Frequently Asked Questions

Deciding to Start a CLT
The Variety of CLT Programs
How CLT Homeownership Works
CLT Relationships with Governments and Other Organizations

Deciding to Start a CLT

Why have a number of communities chosen the CLT approach to affordable homeownership?
These communities differ in many ways, but all of them are concerned about what will happen to the homes after the first owners leave. For low-income communities suffering from disinvestment—like the neighborhoods of west central Durham —the primary goal is to sustain owner-occupancy and prevent a return to absentee ownership. For communities where property values are rising, as in Albuquerque and Burlington, the primary goal is to limit resale prices so the homes will continue to be affordable for lower income households. All of these communities recognize that just producing affordable housing is not enough. They need some way to control what happens to the housing in the long run. The community land trust gives them a way to do this.
"We wanted to be able to revitalize those neighborhoods without making them unaffordable to the people who lived there."
— Brenda Torpy, Burlington CLT

What kinds of groups have started CLTs?
CLTs have been established by a variety of local groups, including neighborhood associations, religious coalitions, community development corporations, local governments, and groups of concerned citizens. Regardless of the kind of group, organizing a CLT involves an effort to familiarize the community with the CLT concept and to develop grassroots support and participation.
"The community was involved in the planning process. As a result of
that, the neighborhood is very supportive of this project."
— Debbie O’Malley, Sawmill CLT

How large an area does a CLT serve?
Some CLTs serve a single neighborhood, like Sawmill CLT in Albuquerque, or a small rural community, like CLTs in Maine and other rural areas. Some serve a larger section of a city, like the Durham CLT, or an entire city or county, like the Burlington CLT. How a CLT’s territory is defined is shaped by the immediate interests of its founders, the location and nature of housing needs, the location of project opportunities, and the roles and service areas of other housing and community development organizations in the general area.

The Variety of CLT Programs

Does a CLT usually acquire more than one parcel of land?
A few CLTs, like the one in Albuquerque, have launched their programs with the
development of a single large parcel of land, but most, like the Durham and Burlington CLTs, have acquired many smaller properties, one at a time over the years, throughout a neighborhood or city or rural area.

How do CLTs acquire property?
In most cases, CLTs acquire property in the same ways as do other nonprofit organizations. As tax-exempt organizations, they sometimes receive gifts of property from individuals or corporations and quite often acquire city or county-owned property from local governments. But in many cases, they purchase property in the open market— often with the help of funding from public sources.

What kinds of housing do CLTs provide?
As is illustrated by the wide variety of housing developed by the Burlington CLT, it is possible for CLTs to provide any type of housing for which there is a need in the local community and for which there is an opportunity to create permanent affordability for lower income households.

"We have folks living in shelters; we have single-room occupancy; we have very affordable rentals; we have housing cooperatives; we have affordable condominiums throughout the city and county, and affordable single-family homes."
— Brenda Torpy, Burlington CLT

Can CLT land be used for purposes other than housing?
Many land uses are possible— from facilities for community services such as the "food
shelf," Legal Aid, and the Technology Center in Burlington, to local businesses, parks, and plazas, as planned in Albuquerque, to gardening and fuel wood production in the case of some rural CLTs.

How CLT Homeownership Works

How does the CLT reduce the cost of housing in the first place?
In producing affordable housing, CLTs usually rely on the same resources as other affordable homeownership programs — including grants from government programs, contributions of property from both public and private sources, volunteer labor, and so on. At the same time, CLT projects do sometimes gain greater access to these resources because the CLT is able to extend their benefits for the long-term — not only for rental housing but for owner-occupied housing as well. In Vermont, both the City of Burlington and the State have adopted policies that provide subsidies only for housing that is permanently affordable (in part because of the successful example set by the Burlington CLT).

How does the CLT make sure that the home will be affordable—and available—for other lower income households?
CLT homeowners and their descendents have a right to occupy and use the leased land for as long as they wish, provided that they abide by the terms of the land lease. These terms place some limitations on the resale of the home— preventing resale to a household that does not qualify as low or moderate income, and limiting the sales price to keep it affordable. The lease lays out a "resale formula" that determines the maximum allowable price.

"We’re old enough to have had a number of resales, and we’ve seen it really work. The second time around we don’t need any additional government subsidy and we typically serve a lower income family. We’re doing that at the same time that the seller is taking equity with them…and has had all the tax benefits and all the security that homeownership offers."
— Brenda Torpy, Burlington CLT

How do resale formulas work?
Each CLT — given its own goals and local circumstances — designs its own resale formula to set maximum prices that are as fair as possible to the seller while staying affordable for the next buyer. There are several types, but the majority of CLTs use
what are called "appraisal-based" formulas. These formulas set the maximum price as the sum of what the seller paid for the home in the first place plus a certain percentage of any increase in market value (as measured by appraisals). Variations on these and other types of formulas are possible. Most local groups starting CLT programs spend a good deal of time examining the various possibilities before deciding on a formula.

"The formula would give you back what you had invested in the house plus an inflation factor, but you would not be able to go out and sell that house on the open market at an inflated value."
—Beverly Little, Durham CLT

How do CLTs insure continued owner-occupancy?
The ground lease requires that owners continue to live in the home as their primary residence. Subleasing is permitted only for limited periods with the consent of the CLT. If owners want or need to move away permanently, they must sell the home. The lease does not allow them to continue as absentee owners.

Can CLT homes be inherited?
Yes, the home is an asset that can be left to the owner’s children or to anyone else the owner chooses. When a home is inherited, most CLTs will allow the heirs to live in the home if they are (1) children of the deceased owner, or (2) have already lived in the home for a period of time, or (3) qualify as low or moderate income households. Heirs who do not meet any of these qualifications, or who do not intend to live in the home anyway, must sell the home, in accordance with the resale restrictions, and will receive the proceeds from the sale.

Is it really fair to restrict resale prices for lower income CLT homeowners when higher income conventional homeowners can sell for market-rate prices?
CLTs look at this question not in terms of what would be fair in an ideal world, but in terms of the real choices open to lower income tenants, most of whom are not able, on their own, to buy decent homes in their communities through conventional channels. Homeownership through a CLT can give them many advantages that they do not enjoy as tenants — long-term security, a chance to build substantial assets through affordable monthly payments, and the opportunity to leave these benefits to their children. But, as with any investment, potential buyers should look at the advantages and disadvantages of all their options, and make their own decisions.

"I didn’t buy this house to make a profit. I did it to get ahead…. This is not the traditional market. You have to understand that principle before you buy a land trust house."
—Linda Lewis Giles, Durham CLT

What other benefits do CLTs give their homeowners?
Some CLTs provide homeowner training and assistance. Some have developed home repair loan funds and have made special arrangements for leaseholders who face unexpected financial problems. Most CLTs help the owners sell their homes when the time comes, which means the owners get to keep more of the resale price. And, as members of the organization, all CLT residents share a set of connections with the community and each other that can bring tangible benefits, like the sharing of a lawn mower, as well as the sense of security that comes from belonging to a group.

How do property taxes work?
Residents pay property taxes on their homes if they own them. CLTs usually pay taxes on their landholdings, with the cost usually covered by lease fees from those using the land.
(CLTs and their residents can request reduced property tax assessments based on the resale value of the home as determined by the CLT’s resale formula rather than what would otherwise be the market value of the property.)

Can CLT homebuyers get mortgage loans even though they won’t own the land outright?
CLTs have been able to negotiate mortgage agreements that address the basic concerns of lenders while protecting the CLT’s long-term interest in the property. These agreements typically allow the CLT to take action, if necessary, to prevent foreclosure and the sale of the property on the open market. Such mortgages give the lender a claim on the borrower’s house and "leasehold interest." The CLT’s "fee interest" in the land is not mortgaged. These "leasehold mortgages" can be, and have been, insured by FHA, and have been purchased by Fannie Mae and a number of state housing finance agencies, as well as banks. CLT homebuyers have also received mortgage loans through the Rural Housing Services program of the federal Department of Agriculture.

CLT Relationships with Governments and Other Organizations

Are CLTs supported by local governments?
It is common for CLTs to work in cooperation with local governments in meeting present and future community needs. A growing number of public officials recognize that CLTs can play an important role as stewards of community resources and that property and funds allocated to a CLT can benefit not only present community residents but future residents as well.

"Particularly if there is a public investment in housing, I think we ought to be very careful as to where that investment flows. With the land trust model, that investment remains with the community and the long-term affordability of the housing is guaranteed."
— Peter Clavelle, Mayor of Burlington, Vermont

A number of states and municipalities — including all three cities featured in the CLTs described in CLT Profiles — have allocated Community Development Block Grant and HOME funds, as well as other available resources, to CLT programs. Some — as in the notable case of the large Albuquerque project— have allocated city-owned land.

Do federal housing programs provide for CLTs?
The 1992 Housing and Community Development Act makes specific provision for CLT funding under the federal HOME program (which provides block grants to municipalities and states to be used for affordable housing programs in their jurisdictions). The Act defines CLTs as "community housing development organizations" (CHDOs) under the HOME program, thus qualifying them for additional project funding, operating support, and technical assistance. (In 1999, ICE received its second three-year national contract with HUD to provide technical assistance to CHDOs that operate as or want to start CLTs.)

How do CLTs relate to other housing organizations?
Many CLTs are initiated through the sponsorship of other organizations, or emerge out of other organizations as in the case of Albuquerque’s Sawmill CLT. Most CLTs, regardless of how they were created, cooperate with the efforts of other organizations in their community. Burlington CLT, for instance, works closely with a network of organizations that address the area’s housing and community development needs. In a number of communities it is common for CLTs to acquire housing (or the land beneath housing) that has been built or rehabilitated by other not-for-profit (or sometimes for-profit) organizations.

How do CLTs relate to limited equity housing co-ops?
Co-op housing is owned by a corporation that is controlled by the people who live in the housing. Thus co-op residents do not own their homes individually, but each household owns a share in the corporation and has a "proprietary lease" to their own apartment. When a household wants to move away, they can sell their share — and their rights as co-op residents — to another buyer. In the case of "limited-equity" co-ops, the price for which shares can be sold is limited by the corporate bylaws to keep the housing affordable. (In "market rate" co-ops, shares can be sold for whatever the market will
bear.)

Some CLTs, like the Burlington CLT, have developed limited equity co-ops on land leased from the CLT. These CLTs can provide important support services to the co-ops, and the land lease can help to ensure long-term affordability by requiring that restrictions on the sale of shares remain in place.

How are CLTs different from conservation land trusts?
Both CLTs and conservation land trusts control land use for the benefit of people in the future as well as the present, but they are primarily concerned with different types and uses of land. Conservation trusts are concerned with controlling rights to undeveloped land to preserve open space, ecologically fragile or unique environments, wilderness, or productive forest or agricultural land. CLTs, on the other hand, are mainly concerned with acquiring developed or developable land for specific community uses — particularly residential use. These concerns are not mutually exclusive, and some land trusts, notably in Vermont, combine these purposes, preserving some land in a natural state while leasing other land for development.