The Columbus Community Land Trust
A New Approach to Housing Affordability for Central Ohio Bill Plumley and Cameron Roberts
Prepared as part of the Linden Neighborhood Studio at Knowlton School, OSU, in Autumn 2017
Executive Summary The community land trust model is in use in over 300 locales across the country, managing over 10,000 parcels of land. With many examples to draw from, as far back as the 1980s and 90s, CLTs have an established track record of expanding access to homeownership, maintaining home affordability in latter decades, and acting as a responsible partner in redevelopment, beholden to residents instead of profit margins.
Pointing to examples such as Weinland Park and Italian Village, residents of Columbus neighborhoods such as Linden, the Near East, the South Side, and Hilltop, often name gentrification and being shut out of their own community among their top concerns as city and institutional attention and resources begin to focus on their communities. Itâ€™s in these neighborhoods, with vacant lots and homes still so numerous, that a CLT offers the most fitting solution. With affordable housing funding increasingly difficult to secure, the CLT model makes the most of every dollar it receives: funds help build a portfolio that remains in the trustâ€™s ownership, helping homebuyers today and for generations to come.
CLTâ€™s also serve the communities they operate in. They help revive blighted properties, often assist with home maintenance, and typically provide financial and legal assistance to help homeowners be successful. This stabilizes neighborhoods and helps them endure economic hardships; CLT homeowners have lower mortgage delinquency rates than even prime borrowers. Larger trusts can even expand their offerings into condominiums, rental units, and commercial property to help aspiring entrepreneurs with low resources get started. With the attention given to these neighborhoods as high as ever, and with concerns over housing affordability and the pressures of redevelopment at the fore, there is no better time to establish a community land trust serving the city, and the people, of Columbus.
Table of Contents What is a Community Land Trust?
Keeping Homeownership Affordable
Making Homeownership Affordable Benefitting the Community
Structuring a Community Land Trust Building a CLT for Columbus Further Reading
pg 4 pg 6 pg 7 pg 9
What is a Community Land Trust? Community land trusts (CLTs) are an affordable housing solution on the rise, with over 300 trusts nationwide managing a portfolio of over 10,000 parcels, in jurisdictions ranging from specific neighborhoods to entire counties and states. CLTs are traditionally non-profit, tax-exempt organizations, operating independently or as part of larger entities, that take on the task of maintaining affordability in homeownership in perpetuity.
“Do CLTs create stigma–however unfair it is–around certain neighborhoods and blocks like other affordable housing strategies?” CLTs tend to avoid this issue through their focus on working with marketrate housing or rehabilitating houses that have fallen off the market due to disrepair or abandonment. Most CLTs also tend to avoid clustering their holdings, keeping a patchwork of properties across the neighborhoods they serve, keeping their homeowners woven into the fabric of the community.
To do this, a CLT divorces the cost of the house and the cost of the land the house sits on. The cost of the physical structure and other improvements is relatively stable, with most major changes accounted for by the actions of the homeowner, such as remodeling and maintenance. Meanwhile, land prices can fluctuate dramatically due to forces outside a homeowner’s control, such as transit access, private and public investment, and neighborhood desirability and trendiness. As a community redevelops, and even gentrifies, it’s the increase in land prices that primarily increase the property value overall, putting homeownership out of reach for many. The CLT acquires a patchwork network of land parcels throughout their jurisdiction, and leases them to qualifying homebuyers under specific conditions for a nominal fee, while the homebuyer only then must mortgage the cost of the house itself. This makes the price much lower, especially in conjunction with other affordable housing grants and programs. The leasing fees fund the operation of the CLT, which has a vested interest in the success of the homeowner, and thus often offers assistance in services ranging from financing to maintenance and upkeep.
In exchange for this assistance, the homeowner commits to maintaining the quality of the property, and agree to abide by a pricing formula in the event of selling the house. The exact formula often varies between CLTs, but generally limits the price to the base cost plus a percentage of the appreciated value. Thus, if a house is purchased for $100,000, and is appraised for $180,000 at the time of sale, and the CLT allows for sale at 25% of appreciation, the homeowner can sell the house for up to $120,000. While this limits the homeowner’s return on investment, it ensures that the home remains affordable for successive owners well into the future while still allowing some accumulation of equity.
By removing land costs from consideration and making homeownership more affordable, a CLT is an excellent opportunity for locals and first-time homebuyers who would otherwise be priced out of the market. It also gives homeowners a partner in their own success, putting them in touch with resources such as legal and financial assistance, foreclosure avoidance, and maintenance and upkeep. And unlike many other affordable housing programs, CLT homeowners aren’t as exposed to political and funding changes, and are in a property that their family can inherit, ensuring that their participation isn’t temporary and beyond their control. The community as a whole benefits from the CLT, too: vacant land is put to productive use, the neighborhood receives an ally in its development, CLT homeowners are more resilient to housing market troubles, and a balance is found between market forces of redevelopment and the issue of affordability and accessibility.
A CLT is a wise strategy for many Columbus neighborhoods such as Linden, Hilltop, the South Side, and the Near East. The availability of vacant land provides ample opportunity to start building a portfolio of parcels while protecting against speculation from developers that don’t have the best interests of residents in mind. The attention these communities are receiving gives the chance to turn shortterm funding opportunities into successful long-term solutions, as well as providing a strong institution to partner in any community programs. A noted concern among residents is that their neighborhood will see the gentrification and skyrocketing costs that other parts of Central Ohio have seen; this helps address those concerns. And while intervention efforts have too often turned out to be half-hearted and short-term, a CLT is an enduring program that is built to be around for decades to come.
“Doesn’t limiting returns on appreciation when the owner sells their home eliminate one of the most appealing parts of homeownership?” The resale formula was established to balance homeowner gains with lasting housing affordability. Without this, CLT house prices would grow in stride with the rest of the housing market, outpacing inflation and wage increases, putting homeownership further out of reach of future households. Since a CLT works with those who can’t afford or obtain mortgages at market price, this creates a way to build equity and wealth that rental housing doesn’t.
Making Homeownership Affordable
“Isn’t a CLT a distortion of the free market?” CLTs work with the market while staying out of its way; their homes are often formerly underutilized assets, do little to impact area housing prices, and their members can still gain equity and earn a return on investment like traditional homeowners. These gains and the proven credit history that comes with homeownership allows people to use a CLT home as a stepping stone to open market housing, if they so desire.
While much of the focus of a CLT is in its rewards for homeowners in the decades to come, its role in making buying a house for its first generation of members is just as important to the concept. This comes mostly from the CLT’s ownership of the land itself; by removing this expense from the purchase cost of the home and leasing it at a nominal rate, a qualifying buyer joining a CLT only needs to mortgage the cost of the home itself. A lower principal can mean lower monthly payments, a lower down-payment, or a shorter term. For many households, this is the difference between qualifying for and affording a mortgage or not. The reduced cost also means that some other assistance programs for low-income or first-time homebuyers can be of greater value proportionate to the cost when awarded in fixed amounts, or be offered to more households overall when awarded as a percentage.
Immediate home affordability has always been a goal of CLTs. The Champlain Housing Trust reports that their average initial sale is to a household earning only 62% of the area mean income (AMI). Seattle’s Homestead CLT has built a portfolio of over 200 homes working exclusively with households earning less than 80% of AMI. CLTs also work to make the homeownership experience successful, often providing financial counseling and first-time homebuyer education and partnering with community banks and credit unions to create mortgage offerings that work with CLTs while being fair and responsible.
As housing prices continue to recover from recession lows, increasing at rates outpacing wage increases, the housing market is becoming less welcoming to those earning lower incomes. Year-toyear housing prices are up over 5% in the Columbus area this year, with the biggest increases coming in places traditionally considered more affordable: 17% increase in Whitehall, 15% increase in Blacklick, and 28% in Obetz. A CLT provides an immediate solution while locking in public funds for the future.
Keeping Homeownership Affordable While there are immediate benefits to be had, CLTs are most famous for being a way to address home affordability in the longterm, a permanent solution where funding today can still benefit generations to come. By keeping land under the trust’s ownership, with members agreeing to a formulaic resale value that limits the impact of market price increases, a CLT protects against the cost of housing outpacing wage increases and inflation, as well as sharper increases in specific neighborhoods due to redevelopment and gentrification.
Champlain Housing Trust has seen their homes actually become more affordable over the years; while initial purchases were by households earning an average of 62% of AMI, resales were going to households averaging 57%. The Guadalupe Neighborhood Development Corporation tells the story of its first home: The price of the land alone was $20,000 in 1989, and when the home was sold in 2012, that land value had increased by 500%. As a result, a single mother working as an office administrator bought a $270,000 home for $150,000, while the GNDC ‘subsidized’ $120,000 of the cost for just $20,000 from twenty-three years prior. The fear of gentrification is strong in many Central Ohio communities, who point to changes in the Olde Towne East and Weinland Park as instances where locals are being priced out of their own neighborhoods. Those who are being displaced, however many there may be, are finding it difficult to find new homes they can afford after relocation. For neighborhoods that have not yet seen the pressures of escalating costs, timely investment in a CLT is an excellent way to commit to housing affordability well into the future while becoming a partner in redevelopment that has the interests of locals at heart.
“If CLT homeowners are limited in resale price, what motivates them to maintain and improve their home?” Most CLTs require a standard level of upkeep that the homeowner agrees to in their lease of the land, and many CLTs offer resources and assistance to help members keep to this agreement. Deviating from the traditional version, some resale formulas will allow for bonuses to the allowed resale price in recognition of major additions and improvements.
Benefitting the Community
“What role does a CLT have as part of a city’s affordable housing programming?” CLTs operate between households most in need and households that only need minimal assistance to afford housing. While often limited to those earning less than 80100% of the area median income, many CLTs can provide affordable homeownership to those earning even less, often around 60% AMI. The CLT’s ability to lock in funds received to increasingly help each successive generation make this an appealing program to serve this income range.
In addition to helping the homeowners of today and tomorrow, community land trusts benefit the neighborhoods they operate in in a variety of ways. Many of these benefits are intrinsic to a CLT’s basic operations. Trusts often target underutilized property— vacant lots, abandoned homes, foreclosed property, and the like— and bring the resources needed to build or rehabilitate houses and find occupants for them. This minimizes the dangers associated with unmaintained property, improves neighborhood vitality and appearance, and protects against real estate speculators buying and holding on for however long is needed to make a profit. The services a CLT often provides its homeowner members help keep communities stable, too. By providing financial counseling and legal advice on mortgage and refinancing opportunities, the trust helps shield against predatory lending practices. With this protection combined with an affordable homeownership situation suited to their incomes, CLT homeowners are often more successful in enduring market downturns. In December 2009, in the depths of the recession, only 1.6% of CLT mortgages were considered severely delinquent, versus 7.0% of prime mortgages and 30.6% of subprime mortgages. Fewer foreclosures helps maintain property values for the entire community during the worst of times.
CLTs also serve as anchor institutions for the neighborhoods they serve, advocating on behalf of locals and providing services for the public at large. Boston’s Dudley Street Neighborhood Initiative, for example, founded a Resident Development Institution, which keeps record of the community’s history, provides data and advocacy for decision-making in the area, and builds capacity in residents through leadership and civic engagement classes. Larger CLTs often work on responsible redevelopment of larger sites, facilitating construction of low-income rental housing, condominiums, senior living facilities, and commercial space available to entrepreneurs who may lack the resources needed to secure a location elsewhere. All this can add up to a stronger community with diverse and accessible development and the ability to help shape its own future.
Structuring a Community Land Trust Just as no community is the same, no CLT tailored to best serve a community is the same, either. CLTs have seen their origins at different levels of governance, ranging from city, regional, and state authorities, all the way to concerned locals banding together and taking the initiative. CLT service areas reflect this broad spectrum, too, from neighborhood-specific programs to multi-county regions or entire states. CLT leadership design, administrative staffing, funding sources, resale formulas, and more, also vary from one trust to another. Home acquisition strategies vary, too: common approaches include purchasing and repairing old homes or having new homes built charitably and selling to qualifying homeowners, or finding those homeowners first and partnering with them to split the purchase of a home from the open market. For example, the Durham CLT in North Carolina and Boston’s Dudley Street Neighborhood Initiative both exhibit successful programs that are focused on a neighborhood level, founded by residents. While having needed to find initial funding through grants, donations, and government programs, both have now been established for over 30 years and manage portfolios of hundreds of units. Meanwhile, Vermont’s Champlain Housing Trust and Washington State’s Homestead CLT are examples of larger-scale operations; the former was launched as a partnership of the city of Burlington—who gave substantial public funds—and surrounding communities and civic groups, while the latter grew from a citizendriven start to service the Greater Seattle and King County area.
“Why use a CLT instead of just providing direct subsidies to qualifying homebuyers?” Direct subsidies only help the qualifying homebuyer of today, with no benefit seen at the time of the next sale: the home is resold on the open market and that subsidy is lost to the public. Money given to a CLT can indirectly subsidize the homebuyer of today by taking the land cost out of their mortgage, but this subsidy remains for future homebuyers as well as the lease passes to them. As the land price rises over time, that subsidy only grows larger.
DETERMINING A SERVICE AREA
There is no one size for a Community Land Trust. CLT’s have been successfully implemented on a variety of project scales depending on the level of neighborhood involvement, funding, and existing agencies. Larger CLT’s are often administratively self-sufficient through leasing fees and alternate revenue streams, like rentals.
Many bottom-up, neighborhood scale CLT’s rely on grants, donations, and government funding for their success.
Case Study Examples: - Champlain Housing Trust - Homestead Community Land Trust
Case Study Examples: - Durham Community Land Trustees - Dudley Street Neighborhood Initiative
Many CLT’s use a three-part board of directors, as shown to the right, consisting of nine to twelve people.
This structure helps establish an environment where key stakeholders have equal footing in organizational policy decisions.
The CLT homeowner portion is often phased in, to avoid ‘mandatory’ board membership from the first members.
Three-Part Governance Structure
Civic and Business Leaders
Building a CLT for Columbus For Columbus, a program encompassing the entire city or Central Ohio as a whole would be best, with targeted focus on neighborhoods primed for recovery, such as Linden, Hilltop, the Near East, and the South Side. A CLT would help these communities maintain affordability for current residents and later generations without being priced out of the home they have known for years. With success, the CLT could oversee other forms of development, such as senior living, to keep family members of all age together.
These residents would also be incorporated into the traditional CLT three-part directorship: one third of a panel of nine would be formal housing officials, one third would be leadership from community groups, and the final third, phased in at adequate membership thresholds, would be CLT residents themselves. The trust’s administrative staff would be sourced from an existing community institution or housing authority until the trust is large enough to warrant full-time workers and has the leasing fee revenue and supporting funding to afford them. Housing acquisition strategies could easily favor purchase and resale, while partnered purchases could come as opportunities for the former diminish. Funding, too, could be sourced from numerous locations. While affordable housing money is stretched thin, the Columbus area and the state as a whole are home to many generous institutions of all sizes—coming from government, businesses, community groups, and more—and an ambitious project like a CLT could be a radical change of pace in the region that could rally them together, especially with how keen some are to help the neighborhoods this would best serve. These contributions could also fund a suite of supporting services—financial counseling, housing maintenance assistance, community programs, and more—that would help CLT homeowners find success and be a valuable ally to their neighbors. While this is certainly not all that needs to be considered to get the Columbus Community Land Trust launched, and while further exploration might expose better options than those mentioned, this serves as a starting point for discussion going forward, and helps to visualize what this program could look like in Central Ohio.
“Would a CLT be politically viable in the State of Ohio? ” According to the CLT Network’s directory, CLTs currently operate in 45 out of 50 states plus Washington DC. These states range from east to west and north to south, coastal to inland, conservative to liberal, and the areas they serve cover major metropolises, small cities, and rural areas alike. There are already CLTs in operation in Ohio, with this same diversity of locale reflected from the Village of Yellow Springs to the City of Cleveland.
Further Reading For more information about CLTs
The National Community Land Trust Network
Burlington Associates in Community Development
To learn more about the CLTs discussed here
Guadalupe Neighborhood Dev. Corp. - Austin, Texas
Champlain Housing Trust - Burlington, Vermont
Durham Community Land Trust, Durham, N. Carolina
Yellow Springs Home, Inc. - Yellow Springs, Ohio
Dudley St. Neighborhood Initiative - Boston, Mass.
NHS of Greater Cleveland - Cleveland, Ohio
Homestead Community Land Trust - Seattle, Wash.
A new approach to housing affordability in Central Ohio.