’s poorest residents and most
Home Financing Agency in 1947, which violent gangs in dozens of mid-rise and high-
had an expressed goal of eradicating slums rise buildings. By 1996, when HUD took
and promoting redevelopment during the control of Cabrini-Green, it was declared a
post World War II housing boom. By 1965, failure, and a redevelopment plan was adopted.
the Department of Housing and Urban By 2002, all of the high rise structures had been
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Community Land Trusts: Affordable Access to Land and Housing
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CHAPTER 9 THE CONTRIBUTION OF COMMUNITY LAND TRUSTS TO AFFORDABLE HOUSING
Inclusionary Zoning
Some communities have established
land development ordinances requiring (or
requesting) a certain percentage of affordable
housing be created within new, market-
rate development projects. In many cities
and suburbs, affordable housing quotas are
required – a legacy from the famous Mount
Laurel housing cases (Southern Burlington
County N.A.A.C.P. v Township of Mount
Laurel, 1975 and 1992), in which the New
Jersey Supreme Court ruled that communities
such as Mount Holly had to provide their “fair
share” of affordable housing, and could not
exclude lower income residents through their
low-density zoning and land use ordinances.
The resulting affordable housing formulas
adopted in certain cities mandate that as much
as 10% or 20% of the units are constructed
as below-market rate housing. In some cases,
incentives are used to encourage (rather than
require) developers to achieve these goals.
Some CLT’s have benefitted from inclusionary
zoning requirements or options, in some
cases partnering with developers to fulfill
affordability obligations.
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Community Land Trusts: Affordable Access to Land and Housing
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CHAPTER 10 THE CONTRIBUTION OF COMMUNITY LAND TRUSTS TO COMMUNITY DEVELOPMENT
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Community Land Trusts: Affordable Access to Land and Housing
This sections includes examples of CLT’s the village, such as conversion of a former
demonstrating success with affordable housing glove factory into workspace, and a low-rent
in urban areas, including: Dudley Neighbors, space for the village post office. Its first loans
Inc.; Durham Community Land Trustees – to were fully repaid in 2005, and net income
be added, and; Champlain Housing Trust. A from CLT property now funds a local youth
successful CLT practicing urban agricultural service.
and affordable housing is also included:
Madison Area CLT and its Troy Gardens Isle of Ghiga Heritage Trust
project. Finally, several examples of rural
CLT’s are included: Opal CLT, Woodland Scottish communities have created CLT’s
CLT, and School of Living (to be added) in places such as the Isle of Ghiga, where an
absentee landlord placed the entire island
up for sale in 2001. Residents organized a
Successful CLT Examples in England “community buy-out” and formed the Isle of
and Scotland Ghiga Heritage Trust. Boosted by strong voter
support and a feasibility study, the CLT was
In the United Kingdom, a small number of able to borrow £1 million (paid off by 2007)
Community Land Trusts have been created and raise an additional £3 million in grants
since the 1980’s. The Land Reform Act of to purchase the island and 41 of 67 houses.
2003 provides enabling legislation granting They have developed 6 properties for sale and
Scottish communities a “community right to are developing 18 rental units with a local
buy” land as a pre-emptive right to purchase Housing Association, and are working with
land in which they have registered an interest, local builders to renovate historic properties
provided they have demonstrated that and train building apprentices.
community ownership would be in the public
interest. (www.communitylandtrust.org.uk) from housing into community energy
by developing Scotland’s first community-
Stonesfield Community Trust
owned wind farm, a hotel, vacation homes,
and three dairy farms. Funding of £400,
One of the earliest and most successful 000 was secured for the renewable energy
examples in England is the Stonesfield project, which generates £140,000 annually in
Community Trust in Oxfordshire, founded revenues to pay off loans and eventually fund
in 1983 with a donation of ¼ acre site in the the CLT’s future projects. The population of
village of Stonesfield for affordable housing the island is increasing and now has a waiting
for local people in perpetuity. The Trust was list of people wanting to move there.
able to acquire mortgage financing and build
its first four properties, with another eight
affordable homes soon developed on another
¼ acre sites. This Trust has also moved into
providing affordable space for mixed uses in
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CHAPTER 11 SUCCESSFUL EXAMPLES OF COMMUNITY LAND TRUSTS IN THE UNITED STATES
Overview
“Our island went into receivership Formed in 2006 by the merger of the
and islanders came home one day to Burlington Community Land Trust and the
eviction notices. The achievements of the Lake Champlain Housing Development
Isle of Eigg land trust were crucial as an Corporation, the Champlain Housing
example of what could be done. At the Trust (CHT) is the largest community
beginning there was no concept of what land trust in the United States. Both the
community ownership meant. We now Burlington Community Land Trust and the
have a five-year development plan around Lake Champlain Housing Development
debt repayment, sustainable development, Corporation were founded in 1984 by the
social infrastructure and the local economy. City of Burlington to meet a growing demand
None of this would have happened if the for decent affordable housing in the area.
community did not own the island.” CHT now owns or manages homes for over
-- Alan Hobbett, Isle of Ghiga Heritage Trust
2,100 households on hundreds of acres of land
in northwestern Vermont.
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Community Land Trusts: Affordable Access to Land and Housing
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CHAPTER 11 SUCCESSFUL EXAMPLES OF COMMUNITY LAND TRUSTS IN THE UNITED STATES
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Community Land Trusts: Affordable Access to Land and Housing
42
CHAPTER 12 LESSONS AND CONCLUSIONS OF COMMUNITY LAND TRUSTS
43
Community Land Trusts: Affordable Access to Land and Housing
Community Land Trust website (English), Harvard Joint Center for Housing Studies
2008. www.communitylandtrust.org.uk – Ratio of Median House Prices to
Median Household Income, 2008.
Community Land Trust Handbook – http://calculatedrisk.blogspot.com
Institute for Community Economics
(original edition published Huggett, Frank. The Land Question and
by Rodale Press in 1982) European Society. Harcourt Brace
Jovanovich, New York. 1975,
Fireside, Daniel. “Community Land Trust
Keeps Prices Affordable – For Now Institute for Community Economics
and Forever” – Yes! Magazine, Fall (www.iceclt.org)
2008 pp. 28 – 30. http://www. Lewis, Roger, Executive Director of National
yesmagazine.org/article.asp?id=2834 Community Land Trust Network,
Davis, John Emmeus and Rick Jacobus, personal interview, October 31, 2008.
The City-CLT Partnership: Municipal Lincoln Institute for Land Policy – research
Support for Community Land Trusts. and courses on CLT formation and
Lincoln Institute of Land Policy, 2008. operation. (www.lincolninst.edu)
Davis, John Emmeus. Starting a Lindsay, Vicki, Roots of the Community
Community Land Trust, Burlington Land Trust Movement, unpublished,
Associates in Community 2001 (www.cltnetwork.org)
Development, LLC. , 2007.
Mack, Selina, Executive Director, Durham
E.F. Schumacher Society (www. Community Land Trustees, personal
schumachersociety.org) –on- interview, November 20, 2008.
line CLT handbook.
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Community Land Trust Resources
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Community Land Trusts: Affordable Access to Land and Housing
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THE GLOBAL URBAN ECONOMIC DIALOGUE SERIES
HS/006/12E
ISBN (Series): 978-92-1-132027-5
ISBN(Volume): 978-92-1-132367-2