Local governments can invest in this strategy using State and Local Fiscal Recovery Funds (SLFRF) from the American Rescue Plan Act (ARPA).
- This strategy helps facilitate investments in housing. The U.S. Department of Treasury has indicated that strategies that help achieve this outcome are eligible for the use of Fiscal Recovery Funds.
- Investments in this strategy are SLFRF-eligible as long as they are made in qualified census tracts or are designed to assist populations or communities disproportionately impacted by COVID-19.
Program overview
Managing land to fulfill community goals: A community land trust (CLT) is a nonprofit or quasi-governmental organization that owns and manages land in the public interest. Most often, CLTs operate with the purpose of creating housing that remains affordable over time.
Led by community members: CLTs are typically governed by a board composed of CLT residents, community members, and government and nonprofit stakeholders. To fund the purchase of land, CLTs rely on government and philanthropic partners, who provide both one-time and ongoing support.
Creating affordable housing: When an individual or family buys a CLT home, they purchase the structure but not the land on which it is built. Instead, the CLT retains ownership of the land and issues the homebuyer a long-term (typically, 99 year) ground lease for it. This arrangement makes homeownership more affordable, as the purchaser is only responsible for paying for the home itself.
Maintaining affordability: In exchange for the subsidy, the homeowner agrees to resale conditions in the lease that aim to preserve the affordability of the home when it is sold. Typically, this is done through a formula which balances maintaining affordability with allowing the homeowner to build wealth. Other common resale conditions include income restrictions on potential buyers (i.e., to restrict purchases to low- or middle-income households) and an option allowing the CLT to buy back the home at a set price.
- Strategies
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Creating affordable housingHousing stability and displacement preventionAccessing private market housing
- Cost per Participant
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Variable
Multiple studies with rigorous designs provide some evidence for community land trusts as a strategy to improve housing stability. Multiple studies with less-rigorous designs suggest that CLTs are also a promising strategy for increasing housing affordability.
A 2022 research synthesis found some evidence that community land trusts increase housing stability and decrease rates of foreclosure and payment delinquency.
In a 2019 pre-post study of 4,108 sales across 58 shared equity programs, 95 percent of homes were considered affordable (80 percent of area median income at first sale).
In a 2017 quasi-experimental study buying a shared-equity home was associated with a $36,346 reduction in mortgage debt.
Build community support: While there are more than 260 CLTs in the United States, many key decision makers may be unfamiliar with the CLT model. Since CLTs demand considerable resources to operate at scale, community support is essential to setting up and sustaining a CLT. Including prospective homebuyers and community members in designing and managing the CLT (e.g., through board membership) can build the support needed to convince public funders and private lenders.
Make home buying easy: A lengthy or complicated home buying process can be a barrier to low- and middle-income first-time home buyers (e.g., a family may need to line up the end of their lease on their current home with purchasing a CLT home). Creating a streamlined home buying process can make purchasing a CLT home realistic for more households.
Maintain CLT homes: CLT homes require proper maintenance and periodic upgrades in order to meet the needs of future homebuyers. To encourage maintenance, CLTs can educate homebuyers on home maintenance, enforce maintenance provisions in the ground lease, assist homeowners in identifying financing for repairs and renovations, and more.
Identify ongoing funding opportunities: When CLTs have sustained and predictable funding, they are better able to plan for future land acquisitions that will expand the stock of affordable housing. Beyond government and philanthropic grants, common sources of funding for CLTs include local policies that either produce revenue for the CLT (e.g., condominium conversion fees) or create additional housing units that are added to the CLT portfolio (e.g., density bonuses).
Tax CLT homes fairly: When assessors do not take into consideration factors that reduce the profitability of CLT homes (e.g., resale restrictions), the homes can become unaffordable to low- and middle-income households. Local government assessors should develop an alternative assessment process for CLT homes that accounts for resale restrictions and reduces their tax burden relative to comparable private market housing.
