{"id":715,"date":"2019-07-29T06:00:31","date_gmt":"2019-07-29T10:00:31","guid":{"rendered":"https:\/\/www.deeds.com\/articles\/?p=715"},"modified":"2024-04-25T23:21:05","modified_gmt":"2024-04-26T03:21:05","slug":"the-land-trust-approach-to-affordable-housing","status":"publish","type":"post","link":"https:\/\/www.deeds.com\/articles\/the-land-trust-approach-to-affordable-housing\/","title":{"rendered":"The Land Trust Approach to Affordable Housing"},"content":{"rendered":"\n
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Rises in\nproperty values are great news for city homeowners. On the other side of\nthe coin, they make the home buying journey that much steeper for\nbuyers. Gentrification of near-downtown areas can make personal\nfinances harder to handle, as property taxes go up. This is a\nconstant challenge for U.S. cities.<\/p>\n\n\n\n

Urban\nrenewal shouldn’t mean pricing people out of the city. With that thought in\nmind, residents themselves are writing the next chapter in the story\nof affordable real estate: lasting affordability. In their quest to create\npermanently affordable housing, community members and leaders are teaming up to\nform land trust coalitions.<\/p>\n\n\n\n\n\n\n\n

The\nResurgence of Land Trusts<\/h2>\n\n\n\n

Land trusts first emerged as a form of home ownership in the United States during the civil rights movement. They were part of community-led efforts called New Communities,<\/a> created by Black farmers in\u00a0Georgia.<\/p>\n\n\n\n

Today, the\nconcept has re-emerged as a method of supporting relatively low-income\npeople who struggle to afford homes in renovated urban neighborhoods.<\/p>\n\n\n\n

In Indianapolis<\/a>, the Old Southside Neighborhood Association has helped\u00a0form\u00a0a network of community groups, religious organizations, businesses, and developers, under the umbrella of the Community Land Trust Coalition. The city of Indianapolis supports\u00a0the network’s growth, funding research on\u00a0the implementation of land trusts.<\/p>\n\n\n\n

Land trusts have found strong support in Denver. The\u00a0Colorado Community Land Trust<\/a>\u00a0is a leader in the movement, and\u00a0Denver\u2019s Urban Land Conservancy took up\u00a0a parallel project focused on 92 condo units<\/a>.<\/p>\n\n\n\n

Yet the largest example of a U.S. community land trust is the\u00a0Champlain Housing Trust<\/a>\u00a0in Vermont. Formed in 2006, it merged multiple existing land trusts to encompass thousands of\u00a0households. These range from\u00a0rentals, to co-ops, to single-family condos and houses. The nonprofit actively develops home\u00a0and commercial properties. It also offers home buyer education, repair loans, and energy efficiency support.\u00a0<\/p>\n\n\n\n

The\nLegal Structure<\/h2>\n\n\n\n

How do these\nagreements work? The community land trust is structured so that the home,\ncondo, co-op, or apartment building is not tied to the land beneath it. The\nland trust owns the land, which will typically rise in value as the housing\nmarket develops.<\/p>\n\n\n\n

Land trust\nhomeowners actually embark upon long-term, renewable leases. A land trust home\nbuyer who takes out a loan and acquires an interest in the property can\nlater sell the home, but the home must be again sold at a\ndeep discount. Thus, when the homeowners sell their interests, they\nreceive only part of the gains on the property’s worth. The rest of the\nprofit goes to the trust, which exists to maintain the property’s affordability\nfor individuals and families to come.<\/p>\n\n\n\n

The typical\nland trust leases its home properties for a span of 99 years to\nbuyers that meet specific income criteria. Or the trust leases the units\nto property managers, who in turn rent out the affordable units to\nqualifying tenants.<\/p>\n\n\n\n

The deed for a land trust home is a Deed for Sale of Improvement Only. It is a\u00a0general warranty deed, like this one<\/a>, created for the Guadalupe Neighborhood Development Corporation\u00a0in Austin, Texas, modified to show that the\u00a0sale constitutes\u00a0a transfer of\u00a0title to the built home\u2014not the land beneath the home.<\/p>\n\n\n\n

Land trust organizations typically require a third or more of their boards to be made up of local residents. Grounded Solutions Network<\/a> of Portland, Oregon helps\u00a0to create these legal entities. The group offers learning tools that can guide a new group\u00a0 through the process of drafting\u00a0governance documents and the organizational structure<\/a> for a new\u00a0community land trust.<\/p>\n\n\n\n

The\nLasting Benefits Land Trusts Bring to Cities<\/h2>\n\n\n\n

Today\u2019s\ntypical land trust is a nonprofit on a mission to provide affordable\nowning and leasing opportunities in perpetuity. Of course, most cities do\nhave subsidized development that holds some units aside at below-market\nprices for buyers whose income levels qualify them for the discounts. It\u2019s not unusual\nfor a developer to create buildings made up of affordable units to accommodate\nworkers, artisans, and artists, and then sell it off 15 years later to a new\ncorporation, after the sunset of the tax credits.<\/p>\n\n\n\n

To get\nserious about supporting economic integration means to come up with a way to\nmake affordability permanent. Cities are therefore testing the tools that can\nbuild long-term affordability. The community land trust serves as an\nespecially appealing tool. Once a land trust owns land, that land cannot\nbe sold or leased at market-rate prices again. <\/p>\n\n\n\n

Thus, in\nmarked contrast to subsidized affordable housing, in which investors keep some\nunits temporarily discounted, the community land trust keeps local residents\nstable for generations.<\/p>\n\n\n\n

The benefits\nof a community land trust include a form of collective wealth building. When\npeople can afford housing, they can also put down roots, and support businesses\nin their cities. They can contribute to the stability of the schools that\ntheir children attend, and the social networks that bind neighborhoods.  <\/p>\n\n\n\n

Are\nThere Drawbacks to the Land Trust Home Ownership Model?<\/h2>\n\n\n\n

It’s true\nthat homeowners may not make alterations or improvements to their homes\nwithout prior approval of the trust organization. Yet this is also true of homeowners’\nassociations for condo owners. <\/p>\n\n\n\n

Critics may\nalso point to the rules requiring the stakeholders to sell their homes\naffordably. Don’t these constitute limits on these residents\u2019 opportunities to\nbuild wealth from home equity?<\/p>\n\n\n\n

On one\nlevel, yes. Yet renting doesn\u2019t offer a wealth-building opportunity,\neither. And land trusts offer their households access to opportunities for\nsocial mobility. Once the stakeholder in a land trust home closes on a loan,\nthe person is free to progress to a higher income level and still keep the\nhome. Thanks to this feature, land trust agreements do make space for\nindividuals and families to cultivate wealth. Consider that most residents of\nthe Colorado Community Land Trust who sold and moved have done so to buy\nmarket-rate houses. <\/p>\n\n\n\n

With land\ntrusts, the benefits outweigh the detriments for stakeholders. People do not\nhave to be wealthy to enjoy, and offer their children, a safe and\nreliable infrastructure, libraries, good schools and green spaces.  <\/p>\n\n\n\n

A\nSolution Whose Time Has Come for Near-Downtown Real Estate<\/h2>\n\n\n\n

Land trusts\noffer a supportive financial option for people and neighborhoods:<\/p>\n\n\n\n