Could Community Land Trusts Help Solve The Housing Crisis?

These organizations have been around for decades and are being seen as possible answers to tough housing questions

Over the past six years, the assessed values of residential property have skyrocketed, both in the value of the land and the value of the improvements. A typical house in the Westbrook Subdivision had the value of their physical home increase 44% from 2016 to 2022 and value of the land increase another 20%. These increases costs are making housing less and less attainable for individuals and families in the community.

The City of Troy’s upcoming Comprehensive Plan provided some attention to housing as it discussed creating new and flexible options for housing units, such as accessory dwelling units, and working with local businesses to create housing opportunities.

What Are Community Land Trusts?

One such tool that was not discussed, but may be worthy of some discussions, are non-profit organizations called community land trusts (CLTs). While these organizations have been around since the 1960s and are now reemerging as a powerful tool to create and preserve affordable housing for working families. These innovative nonprofit organizations are helping communities across the United States tackle the workforce housing crisis by removing land from the speculative market and ensuring long-term affordability.

Community land trusts are nonprofit organizations that acquire and manage land to create permanently affordable housing and other community assets. The CLT retains ownership of the land while selling or renting homes built on that land to lower-income households. This unique model separates the ownership of land from the structures built upon it, allowing the CLT to control land use and preserve affordability over the long term.

CLTs offer several key benefits that make them particularly well-suited for addressing workforce housing needs. By removing land from the speculative market and imposing resale restrictions, CLTs ensure that homes remain affordable for generations. This creates a sustainable stock of workforce housing that doesn't disappear as neighborhoods gentrify. Many CLTs are able to serve households earning as little as 26-36% of area median income, allowing them to reach workers in lower-wage industries who are often priced out of traditional affordable housing programs.

CLTs are typically governed by boards composed of residents, community members, and other stakeholders. This democratic structure gives local communities a say in how land is used and developed in their neighborhoods. While resale restrictions limit equity appreciation, CLT homeowners still build wealth through paying down mortgage principal and modest increases in their share of equity over time. CLTs also work closely with homeowners to prevent foreclosures and preserve affordability, providing an extra layer of stability for working families.

Across the country, CLTs are demonstrating their effectiveness in creating and preserving workforce housing, both in very urban and very rural environments, showing that they have applicability nearly everywhere in the country, including our own community. The Cooper Square CLT in New York City has preserved over 320 deeply affordable apartments and two dozen storefronts for small businesses in a rapidly gentrifying area of Manhattan's Lower East Side. In Vermont, the Champlain Housing Trust manages over 2,000 affordable homes and apartments, serving a wide range of working families in the northwestern part of the state.

While CLTs offer tremendous potential for addressing workforce housing needs, they also face significant challenges. In hot real estate markets, CLTs often struggle to compete with private developers to acquire land. Policies like San Francisco's Community Opportunity to Purchase Act, which gives nonprofits the first right to purchase multi-unit buildings when they go up for sale, can help level the playing field. CLTs also require significant upfront investment to acquire land and develop housing. Increased public funding and innovative financing mechanisms are needed to scale up CLT efforts. Additionally, many policymakers and community members are unfamiliar with the CLT model, making ongoing education and advocacy efforts crucial to build support for CLTs.

How Community Land Trusts Work

The community land trust model operates on a unique principle of shared ownership that balances individual and community interests. When a CLT acquires a piece of land, it retains ownership of that land in perpetuity. The CLT then sells homes built on the land to qualified buyers at below-market rates, or rents them to low-income tenants.

Homeowners in a CLT purchase only the physical structure of the house, while leasing the land beneath it from the CLT through a long-term ground lease, typically 99 years. This lease includes provisions that maintain the home's affordability, such as resale restrictions and requirements that the home be owner-occupied.

When a CLT homeowner decides to sell, the resale price is determined by a formula specified in the ground lease. This formula typically allows the seller to recoup their original investment plus a modest return, while keeping the home affordable for the next buyer. The CLT often has the first option to repurchase the home, ensuring it remains in the trust's portfolio of affordable housing.

For rental properties, the CLT may own both the land and the buildings, operating as a nonprofit landlord. Alternatively, the CLT might partner with a nonprofit housing developer who builds and manages the rental units while the CLT retains ownership of the land.CLTs also provide ongoing support to homeowners, including financial education, maintenance assistance, and foreclosure prevention services. This stewardship role helps ensure the long-term success of CLT homeowners and the preservation of affordable housing stock.

By removing land from the speculative market and implementing resale restrictions, CLTs create a stock of permanently affordable housing that remains accessible to working families regardless of market fluctuations. This innovative approach offers a promising solution to the workforce housing crisis, providing stable, affordable homes while allowing communities to maintain control over local land use and development.

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