FAQ

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.