Community Land Trusts

Summary

A Community Land Trust (CLT) is a non-profit organization stewarding land and property for the benefit of its place-based community members through the use of a ground lease that ensures permanent affordability and community control. Although often used for housing, it can also provide community control over commercial, agricultural, and civic spaces. As of 2022, there are more than 300 CLTs in the US.

The key strategy of CLTs is the decoupling of land and property. Typically, once a CLT acquires land, either with or without property on it, it’s then placed in the trust for the community in perpetuity and subsequently leased to a prospective property owner. The property owner could be anyone from a single family to an affordable housing developer. The ground lease specifies the resale formula, limiting the price so it’s affordable for the next property owner.

💡 Affordability is preserved through two primary mechanisms

1. Decoupling of land and property

2. Resale formulas, often specified in the ground lease agreement

Community governance of CLTs is commonly balanced with a tripartite board structure including equal representation of CLT resident interests, broader community members’ interests (residents in CLT’s service area) and the public interests. Some CLTs modify and add additional member classes such as staff members and general dues-paying members.

Advantages

  • Permanency: CLTs permanently remove land from the market for the community

  • Uncouple land and property: The land/parcels cannot be resold, but the properties and buildings on the land can be sold. This also reduces the price of properties since land is not part of the transaction.

  • Direct ownership: Community members can directly purchase and own properties on CLT land.

  • Mainstreaming: The CLT model today, which first emerged in the 1970s, is used by more than 300 organizations. This means potential funders are more familiar with the model and that there is a wealth of knowledge and lessons to draw from.

Challenges & Critics

  • Slower real estate acquisition: CLTs hold on to the land in perpetuity by design, which, unfortunately, also renders the asset illiquid. Moreover, due to CLTs’ reliance on donations, grants, and fundraising, the acquisition process tends to be slower.

  • Limited mortgage options for property buyers: Due to the restricted property resale value stipulated in the ground lease, individuals find it harder to secure a mortgage. Furthermore, lenders backed by Fannie Mae often demand that CLTs terminate all affordability provisions in the event of foreclosure, threatening the core value of CLTs.

  • Shifting from community-control of land and grass-root organizing to affordable housing development: Given the dire housing crisis, and perhaps the mainstreaming of the movement, more CLT practitioners are shifting the focus of CLTs to affordable housing development and forgoing, or at least deemphasizing, community control.