Community Land Trusts

1
Community Land Trusts

• Barbara Inman, Executive Director
• Habitat for Humanity of Pinellas County (Florida)
• Phone [phone]
• Email execdir_at_phfh.org
• Technology and Financial Health session
• Habitat Focus on the Future Conference, Oct. 07

2
What are CLTs?

• Modeled after land conservancy trusts established
  for ecological reasons
• Separate non-profit corporation that holds land
  for the purpose of providing affordable housing
  in perpetuity
• Takes the cost of land out of the cost to the
  buyer
• Sells the buildings on the land and establishes a
  long-term lease (typically 99 years) with the
  buyer

3
The Land Lease

• Assignable to heirs of the leaseholder
• A new land lease would be established if the home
  was sold to a new income-eligible buyer
• Florida just passed a law to exempt CLTs from
  paying taxes on land
• Not a Real-Estate Trust, which are closed
  arrangements with no public input

4
Who owns the CLT?

• The CLT is owned by the public
• Board is made up of housing professionals and
  community representatives
• Democratically-controlled
• No personal ownership
• Homeowners cannot be more than 49 of the board

5
How land is acquired by the CLT

• Must be some funding mechanism besides state and
  federal monies
• Land donated to HfH or purchased by us can be
  bought by the CLT after construction is
  complete
• Agencies/municipalities will contribute land to
  the CLT
• Private donations

6
Options for a Habitat affiliate

• Participate with an established CLT
• Be involved in the start-up of a local CLT
• Form your own CLT OR merge with an existing CLT
• Habitat for Humanity of Key West and the Lower
  Keys
• Bob Calhoun, Executive Director
• 305-872-4456 phone
• execdirector_at_habitatlowerkeys.org

7
How Habitat affiliates can participate with an
outside CLT

• Be involved in formation of the CLT
• Make certain lease or resale clauses are ones
  that your affiliate will accept
• Retain right to repurchase homes you have
  constructed
• Decide how you will handle equity caps or resale
  amounts
• Perhaps a Master Lease from the CLT to Habitat,
  and sub-leases to your owners

8
Advantage of a CLT working with a Habitat
affiliate

• Can be difficult to get banks to write the
  mortgagesnot an issue with HfH
• Habitat can potentially provide a pool of buyers
• For HfH-constructed units
• For other units in the CLT
• Habitat has land that it might/will sell or
  donate to the land trust

9
Advantages of CLT

• HfH retains better control of any units it
  constructs
• Relief for HfH for the cost of land probably
  more land available to us as well
• Maintains affordable housing units in perpetuity
• Might eliminate the need for a homeowners
  association HfH controls maintenance of
  multi-family projects

10
Advantages of CLT

• Pools some of the best players in affordable
  housing together to address issues/needs
• Synergistic development of funding sources and
  accountability
• Will likely garner wide-ranging support
  municipalities, corporations, congregations,
  individuals

11
Advantages of a CLT, contd

• Popularity should increase land pool
• CLT will be doing the purchasing of land
• A certain portion may be set aside for 80 and
  below of AMI (our market)
• Relief from land loans/grants, etc. and the
  resulting administrative work
• Homeowners pay less overall for their housing,
  and leave with some appreciation (although not as
  much as in fee-simple homeownership)

12
Drawbacks to a CLT

• Homeowner realizes less appreciation (over
  fee-simple ownership)
• The public has little common knowledge of CLTs
• Homeowner Candidates may resist CLT property over
  the possibility of fee-simple ownership
• This is a non-issue if all of the affiliates
  properties are land trust properties

13
Comparison of Current(fee-simple) vs. CLT
Equity-sharing model
Assumed future value annual increase of 4 for
improvements, 10 for land
14
Homeownership in a CLT

• Increases affordability to the homeowner in
  return
• Limits the equity available to the homeowner upon
  sale of the home
• Our agreement will require that the homeowner
  will sell the improvements back to us for sale to
  another qualified applicant
• Requires that the resale price be affordable
• Each homeowner needs to have their own legal
  representation at closing usually local legal
  services will have several attys versed in CLTs
  and will provide pro bono services

15
CLT Resources

• The National CLT Network
• www.cltnetwork.org/
• Join their ListServ
• http//groups.yahoo.com/group/NACLTNetwork
• Lincoln Institute of Land Policy in Cambridge,
  Massachusetts
• www.lincolninst.edu
• Institute for Community Economics
• Model ground lease widely used
• www.iceclt.org