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Community Land Trust: A Tool For Preserving Economic Diversity

by Janice Christensen

It took years of hard work to make the neighborhood a safe, inviting place. Naturally, now more people want to live in it. Property values skyrocket, and the very people who did the work can’t afford to stay. It just doesn’t seem fair. But the people who live and work in these neighborhoods have a history of putting their heads together to solve their problems. There must be something that can be done about this one… The downside of gentrification is becoming apparent in neighborhoods throughout the country. Preserving an affordable housing base is of primary concern for neighborhoods like Riverwest that are facing these challenges. One approach that has been used successfully in other areas is called a Community Land Trust. What Is A Community Land Trust? A Community Land Trust (CLT) is a private, nonprofit corporation created to provide secure, affordable access to land and housing for community members. Ownership The CLT’s distinctive approach to ownership involves permanent CLT ownership of land. It is usually leased to low- and moderate-income households. CLTs can acquire vacant land and develop housing on it. At other times, CLTs acquire land and buildings together. The land is held permanently by the land trust so that it will benefit the community. Buildings (known as improvements) can be owned by those who use them. CLTs help people to own their own homes on this land. When a CLT sells homes, it leases the underlying land to the homeowners through a long-term (usually 99-year), renewable lease, which gives the residents and their descendants the right to use the land for as long as they wish to live there provided that they abide by the terms of the land lease. These terms place some limitations on the resale of the home. They may only be sold to a household that qualifies as low or moderate income, and the sales price is limited to keep it affordable. The land lease requires that owners live in their homes as their primary residences. When homes are resold, the lease ensures that the new owners will also be residents — not absentee owners. Subleasing is permitted only for limited periods with the consent of the CLT. CLTs create a pool of permanently affordable owner-occupied housing in gentrifying communities where the cost of housing is otherwise being driven beyond the means of local residents. Organization CLTs are usually organized as “membership corporations,” with boards of directors elected by the members. Neighborhood-based CLTs tend to reflect the grassroots concerns of particular communities. They naturally have a more narrowly focused, block-by-block concern with the ways in which their own neighborhoods are developed and with the effects of this development on existing residents. They tend to operate on a micro level, acquiring specific properties on particular blocks to preserve a certain number of units of affordable housing while preventing the displacement of their residents. Use A CLT may build new homes, rehabilitate older homes, or acquire existing housing that needs little or no renovation. In addition to providing affordable housing, CLTs may make land available for community gardens, playgrounds, economic development activities, or open space, and may provide land and facilities for a variety of community services. A CLT can work with various ownership structures for multi-family buildings. To ensure long-term affordability, the CLT itself may own and manage a building as rental housing, another nonprofit may own it, or the residents may own it as a cooperative or as condominiums. CLTs can provide a variety of training opportunities and other services to firsttime homeowners and can provide crucial support if homeowners face unexpected home repairs or financial problems. In these cases the CLT can often help residents find a practical solution, and may help to make necessary financial arrangements. Financing In producing affordable housing, CLTs usually rely on the same resources as other affordable homeownership programs — including grants from government programs, contributions of property from both public and private sources, and volunteer labor. CLTs usually pay taxes on their landholdings, with the cost usually covered by lease fees from those using the land. CLTs and their residents can request reduced property tax assessments based on the resale value of the home. This is determined by the CLT’s resale formula rather than the market value of the property. CLTs have been able to negotiate mortgage agreements that address the basic concerns of lenders while protecting the CLT’s long-term interest in the property. Contact Vince Bushell at 263-1380 with any questions. Riverwest Currents – Volume 1 – issue 6 – July 2002