Community Land Trust

CLTs and Affordable Housing

Most CLTs are designed to create owner-occupied affordable housing. Typically, a CLT acquires either vacant land or land with housing on it. It then sells the housing but retains the land underneath the buildings. This means that the buyers pay a lower price than they would if the land was included; for instance, a house that may ordinarily cost $100,000 may sell for $70,000 if the land is not included in the price. CLTs thereby allow families to buy houses that they could not otherwise afford.

In addition, the land value counts as security. To qualify for a mortgage with the lowest possible interest rate and still avoid high fees for mortgage insurance, families usually must make a down payment of at least 20 percent of the house value. Since the land represents substantially more than 20 percent of the value of the land-house package, buyers can qualify without making a down payment.

Some CLTs buy multiple-unit dwellings (apartments or duplexes, for example). In these cases, the occupants do not own their housing units; instead, they own shares in the building that function much like shares of stock in a corporation (this arrangement is known as a housing co-op). Their shares entitle them to live in their unit because they are part of the corporation that owns the building. Housing co-ops are one form of housing tenure that can be used within a CLT, but CLTs are not limited to housing co-ops; they also include free and clear title ownership of the housing atop the land.

Because CLTs are nonprofits with the goal of providing affordable housing, they usually have procedures to select families whose incomes do not surpass a specified threshold. They also have a way to ensure that the houses stay affordable even after the initial owners sell: CLTs lease the land underneath the houses to the home-buyer. [Page 284]The land lease costs very little (sometimes just a dollar a year), but the lease usually stipulates that the house may be resold only to another qualifying lowincome family and that the price may not exceed a specified amount. Most CLTs entitle the sellers to their original purchase price plus a percentage of any increase in the house's appraised market value. The land lease also often requires that owners occupy the buildings.

Beyond Affordable Housing

Although almost all CLTs have an affordable-housing mission, practically any land use can occur in a CLT. CLTs can make affordable commercial space available for such community services as food pantries and legal aid offices; for small businesses offering economic development opportunities; for firewood production in rural areas; and for community open space (parks and plazas). In all cases, community ownership of the land makes it less expensive to use the land. CLTs are related to, but not the same as, conservation land trusts. Conservation land trusts seek primarily to preserve open space for the enjoyment of future generations and to benefit ecological diversity.

...