Last year, Shelterforce, a publication dedicated to covering community development issues, released a series of in-depth pieces analyzing the evolution of Community Land Trusts (CLT) and their impact on housing. It's a topic we introduced readers to previously, and the Shelterforce series inspired us to take a closer look at the CLT model.
What are CLTs?
Before going in-depth, let's start with the basics. As Shelterforce explains, a community land trust is "an independent, community-controlled entity that owns land and takes care of (or "stewards") that land, making sure it is being used in ways that support the community it is accountable to." Entities that own the land are commonly nonprofits, government agencies, or community-based developers.
Depending on where a CLT is located, the land can be used for different community benefits. In Texas, CLTs may provide housing for low to moderate-income residents in the community that promotes resident homeownership and keeps the housing affordable for future residents.
This is accomplished by separating the ownership of the land from the ownership of the housing. The CLT owns the land, and the housing built on it is sold to residents. This means the homeowner only has to get a mortgage on the house and not the land, which reduces the price of a home and property taxes significantly. In return for providing the land, the CLT collects a modest ground lease fee from the homeowner. We invite you to watch the video below created by Grounded Solutions Network for a more thorough explanation of the CLT model.
Moreover, the affordability feature is permanent. Home buyers must income qualify, and if they sell their house, they must sell it to another income-qualified buyer. This enables CLTs to provide affordable homeownership opportunities from one generation to the next.
SCALING UP CLTS
The primary challenge with CLTs is their scalability. Because purchasing land requires a large investment, it's difficult for CLTs to expand on their success without significant capital investments.
Shelterforce explains the different options CLTs can pursue for expansion. First, there's organic expansion which more established CLTs have done. Over time, they slowly expand their geographic footprint through land acquisitions, merging with other housing organizations, or helping other CLTs launch.
Next, CLTs can operate as "central servers" where a primary entity can fulfill the long-term stewardship role over the land while other neighborhood-based entities can develop housing. This allows for community developers to spend more time creating housing and less time on the administrative work of a CLT.
Then there are the CLTs that just start big like the one in Irvine, California. Thanks to a hefty investment from the city, the Irvine CLT initially created more than 400 units and has a long-term goal of creating 5,000 total. More locally, the Houston CLT is following a similar model. The city launched it in 2018 with an ambitious goal of creating 200 homeowners in the first three years.
MAINTAINING COMMUNITY CONTROL and representative governorship
The other primary challenge for CLTs is how you maintain CLT governance that includes proper geographic and demographic representation. For hyperlocal CLTs, it's often not difficult to include residents from the neighborhood it serves as part of its governing body.
But as CLTs grow geographically, it's hard to maintain a neighborhood level of governance over them. As Shelterforce notes, one way to address this is to simply grow the size of the CLT board to include representation from more neighborhoods as they expand. Another option is to keep the board the same size, but create neighborhood level committees that advise the board on issues local to their community. This is how the Houston CLT operates.
TSAHC AND LAND TRUSTS
TSAHC has the ability to operate a statewide land trust, which can expand affordability in changing neighborhoods and provide alternatives to traditional affordable housing. We also provided financing to support the construction of The Chicon, a mixed-use, mixed-income condominium development that sits on a CLT designated site.
On the House blog posts are meant to provide general information on various housing-related issues, research and programs. We are not liable for any errors or inaccuracies in the information provided by blog sources. Furthermore, this blog is not legal advice and should not be used as a substitute for legal advice from a licensed professional attorney.
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