Community land trust

What Is a Community Land Trust?

A community land trust (CLT) is a private, nonprofit organization that acquires and holds land permanently to ensure long-term affordable housing and other community assets. Operating within the broader field of affordable housing initiatives, the core principle of a community land trust involves separating the ownership of the land from the ownership of the buildings on that land. This unique land tenure model aims to reduce the upfront cost of homeownership for eligible individuals or families by removing the land cost from the purchase price of the home. Homeowners then lease the land from the community land trust, typically through a long-term, renewable ground lease. This arrangement helps to preserve affordability for future buyers and promotes community development.

History and Origin

The conceptual roots of community land trusts can be traced to various land reform movements globally, including England's Garden Cities, India's Gramdan Movement, and Israel's cooperative agricultural settlements. However, the modern community land trust model in the United States emerged from the Civil Rights Movement in the American South. The first organization to be formally recognized as a community land trust, New Communities, Inc., was established in 1969 near Albany, Georgia.³⁴, ³⁵ This initiative was spearheaded by civil rights activists, including Charles Sherrod and Slater King, with the purpose of providing secure land access for African American farmers who faced displacement due to mechanization, discriminatory practices, and retaliatory evictions for civil rights activism.³², ³³ New Communities, Inc. was an experiment in cooperative living and collective resilience, aiming to create housing and equitable economic development.³¹ Initially, all early community land trusts were in rural areas, with the first urban CLT appearing in 1981 in Cincinnati.²⁹, ³⁰ The model gradually expanded across the U.S. and internationally, gaining traction as a tool for permanent affordability and community control.²⁸

Key Takeaways

• Community land trusts are nonprofit organizations that own land in perpetuity to maintain its affordability for housing and other community uses.
• They achieve affordability by separating land ownership from building ownership; homeowners buy the structure but lease the land.
• Resale formulas are typically included in the ground lease to cap future sale prices, ensuring the home remains affordable for subsequent income-qualified buyers.
• CLTs aim to create lasting financial stability and prevent displacement in rapidly appreciating real estate markets.
• Governance often includes a tripartite board with representatives from leaseholders, the broader community, and public interest groups.

Interpreting the Community Land Trust

Interpreting the role and impact of a community land trust involves understanding its dual goals: promoting individual homeownership and preserving long-term affordable housing. For homeowners, a community land trust makes homeownership accessible by significantly lowering the initial purchase price, as they do not pay for the land. While this limits future appreciation and potential equity gains compared to traditional market-rate homes, it provides stable housing costs and the opportunity for asset building for households who might otherwise be unable to afford a home.²⁷ From a community perspective, CLTs are interpreted as a mechanism to remove land from the speculative market, combating gentrification and ensuring that properties remain affordable for generations.²⁵, ²⁶ The success of a community land trust is often measured not just by the number of homes created, but by its ability to foster community engagement, reduce displacement, and provide lasting economic and social benefits.

Hypothetical Example

Imagine the city of Harmony, facing rapidly rising home prices. A local nonprofit organization establishes the Harmony Community Land Trust (HCLT). HCLT acquires a parcel of land, perhaps with the help of public subsidies or grants. On this land, a small development of three homes is built.

Sarah, a single mother with a moderate income, wants to buy a home but cannot afford the market price of $350,000 for a typical house and lot. HCLT offers her one of the homes for $180,000. This price reflects the cost of the house itself, as HCLT retains ownership of the land. Sarah secures a mortgage for $180,000 and enters into a 99-year ground lease with HCLT for the land, paying a modest monthly lease fee.

After five years, Sarah's circumstances change, and she decides to sell. Her ground lease with HCLT includes a resale formula that allows her to recoup her initial investment, plus a fixed percentage of any appreciation, perhaps 25% of the increase in value. If the market value of similar homes in Harmony has risen significantly, say to $450,000, Sarah's home might be resold through the CLT's formula for $210,000. This ensures that the home remains affordable for the next income-qualified buyer while still allowing Sarah to build some equity and benefit from her investment.

Practical Applications

Community land trusts are primarily applied as a strategy to create and preserve affordable housing opportunities. They are particularly valuable in areas experiencing high housing costs and intense development pressures, helping to combat gentrification and displacement.²⁴ CLTs can provide opportunities for homeownership to low- and moderate-income households who would otherwise be priced out of the market.²³

Beyond residential housing, community land trusts can also be used to steward land for other community assets, such as community gardens, civic buildings, and commercial spaces, fostering broader community development.²² They often work in partnership with local governments, which may provide funding through affordable housing trusts or other grant programs to help CLTs acquire land and subsidize development.²¹ These partnerships ensure that public investments in affordability are recycled and benefit future generations.¹⁹, ²⁰ The Grounded Solutions Network serves as a national resource and advocate, connecting local experts and promoting solutions for lasting affordability.¹⁶, ¹⁷, ¹⁸

Limitations and Criticisms

Despite their many benefits, community land trusts face certain limitations and criticisms. One common concern is the cap on resale profits, which limits the homeowner's potential for significant equity growth compared to traditional homeownership in a rapidly appreciating real estate market.¹⁵ While CLTs enable asset building for those who might not otherwise become homeowners, the limited appreciation can deter some prospective buyers who prioritize wealth accumulation through property value increases.¹⁴

Another challenge for community land trusts is their dependence on external funding, such as government subsidies and private grants, to acquire land and sustain operations.¹², ¹³ This reliance can make CLTs susceptible to "mission drift," where the pursuit of funding opportunities might lead them away from their grassroots community organizing roots and focus on the sheer number of affordable homes delivered rather than deep community control.¹⁰, ¹¹ Critics argue that while CLTs remove land from the speculative market, their effectiveness as a standalone solution to widespread housing crises is limited without broader systemic changes to land ownership and economic incentives.⁸, ⁹ Furthermore, questions have been raised about the long-term financial stability of CLTs if funding streams fluctuate, emphasizing the need for diverse funding sources and robust operational planning.⁶, ⁷

Community Land Trust vs. Limited Equity Cooperative

While both a community land trust (CLT) and a limited equity cooperative aim to provide affordable housing by restricting resale profits, their fundamental structures differ in terms of ownership.

In a Community Land Trust, the nonprofit organization (the CLT itself) owns the land in perpetuity, and homeowners purchase or lease the physical structures (houses or units) built on that land. The homeowner has a long-term ground lease for the land. This separation of land and building ownership is a defining feature. The CLT maintains control over the land to ensure long-term affordability and adherence to community goals, using a resale formula to cap the price when the homeowner sells.

In contrast, a Limited Equity Cooperative involves residents purchasing shares in a cooperative corporation that owns the entire property, including both the land and the buildings. Residents do not directly own their individual units but rather have a membership interest in the cooperative, which grants them the right to occupy a specific unit. Resale restrictions are imposed on the shares, limiting the profit members can make upon sale to keep the units affordable for future buyers.

The primary point of confusion often arises because both models use mechanisms to limit appreciation and maintain affordability. However, the distinction lies in what is owned: with a CLT, the individual owns the building and leases the land; with a limited equity cooperative, the individual owns a share in the corporation that owns everything. This difference impacts legal structures, governance, and the nature of the homeowner's direct property rights.

FAQs

How does a community land trust ensure long-term affordability?

A community land trust ensures long-term affordable housing by retaining ownership of the land. When a homeowner sells a house built on CLT land, a resale formula stipulated in the ground lease limits the sale price. This cap on price prevents the home from escalating to market rates, making it accessible to subsequent income-qualified buyers for generations.⁵

Do homeowners in a community land trust build equity?

Yes, homeowners in a community land trust can build equity, although the amount is typically limited compared to traditional market-rate properties. The equity built comes from their initial investment, principal payments on their mortgage, and a pre-defined share of the home's appreciation through the resale formula. This allows for asset building for individuals who might not otherwise afford homeownership.⁴

What are the responsibilities of a community land trust?

The responsibilities of a community land trust typically include acquiring and stewarding land, developing or overseeing the development of affordable housing and other community assets on that land, and managing the long-term ground leases with homeowners. CLTs also often provide support and education to their leaseholders, promote community development, and ensure that the properties remain affordable and aligned with community needs in perpetuity. They are governed by a board representing leaseholders, the community, and the public.³

How are community land trusts funded?

Community land trusts receive funding from a variety of sources. These commonly include grants and subsidies from federal, state, and local governments, as well as contributions from private foundations and philanthropic organizations. Some CLTs may also generate revenue from ground lease fees or through innovative community financing strategies to support their operations and land acquisition efforts.¹, ²