By Maria Walliser-Wejebe, GOPC Project Associate
Community Land Trusts create an opportunity for low and middle income households to purchase a home, and maintain that affordability in perpetuity for other LMI households in the future. CLTs can be a useful tool to stabilize neighborhoods and preserve mixed-income communities, especially in recovering markets.
Recently, the city of Columbus announced that they would be setting up a Community Land Trust to provide long-term stability to changing neighborhoods. Read on to find an overview of Community Land Trusts and their role in providing opportunities for homeownership.
What is a Community Land Trust?
A Community Land Trust (CLT) is a shared equity homeownership model operated by a nonprofit entity. The nonprofit acquires property, builds and then sells homes at an affordable price while retaining the deed over the land. Prospective buyers have the opportunity to purchase the homes at an affordable price; they own the home on a long-term lease from the CLT and still earn equity from the purchase, but there are resale stipulations, should the homeowner decide to sell.
Why do communities form a Community Land Trust?
It is difficult to maintain housing affordability over long periods of time, especially in attractive markets. Homes sold below market rate don’t typically have requirements to resell at an affordable price. Additionally, the value of land often appreciates much faster than the value of the structure on the land, especially as an area becomes more desirable, pushing a home’s resale value up. By sharing the equity on homeownership and maintaining control of land, CLTs manage to effectively keep housing affordable in perpetuity for multiple generations of homeowners.
How does a Community Land Trust Work?
Under the shared-equity approach, the land which a house sits on is owned by the CLT, which then executes long-term leases for any structures - i.e. the home - which sit on the CLT land. The ground lease establishes a resale formula specific to each CLT, which often limits who the homeowner can sell to and the sale price of the property. By sharing equity with the homeowners, the CLT has some control to maintain long-term affordability.
Community Land Trusts support credit and equity building through homeownership. Despite limiting future sales prices, CLT resale formulas balance desires to maintain affordability with the right for the homeowner to retrieve their equity and realize appreciation from improvements they make while living in the house. Homeowners on CLT land pay all taxes and insurance on the home, and assume all of the rights and responsibilities of homeownership.
What is Columbus Doing?
In Columbus, the city plans to commit $3.8 million towards establishing the Central Ohio Community Land Trust. Properties currently owned by the County and City Land Banks in four different neighborhoods would be transferred into the Central Ohio CLT, where private and nonprofit funding sources would begin building the first 40 homes. The city’s funding contribution would subsidize the difference between the developers’ building cost for new homes and what the homeowner pays during the final sale, without resulting in a higher asking price. The homes would be sold to households who earn between $40,000 and $80,000 per year. Public and private contributions to a CLT bridge the gap between an affordable sales price and a structure’s market value.
The Central Ohio Community Land Trust would be the fourth CLT operating in the state. For more information on other community land trusts in Ohio, see below.
Community Land Cooperative of Cincinnati
Neighborhood Housing Services of Greater Cleveland/The Land Trust
Yellow Springs Home Inc.
For more resources on Community Land Trusts, see https://groundedsolutions.org/strengthening-neighborhoods/community-land-trusts