Connecting state and local government leaders
Nonprofits aim to prevent developers from scooping up properties.
This story was originally posted by Stateline, an initiative of the Pew Charitable Trusts.
As housing prices skyrocket in neighborhoods across the country, some state lawmakers and local officials are turning to a decades-old model for keeping homes affordable: community land trusts.
Known as CLTs, community land trusts are mostly nonprofit organizations that operate within a specific neighborhood facing development pressure. They acquire and own land while selling homes that sit on the property or leasing apartments and commercial space. The trusts’ permanent ownership prevents the land from being scooped up by developers and converted to high-dollar housing.
The split ownership removes the land value from the purchase price of the home. And homeowners who buy from community land trusts usually have incomes below a certain percentage of the area median; some trust programs include down payment assistance. Residents build equity in their homes, but a formula set by the trust caps the resale price at an affordable level for the next buyer.
“[Community land trusts] are an extremely important means of taking land out of the speculative market for affordability in perpetuity,” said Sarah McKinley, director of community wealth building programs with The Democracy Collaborative, a nonprofit think tank that focuses on community-based economic development. “The interest in CLTs is growing, and particularly among local governments.”
The community land trust model relies on local oversight from boards that often include the organization’s residents. Many of the trusts prevent the housing stock in historically minority neighborhoods from being claimed by developers.
Some states and cities are looking to give money to the trusts to help them acquire properties. Other governments are changing the rules for foreclosure auctions or sell-offs of public parcels to give community groups a chance to make earlier offers to compete with well-financed developers. Some places are reworking property tax laws to ensure that protected units aren’t being assessed the higher rates that pricey developments next door might be charged.
Vince Wang, director of research with Grounded Solutions Network, a nonprofit focused on community housing issues, estimates that 300 to 450 community land trusts now operate nationwide. Many, however, oversee relatively few housing units because of the difficulty in financing significant property acquisitions, a longstanding obstacle.
“It's one thing to establish the CLT, it's another thing to build units and expand it,” he said. “So many dots need to be connected in order to actually produce.”
Community land trusts still make up a relatively small percentage of the housing stock, and sky-high real estate prices can make it difficult for them to add more housing. In some urban areas, the rental properties acquired by such trusts often require extensive maintenance, adding to costs. And some real estate groups have fought efforts to give the trusts a stronger footing in foreclosure auctions.
‘An Opportunity to Intervene’
In California, state legislators passed a bill in 2020 preventing large corporations from bulk-purchasing homes in any single foreclosure auction, giving locals and community groups a better chance to bid on those properties. Last year, the state set aside $500 million for nonprofits such as community land trusts to buy and rehabilitate buildings at foreclosure auctions.
“Supply-side housing policy is important, but the displacement of people is happening right now in existing buildings with existing landlords, and this is an opportunity to intervene in these situations,” said Leo Goldberg, co-director at the California Community Land Trust Network, which advocates for trusts across the state.
Preserving existing housing at affordable rates is particularly important for protecting residents of color from displacement, he added. According to Goldberg, six of the group’s newest member organizations acquired their first property in 2021, a major milestone. Other trusts have seen recent growth, including the Beverly-Vermont Community Land Trust in Los Angeles, which has added 13 units in the past two years, bringing its total to 60.
Part of that growth stemmed from a $14 million investment from Los Angeles County, passed unanimously by county supervisors, to help trusts acquire land.
“Once funding became available, CLTs were able to access property a lot more quickly,” said Kasey Ventura, community organizer with the Beverly-Vermont trust, which serves residents of color around the city’s Koreatown neighborhood. “Public subsidy is a way to quickly acquire buildings in a short span of time.”
Meanwhile, California lawmakers are considering a bill that would protect community land trusts from losing their property tax exemptions for low-income housing if a resident’s income goes up. At present, an entire apartment complex could face a massive tax spike if one member’s income rises above a certain threshold.
“[Community land trusts] give you affordable housing, and they ensure that the affordable housing stock will stay affordable,” said Assemblymember Steve Bennett, the Democrat who sponsored the bill.
‘A Way to Scale Up’
In New York, state Sen. Brian Kavanagh, a Democrat, has sponsored a bill that would set aside state money to help community land trusts acquire property. While the bill does not specify a funding level, Next City reported that it likely would be $50 million. Kavanagh was unavailable for comment.
State lawmakers also are considering a bill that would provide property tax exemptions for community land trusts.
Local officials in New York City founded the Citywide CLT Initiative in 2019 to provide technical assistance and organizing support to 14 trusts. Council member Carlina Rivera, a Democrat, is hoping to boost the project’s funding, which stands at $1.5 million, to $3 million in the next budget. Rivera also is backing a measure that would give community housing groups such as land trusts a right of first refusal when landlords sell property, known as “community opportunity to purchase.”
“Larger development firms can put together a proposal much faster, swoop in and increase gentrification in our neighborhoods,” she said. “This bill will give nonprofit affordable housing developers and CLTs the critical time and the flexibility they need to make a fair-market offer.”
One of the groups that has benefited from city leaders’ support is the East Harlem El Barrio Community Land Trust, which serves a predominantly Hispanic neighborhood. The group acquired its first property in 2020. The city transferred four buildings with a total of 36 units to the trust, which has secured funding to rehabilitate the structures. Valerio Orselli, a board member, said financing challenges have made it difficult for trusts to acquire more than city surplus property, and he called for more public investment.
“If it's going to be a real movement, we have to find a way to scale up, to get sufficient funding to really create thousands of units each year,” he said. “We need a CLT program that is deeply funded.”
Several other places also are taking an interest in community land trusts. Texas lawmakers passed a bill last year that instructs local governments to appraise trust properties based on the affordability restrictions they operate under, limiting their property tax obligations.
Maryland legislators are considering a bill that would steer community development block grant funds to affordable housing land trusts, while also creating property tax exemptions for such organizations. Policymakers in Michigan likewise have proposed bills that would shield community land trusts from certain property taxes. Trust leaders point out that property tax laws vary widely from state to state, leaving some organizations facing hefty tax bills, even though their properties cannot be sold for the value at which they’re assessed.
In Philadelphia, councilmember Jamie Gauthier has proposed a bill that would give community land trusts priority in applications for surplus public land. And Washington state lawmakers recently budgeted $1 million for a program that will help such trusts build capacity and share resources. State Rep. Alex Ramel, a Democrat who supported the funding, said he bought his first house with a community land trust in 2003 as a young, single father.
“[Without the CLT], I would have been renting at a rate outside my budget and never getting any equity in my home, and I probably would have had to move multiple times as rents continued to increase,” he said.
Ramel and others also secured $113 million in funding for the state’s Housing Trust Fund, which provides financing for many affordable housing projects, including community land trusts.
Some leaders even have re-created aspects of the trust model within public agencies. The Chicago Housing Trust, a nonprofit within the city’s Department of Housing, will oversee 200 units by the end of this year, up from 100 at the end of 2020. The trust manages properties in some neighborhoods facing gentrification, while supporting existing nonprofit community land trusts that already work in other neighborhoods.
“We're here as a bit of a safety net for neighborhoods that don't have as much [community housing] infrastructure on the ground, to get there before the fires of gentrification and displacement are raging,” said Jennie Fronczak, the trust’s executive director.