What Is a Community Land Trust?

A community land trust (CLT) is a private, nonprofit or🌊ganization that owns land on behalf of a community, promoting housing affordability and sustainable development and mitigating historical inequities in homeownership and wealth building. CLTs are a response to the increasing lack of affordable housing in major metropolitan areas, particularly for underserved minority communities.

How Community Land Trusts Work

Community land trusts are a form of shared equity ownership. CLTs use public and private investment funds to acquire land on behalf of a specific community. The CLT owns the land in perpetuity (that i💜s, forever).

Community residents can purchase their homes but not the land on which the houses sit. Instead, residents enter into low-cost, long-term property leases with the CLT, known as ground leases, typically for 99 years. Monthly charges for the ground lease can be $100 or lower.

Although CLT residents can never sell the land their home is on, they can sell the home itself and profit from it. However, there is a limit to serve the mission of affordable housing. They otherwise have the same rights as other homeowners. During the 澳洲幸运5官方开奖结果体彩网:term of the ground lease, they enjoy full and exclusive use of the prope🀅rty, as well as common privacy rights a♎ssociated with homeownership.

CLT residents also have many of the same obligations as other homeowners, including liability for property taxes. Historically, property taxes have presented difficulties for CLTs when states assessed taxes based on the actual market value of CLT property rather than the managed values that the CLT sets.

CLT residents can sell their homes, although the CLT has a right of first refusal for every sale, and there is a cap on resale profits so that the ho🎀using remains affordable for the next owner. The buyer must meet the trust's eligibility requirements. Many community land trusts will buy the home from owners wishing to sell, and then resell it to an eligible buyer.

CLT residents may not sublet their properties. Instead, CLT leases typically include an occupancy requirement that the property must serve as the owner’s 澳洲幸运5官方开奖结果体彩网:primary residence. Critically, however, CLTs allow residents to pass the property lease and ownership of the home to their children, which promotes 澳洲幸运5官方开奖结果体彩网:generational wealth building within families.

CLT members are primarilღy responsible for CLT management. CLT boards typically include those living on CLT land, community members not living on CLT land, public officials, funders, experts, representatives from nonprofits in the community, and other stakeholders.

Communi꧃ty Land Trusts vs. Mutual Housing Associations

There are other forms of not-for-profit, community property ownership intended to p꧃✃romote affordability and neighborhood development, such as mutual h🐻ousing associations (MHAs). Like CLTs, MHAs are community-governed organizations that facilitate low-cost housing for low- and middle-income families while also working to rehabil😼itate and revitalize neighborhoods. 

There are several important distinctions between CLTs and MHAs. Whereas CLTs focus on land ownership, MHAs focus on the housing itself. MHAs also rely on 澳洲幸运5官方开奖结果体彩网:economies of scale to minimize propert🅰y costs and ongoin♈g maintenance expenses.

MHAs frequently own one or more multi-unit buildings, allowing them to share resources, spread operating and maintenance costs, and generate bulk purcha🎶sing power.

MHAs are generally inclusive of the larger community surrou𒐪nding them. Just like CLTs, they frequently include nonresidents as board members. This allows MHAs to seek management expertise from outside experts and associations. Indeed, MHAs frequently have experienced, professional property management staff.

Finally, unlike CLT homeowners, MHA residents cannot sell their units for profꦛit; that is, they do not develop equity in the property. Instead, those living in an MHA building rent from the association. The organization uses resident rents to continually provide services and improvements that allow the MHA to offer quality housing at affordable prices.

Advantages and Disadvantages of Community ꦡLand Trusts

Advantages

There are numerous advantages of CLTs, both to CLT residents and to t🃏he larger community, including that they:

• Keep home prices from escalating out of reach for low- and moderate-income buyers
• Provide access to homeownership for underserved minority communities
• Help reduce the wealth gap for minority communities by building generational wealth through home equity
• Help revitalize urban neighborhoods and provide opportunities for minority-owned businesses
• Reduce delinquency and foreclosure rates
• Give neighborhood residents control over development

Disadvantages

CLTs have disadvantages as well. For one, potential homebuyers may be reluctant to buy property in a CLT because they do not actuallyও own the land, even though CLT property owners have ownership benefits that are similar to those of traditional homeowners.

Overcoming this obstacle💫 requires CLTs to educate prospective buyers about their rights and responsibilities, particularly regarding intergenerational transfers.

A more significant obstacle to CLT participation is the cap on resale profits. Home prices tend to appreciate overtime, allowing homeown🦩ers to profit when selling their home. Of course, rising prices also contribute to affordability issues. CLTs help to provide affordable housing, but to do so they limit profits from equity growth that those who buy CLT properties can achieve when they sell them.

All prospective homebuyers come into homeownershi🌸p with preconceptions about the appreciation in value that they expect to achieve, and historical price increases keep these expectations high.

So, when given a choice between a CLT and alternative affordable housing from commercial builders ꧋that do not have similar resale restrictions, potential buyers may shy away from the limited profit potential of the CLT. 

CLTs must also compete with other nonprofit housing organizations for scarce public and private resources. 🅺A lack of resources can ma๊ke it difficult for CLTs to achieve critical mass and build sufficient inventory to serve the community.

Examples of Community Land Trusts

More than 260 CLTs operate in the United States, and more exist in Canada, Belgium, Kenya, New Zealand, Australia, and the United Kingdom, many of which have been very successful.

Among the CLTs that have generated recognition✱ for their efforts—which often include organizing community political action in support of affordable housing—are New York City’s Cooper Square development, Boston’s Dudley Street Neighborhood, t𓃲he Chicago Community Land Trust, and T.R.U.S.T. South LA.

The Bottom Line

Community land trusts help establish affordable housing, which is highly beneficial in metropolitan areas where the cost of housing has continued to increase. CLTs often focus on traditionally underserved minority communities intending to eliminate historical racial inequalities so that low- to moderate-income families can gain access to the housing market.