How Community Land Trusts Can Provide Generational Affordability

March 13, 2020

As housing prices continue to escalate quickly, more communities are turning to innovative solutions to make housing affordable for low to moderate-income households. One such solution is the Community Land Trust (CLT), a model that allows for a community-controlled organization to own land and then sell or rent the housing on that land to lower-income households. 

Minnesota Public Radio (MPR) recently profiled Minneapolis' use of CLTs to address housing affordability. There are 13 CLTs in and around Minneapolis. Each offers residents an affordable way to enter into homeownership by retaining ownership of the land but allowing the homeowner to own the home that sits on the land. 

As MPR explains, "this arrangement provides a substantial subsidy that sticks with the property from owner to owner, typically keeping the selling price of a home tens of thousands of dollars below what it would fetch on the open market." The subsidy exists because the home cost no longer includes the cost of land -- a significant driver of increased home prices, especially in urban areas.

There's also typically a property tax benefit for homeowners and CLTs. Homeowners pay taxes on just the home's value, and taxing jurisdictions commonly exempt CLT-owned land from property taxes.   

In exchange for the reduced home price, homeowners usually pay a nominal fee to lease the land from the CLT and agree to restrict its resale to another income-qualified buyer. This mechanism is what keeps the homes affordable for generations.

The CLT model also allows homeowners to build equity in their home. It's more limited than traditional homeownership, but oftentimes it's enough to allow homeowners to move on from the land trust to purchase another home.

As Emily Thaden, director of national policy and sector strategy for Grounded Solutions Network, explains in the MPR story, "Families will first buy a community land trust house, and then they will end up moving on and buying something in the private market because they were able to build wealth.”    

MORE INFORMATION ON COMMUNITY LAND TRUSTS

Grounded Solutions Network offers detailed information on how CLTs work, who controls a CLT, and additional resources that address every aspect of the unique land ownership structure.  

In 2018, the Urban Land Institute - Austin chapter published a paper entitled, "Community Land Trusts: Permanent Affordable Housing for Central Texas" that documents the benefits of CLTs and how to amplify their impact. 

INTERESTED IN STARTING A LAND TRUST

Grounded Solutions Network also provides a Startup Community Land Trust Hub and a Community Land Trust Technical Manual that offer guidance for establishing a CLT from the idea stage to implementation. More locally, The University of Texas at Austin School of Law issued a Community Land Trust Toolkit in 2018 that offers Texas-specific best practices for creating land trusts.  

Additionally, TSAHC operates 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. 

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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.