The Equity Factor

Should Community Land Trusts Rank Higher in the Affordable Housing Toolbox?

An abandoned house that Chicago officials deemed a haven for drug dealers and gang members is demolished. (AP Photo/Charles Rex Arbogast)

With federal investment in public housing on the decline, keeping housing affordable has increasingly fallen on local governments. Cities have been burdened with devising thrifty, creative solutions to this dilemma.

Earlier this month, in Jacobin, writer Samuel Stein critiqued New York City Mayor Bill de Blasio’s plan to rely heavy on inclusionary zoning to generate affordable housing. Stein argued that new developments generated by inclusionary zoning cause displacement of low-income people, disrupt the cohesion of neighborhoods, and don’t generate enough permanently affordable housing for New York’s deep need. (Read this week’s Forefront feature for more on inclusionary zoning and strategies for limiting displacement.)

Instead, he writes, “Democratically controlled community land trusts remain the best way forward in today’s context, when government is reluctant to either finance public housing or dramatically expand rent regulations.”

But perhaps cities should be looking for the right mixture of inclusionary zoning and community land trusts.

Community land trusts (CLTs) are locally based non-profit corporations that acquire properties in their home territory through private donation or the use of government subsidies. The CLTs then sell the buildings to low- or moderate-income homebuyers, but retain the deed to the underlying land, which is then leased to homebuyers. If a homeowner moves on, she’ll be restricted on how much profit she can make when selling to guarantee that the buildings remain affordable over several cycles of owners. Leases are typically 99 years in contrast to other shared equity or inclusionary housing models that have limits of 20 or 30 years.

“One of the things that we think is great about community land trusts is that they are pretty stable even in the face of tough economic conditions,” says Armando Carbonell of the Lincoln Institute of Land Policy. “The figure we used factoring in the recession was that even in 2009 they were eight times less likely to be foreclosed than conventional mortgages, even though CLT property tends to be owned by lower-income people, who might be under more stress than the average mortgage holder.”

In the 1990s and 2000s, CLTs became increasingly popular in cities. In 2012, there were 258 CLTs encompassing 9,000 units of housing. Community leaders and organizations usually take the lead role in establishing a CLT, with municipal governments later offering support, but in some cities, such as Irvine, California, and Chicago, municipal governments have led the charge.

The Chicago Community Land Trust (CCLT) was created in 2006 with initial funding from the MacArthur Foundation and some support from the Chicago Department of Housing. Per a Chicago ordinance, residential developers receiving city assistance or whose deals involve city-owned land must set aside 10 percent of their units at affordable pricing — or donate $100,000 per mandated unit into the City’s Affordable Housing Opportunity Fund. The new affordable units are typically placed in the CCLT. (Next City receives funding support from the MacArthur Foundation.)

“The CLT is a form of homeownership, which could be part of an inclusionary system, so it’s not as if you have to choose one or the other,” says Carbonell, in response to Stein’s article. “In my opinion, I think they’re really two different things. One is essentially a regulatory mechanism that provides housing resources and the other is a form of ownership where land is shared.” Chicago’s CLT seems to be counting on the synchronicity between inclusionary housing and land trusts.

Currently, the CCLT only has 70 units, which is much smaller than their initial anticipated growth of 150 units a year. A rep from the CCLT emailed that although none of their housing units were lost as a result of the foreclosure crisis, the recession did, in fact, slow down the projected growth of the CCLT.

The Lincoln Institute of Land Policy’s “The City-CLT Partnership: Municipal Support for Community Land Trusts” notes some of the challenges to municipally led CLTs, which include: limited staffing and budgetary resources when cities have competing affordable housing programs, the difficulty for governments to cede control of these properties to grassroots-level led leadership, and creating fair tax assessments on trust properties. If the assessed value on a home does not reflect the permanent restrictions placed on the leased land, property taxes can make these homes cost-prohibitive despite the efforts of a land trust to make homeownership affordable.

“Inclusionary housing and inclusionary zoning constitute one of the arrows in the quiver of tools that can be used to create permanently or durably affordable housing,” says Carbonell. “Community land trusts could be one of the vehicles that actually receives those resources or provides those units as part of the regulatory process.”

Carbonell mentions three factors that limit the growth of a CLT: institutional capacity, community backing and available land. He suggests that the cities in the best shape to create robust community land trusts are the ones that are rapidly growing, with both blighted areas and developers in the position to make affordable housing concessions.

Additionally, there’s another, more philosophical issue to consider. “If people can use these tools to take land off the market and develop permanently affordable alternatives, they can effectively decommodify their housing and reclaim community control,” writes Stein. Are cities willing to respond to a groundswell of support (and contend with real estate interests as a result) in order to “decommodify” so much land — with the aim of guaranteeing permanent affordability for their residents?

The Equity Factor is made possible with the support of the Surdna Foundation.

Alexis Stephens was Next City’s 2014-2015 equitable cities fellow. She’s written about housing, pop culture, global music subcultures, and more for publications like Shelterforce, Rolling Stone, SPIN, and MTV Iggy. She has a B.A. in urban studies from Barnard College and an M.S. in historic preservation from the University of Pennsylvania.

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Tags: affordable housing