Community land trusts (“CLTs”) are gaining popularity across the country as many communities and city leaders search for ways to develop and maintain affordable housing. Although CLTs are not a new tool, they are becoming more widespread with over 200 now in operation and more likely to follow as people flock to city centers.1 CLTs developed as a mechanism to combat complex social issues – the first CLT was established in Georgia as part of the civil rights movement – and they are certainly not without their critics. It is undeniable, however, that the demand for affordable housing only continues to rise and CLTs may be one answer to this growing problem.
A CLT is defined by the Institute for Community Economics as “an organization created to hold land for the benefit of a community and of individuals within the community.”2 Although typically a nonprofit organization, there are numerous CLT models that can be tailored to fit the community in which they operate. CLTs are typically governed by a board of trustees or directors and acquire land either through purchase or donation. The acquired land can be vacant, agricultural, or residential in nature, but the goal is to determine the best use of this land in the community and develop it accordingly.
To create affordable housing, CLTs sell homes they have acquired while concurrently executing a lease of the underlying land. Thus, the CLT retains ownership of the land itself and includes lease terms that restrict both the income level of the buyer and the eventual resale value of the home based on a formula that may take into account factors such as fair market value and appreciation or depreciation of the property. In addition, lease terms may also include provisions which prohibit subleasing or dictate who can occupy the home. However, there are numerous benefits to a homeowner entering into such a lease – CLTs often assist current homeowners even after closing, providing financial training and sometimes stepping in when necessary to help the homeowner avoid foreclosure.3
Denver is no stranger to the problem of inadequate affordable housing. According to city statistics, there are approximately 150,000 renter households in Denver. Approximately 61% of those households earn an income of less than $50,000; roughly half spend over 30% of their income on housing, and almost a quarter spend more than 50%.4
In the fall of 2016, the Denver City Council approved a dedicated affordable housing fund estimated to raise $150 million in revenue over the next ten years through a property tax and development fee. Managed by a Housing Advisory Committee, these funds are designed to facilitate affordable housing in a number of ways, including providing permanent housing, workforce rental housing, and family rental housing projects. In addition, the fund will support down payment assistance programs and allow for an administrative budget to manage the fund’s endeavors. A portion of the fund’s revenue is also reserved for innovation, which will be used to research and develop other methods of providing affordable housing within the city.5
In northern Denver, several communities are considering a CLT as a way to assist existing homeowners by creating a long term program that ensures sustainability of affordable housing in the area for years to come. To do this, a coalition formed by the residents of Globeville and Elyria-Swansea is seeking money from the affordable housing fund and others in order to establish a trust and purchase lots to begin selling in the next five years to home buyers who qualify.6
Unfortunately, there is no single solution to this problem, and CLTs have pros and cons. For example, some argue CLT lease restrictions that limit resale value prevent homeowners from reaping the full benefits of owning a home. Others, however, point out that homeowners in CLT housing are building equity, something they could not do while renting, and the community benefits as a whole when the home is passed on to others who might otherwise be priced out of the area. Regardless of lease restrictions, proponents of CLTs contend that they generally foster community growth and investment from the homeowners benefitting from the program. CLTs may not be a perfect solution to this complex issue facing numerous cities, but the establishment of a CLT is certainly an option for communities to consider.
1 Stephen R. Miller, Community Land Trusts: Why Now Is the Time to Integrate This Housing Activists’ Tool into Local Government Affordable Housing Policies, J. Affordable Housing & Community Dev. L., 2015, at 349, 353 (2015).
2 D. Community Land Trusts, Leg. Guide to Affordable Housing Dev. s 4.III.D (2011).
3 Alese Bagdol, Property Taxes and Community Land Trusts: A Middle Ground, 91 Tex. L. Rev. 939, 942-43 (2013).
4 City of Denver, Dedicated Affordable Housing Fund, https://www.denvergov.org/content/denvergov/en/denver-office-of-economic-development/housing-neighborhoods/DenversPermanentFundforHousing.html (last visited Dec. 11, 2017).
5 Id.
6 Stephanie Wolf, A Denver Community Considers a Land Trust to Keep Residents in Their Homes, COLORADO PUBLIC RADIO (Aug. 15, 2017), https://www.cpr.org/news/story/how-a-denver-community-hopes-a-land-trust-will-keep-its-residents-in-their-homes#.WZ8Ep9wiKzU.email.