Urban Commons (3): Community Land Trusts

In the UK, a CLT is defined as follows:

“A Community Land Trust is a mechanism for the democratic ownership of land by the local community. Land is taken out of the market and separated from its productive use so that the impact of land appreciation is removed, therefore enabling long-term affordable and sustainable local development ”

Philip Cryan extensively treats the topic in the OTC blog:

“Community Land Trusts (CLTs) are a unique commons-based form of property rights. Instead of the usual arrangements where individual property-owners hold all the rights or where corporate property-owners are legally accountable to shareholders, land trusts are “owned” by a board of “trustees” who are legally accountable to whoever has been defined in the trust’s charter as its “beneficiaries.” Community Land Trusts were introduced to the U.S. in the 1960s an 1970s by the Institute for Community Economics (ICE), which drew on a variety of established international models, particularly from India. ICE’s idea was that trusts would be governed by their membership, and open both to those who reside on the particular land and to other members of the local community.

In most CLT arrangements residents own the house where they live, and can accumulate a modest amount of property value through improvements they’ve made to the land and house when they sell it. But they cannot profit from the real-estate value of the land itself, which remains in the ownership of the trust. The model has stood up well as way to stabilize affordable housing for low- to moderate-income people (although not for the lowest-income people). The positive results of removing property from the volatility of the real estate market can be seen in the Dudley Street neighborhood of Roxbury in Boston, where a powerful community organization in 1988 turned many vacant lots into a CLT.

“Four hundred new homes occupy once-weed-strewn lots; small businesses thrive; a greenhouse grows organic produce for local restaurants; parks and playgrounds have been rebuilt; and next door a $100 million community center is underway. Home prices in this section of Roxbury are as much as 10 times higher than when the Dudley Street Neighborhood Initiative formed in 1984. The housing in the trust, however, remains available to the next nurse, teacher, or bank teller who wants to stay in the community,” wrote David Abramowitz and Roz Greenstein in the Boston Globe.

The CLT model has been more widely adopted in rural settings than cities, to protect land from development (a model used by the Nature Conservancy) or to preserve land for farming. But there are increasing examples of urban CLTs designed to allow low-income families to become first-time homeowners. Typically, a CLT involves a 99-year lease of the land, which is inheritable just like regular real estate property and which can be renewed on the same terms when it expires. Each housing CLT lays out a formula to determine how much equity residents can acquire, which determines how much money sellers of CLT homes receive from the sale; usually this formula is based primarily on how many years they have been in the home and what improvements they have made to the property. The amount of money they get is naturally much smaller than would be the case for a conventional, private home-owner whose home’s real-estate value has appreciated.

One of the great strengths of the CLT model is that trustees are legally bound to show “undivided loyalty” to the trust’s beneficiaries. Just as a corporate executive who fails to act in good faith to maximize profits has violated the terms of his employment, a trustee who fails to act in good faith to protect the land, ensure affordability for CLT residents, or fulfill any other duty to beneficiaries stipulated in the terms of the trust can he held legally accountable for this failure.

One promising example of an urban CLT is the Figueroa Corridor CLT in Los Angeles. The land trust emerged out of Strategic Actions for a Just Economy (SAJE), a community organizing group that is another founding member of the Right to the City alliance. SAJE and a coalition of other groups negotiated a Community Benefits Agreement (a powerful tool in which developers agree to provide a community with certain benefits in exchange for the right to undertake a development in that community) with the Staples Center,which was planning a huge development in the Figueroa Corridor. They secured $5 million for affordable housing from the developers. The developers, however, did not want to be involved in providing the affordable housing; they preferred to grant the $5 million as seed money to a non-profit group, which was how the Figueroa Corridor CLT (FCCLT) was created.

While it is still in its early stages – acquiring land, seeking further funding, doing community-based planning– the FCCLT offers a compelling example of how the CLT model can strengthen other forms of community action. When the FCCLT needed to conduct a survey of the conditions of houses, commercial buildings, streets, sidewalks, public transportation, parks, businesses, vacant lots, etc., it sponsored a community “walkabout.” Small teams of community members walked their neighborhoods and conducted the survey, assessing conditions according to criteria community members themselves had developed in a series of community meetings “It was gratifying for us to see,” says FCCLT organizer Monic Uriarte, “that we can take on big things, and do them ourselves.” “One way to build on the existing momentum,” note urban scholars Gar Alperovitz, Thad Williamson and David Imbroscio, “would be to extend the land trust model to the commercial sector. Land trusts can be used as a base to launch community-owned business endeavors, or a portion of land trust acreage can be leased to private commercial ventures, whose rents can in turn be used for broader community revitalization projects.”

This idea raises very interesting possibilities. Could a CLT with a strong interest in promoting community-owned small businesses and no financial interest in the property value of the land they lease– simply because it’s a land trust – lower overhead costs for community-owned businesses to make them more competitive? Could a model be developed where a successful commercial district on CLT land generates lease revenues that continuously fund expansion of the CLT, including the creation of more affordable housing? There seems no reason – besides the huge challenges of securing funding– why commercial, and even industrial, land uses cannot be incorporated into the CLT model.

Organizations seeking to create a CLT face one large obstacle: finding funds to buy the land in the first place. This greatly limits the reach and usefulness of this strategy for protecting urban neighborhoods from the forces of gentrification and foreclosure. Still, some poor urban community organizations have succeeded in piecing together the necessary funding from foundations and individuals. And the experience of the Figueroa Corridor CLT suggests another approach: making funding for CLTs part of Community Benefits Agreements negotiated with developers. Another potential source of funding for CLTs is local, state and federal government. A number of different matching-grant, subsidy, or tax-break policies could be developed – or extended beyond their current modest levels – to help community organizations form CLTs and acquire land. Local governments could also do what the city of Boston chose to do in the late 1980s when it granted the non-profit Dudley Street Neighborhood Initiative eminent domain rights to claim vacant lots for redevelopment. With that level of city support – or even just a few sizable matching grants – the funding challenges of creating a CLT may not look quite as daunting.

As a model for taking low- and middle-income families’ homes out of the risky swings of the real estate market, for maintaining neighborhood stability, for empowering community members to do their own planning, and for allowing community members to manage their communities for the long haul, CLTs show tremendous promise for building a city that belongs to all of us.”

1 Comment Urban Commons (3): Community Land Trusts

  1. Chris Cook

    The principle of putting the land into trust/custody is a good one.

    Our Land Partnership approach solves the financing problem by allowing the value of the land to be invested, and it essentially replaces the 99 year lease with an indefinite or “evergreen” right of occupation within a partnership-based contractual framework or agreement.

    For as long as Occupiers pay a rental in respect of the capital invested in the location then they may occupy the location.

    Equity Shares – a solution to the Credit Crash

    The effect is to create a new form of co-ownership between occupier and financier.

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