What is a community land trust?
A community land trust is a private non-profit corporation created to acquire and hold land for the benefit of a community and provide secure affordable access to land and housing for community residents. In particular, CLTs attempt to meet the needs of residents least served by the prevailing market. CLT’s prohibit speculation and absentee ownership of land and housing, promote ecologically sound land-use practices, and preserve the long-term affordability of housing.
What makes a CLT distinctive?
Several things- here are five:
Commitment to Local Control. CLTs are usually initiated to provide greater local control over land and housing ownership. The CLT is a membership organization with members drawn from the land-trust leaseholders and the wider community. CLT members elect a governing board that includes leaseholders, nonresident members and others who represent the broader community.
Protects Long-term Affordability of Housing. CLTs protect affordability for future residents by controlling the sale of buildings and other improvements on their land. Specifically, the CLT retains the first option to repurchase these improvements-if residents choose to sell- at a “limited appreciation” price. The CLT lease agreement includes a formula for calculating the price that offers resident-owners fair compensation for their investment. (Their share does not include value from market appreciation of the CLT’s investment in the land or buildings.) In this way the CLT preserves the community’s investment of public and private resources (time, treasures and talent) that go into creating a CLT and making housing affordable.
Dual Ownership. The way in which the CLT protects the community’s long-term interest is by continuing to own land while conveying the long term use of the land to individuals, cooperatives or other entities. Leaseholders won their homes and other improvements. Terms of the arrangement between a CLT and owner using the land are defined in a long-term land lease. The land trust offers leaseholders security, and opportunity to transfer the lease to their heirs and full rights of privacy.
An Ongoing Development Program. CLTs are not generally focused on a single project. CLTs are committed to an active acquisition and development program that attempts to meet diverse community needs.
Flexibility. CLTs can accommodate a range of specific programs while providing a focus for community organizing. A CLT can help create and preserve such critical local resources as affordable housing, family farms, neighborhood businesses and social services while establishing land-use control that protect the long-term interests of the community. Although CLTs generally promote resident ownership and management, a CLT may also develop and preserve needed rental housing.
How are CLTs different from conservation land trusts?
They are similar in many ways. Both CLTs and conservation land trusts control land use for the benefit of people in the future as well as the present, but they tend to be concerned with different types and uses of land. Conservation trusts are primarily concerned with controlling rights to undeveloped land to preserve open space, ecologically fragile or unique environments, wilderness, or productive forest or agricultural land. CLTs on the other hand, are primarily concerned with acquiring developed or developable land for specific community uses- particularly residential use. These concerns are not mutually exclusive, and some land trusts combine these purposes, preserving some land in a natural state while leasing other land for development. All land trusts have an ethic of land stewardship; they try to see that land is not developed or used inappropriately.
How does a CLT help residents?
By providing access, affordability and security. CLTs use various kinds of subsidies to make housing and land-use more affordable for people who cannot compete in the market. CLTs keep housing affordable for future generations by controlling the price owners receive when they sell their homes. CLTs might assist residents with home repair, rehabilitation and/or financing. The CLT lease offers residents and their heirs long-term security.
Are CLTs supported by local governments?
Yes. Though some of the first CLTs were started in communities suffering from government neglect, it is now more common for CLTs to work in cooperation with local governments in meeting present and future community needs. Public officials are recognizing that CLTs can play an important role as stewards of community resources- that property and funds allocated to a CLT can benefit not only present community recipients but future residents as well. Several CLTs have been established with strong initiative and support from local governments. A number of municipalities have allocated Community Development Block Grant funds, as well as other available funds, to CLT programs. Some have allocated city-owned land. State housing financing agencies are increasingly interested in making financing available for housing on CLT land, and server state legislatures have acted to appropriate special funds to finance acquisitions by land trusts.
Isn’t a mixed ownership arrangement of this sort- with building owned by one party and the land by another- pretty rare?
Not as rare as you might think. The separation of land and buildings and the leasing of land to the owner of the buildings is an old, established and widely-used mechanism. Many substantial commercial buildings are on leased land, perhaps the most famous of these being Rockefeller Center in New York City. There are large areas where people own homes of leased land: Baltimore Maryland, Davis County California and many other regions. It is now becoming more common for developers to establish residential projects on leased land.
Outside of the United States, it is not at all unusual. Since World War II, for instance, nearly two dozen “new towns” have been established in Great Britain- most of them on leased land. In Israel, most rural settlements are built on land leased from the Jewish National Fund.
Do CLTs pay property taxes?
Yes. Residents pay taxes on their homes if they own them and the CLT pays property taxes on land holdings. CLTs can qualify for exemption from federal and state taxes, but they pay local real estate on the land they own. It is politically important for the CLT to pay for its share of services enjoyed by the neighborhood. The cost of these taxes is covered by lease fees paid to the CL by those using the land. (Although the CLT cannot directly reduce property tax assessments, residents may request an assessment based on the resale value of the home as determined by the CLTs equity formula rather than the market value of the property.)
Does the CLT ever sell its land?
Very rarely. Once the CLT has acquired a parcel of land, its intent is to hold it indefinitely- never again allowing the land to be bough and sold as a commodity. Most CLTs structure their bylaws to require the consent of all affected leaseholders and a supermajority of the board and membership for the corporation ever to sell any of its land. There have been situations, however, when CLTs have found it prudent to sell a parcel of land- exchanging land that is not appropriate for the CLT’s purposes for land that is, or selling off some land to avoid losing the rest.
What happens to the CLTs land and lease agreements if the CLT is dissolved?
As a nonprofit corporation, a community land trust must distribute its assets- including land- to another nonprofit corporation if the CLT is ever dissolved. The recipient is obligated, as a condition of the transfer, to honor the long-term lease agreements between the CLT and its leaseholders. Should the CLT ever sell to a non-charitable buyer, the resident has the first right of refusal to buy the land.
What happens if disputes arise between leaseholders, or between a leaseholder and the CLT?
The parties will try to negotiate before litigating. The lease agreement signed by every leaseholder, may establish an arbitration procedure for settling disputes or grievances. Each party may appoint an arbitrator. The first two arbitrators select a third. The three-person arbitration panel then meets to consider the case and to render a judgment. The decisions and awards of this panel are binding on all parties.
How many CLTs are there in the United States?
Because the basic CLT model lends itself to many applications and variations, as people adapt the model to their own circumstances and needs, it is not simple to decide what to count as a CLT. There are nearly 100 organizations in the United States that would probably identify themselves as CLTs. Of these, few are old enough or large enough to serve as a full demonstration of what a CLT might be an do. Nevertheless, CLTs have been established in over twenty states, in urban and rural areas, and in every region of the country. Their numbers are growing. So is the interest in the CLT model. Every day, the Institute for Community Economics receives many requests for information about CLTs. The requests come from tenant organizations, farmers, community activists, environmentalists and an increasing number of public officials. More and more of these people are asking not only for information, but for assistance in establishing a CLT. Currently, ICE has a working relationship with about 80 CLTs.
How do people join a CLT?
Each CLT develops its own membership criteria. Most CLTs require an annual membership fee of a few dollars and expect members to attend at least an orientation session or a general meeting.
How are CLT homeowner/leaseholders selected?
Each local CLT develops its selection criteria based on local needs and resources available. When possible, occupants of buildings acquired by a CLT are given the opportunity to stay as homeowner/leaseholders or renters. Applicants for vacant units are normally judged on the basis of need, commitment to the CLT, and ability to make the necessary payments and handle other responsibilities of homeownership.
How much control do I give up by not owning the land beneath my house?
Leaseholders-homeowners, farm owners, or business owners retain most of the rights and responsibilities that go with ownership. CLT control is generally limited to areas where the CLT has a long-term interest. For example, it is vital to the CLT to preserve affordability of housing units. Most leases also prohibit absentee ownership of housing because it is generally not in the community interest. Also, CLTs want to protect the condition of the land and buildings which would be left at the end of the lease term.
What kind of support does a CLT provide for first-time homeowners?
A CLT does not leave new homeowners to sink or swim on their own. The ability to provide support depends on the resources available to each local CLT. Some CLTs provide homeowner training and assistance as needed. CLTs serving cooperatives have assisted with back-up management services, such as financial management, arbitration, and resident training and selection. Some CLTs have developed home repair loan funds and have made special arrangements for leaseholders who face unexpected financial problems.