LAND COMMUNITY TRUSTS

Housing for All is working with Homes Within Reach, part of the West Hennepin lifecycle housing Land Trust, to establish land trust homes in Maple Grove. Homes Within Reach is a well-established community-based non-profit program that helps working families purchase affordable homes in western Hennepin County suburbs. They are supported by public and private partnerships that share the goal of transforming people’s lives through home ownership and have put over 50 families into homes in the western suburbs since 2002.

The purpose of this narrative is to explain what community land trusts are and how they work.

WHAT IS A COMMUNITY LAND TRUST (CLT)?

Community land trusts are organizations that develop housing through renovation or new construction. They then sell the homes and lease the land to low- to moderate-income families, who agree to restrictions on how the house can be sold in the future. As a result, community land trusts are able to produce high-quality lifecycle housing and keep it affordable. This 30-year old model is at work in over 120 communities throughout the nation. There are more than one hundred community land trusts in the United States overseeing more than 5,000 units of housing.

HOW DOES A CLT WORK?

In the conventional market, the homeowner owns both their house and the land underneath it. In the community land trust model, the homeowner owns the house and the community land trust owns the land. Much like a rental lease, a ground lease outlines the rights and responsibilities of the homeowner and landowner. The CLT retains an option to repurchase the homes located upon its land, should the owners ever choose to sell. The resale price is set by a formula, which is contained in the ground lease, and is designed to give the present homeowners a fair return on their investment and future homeowners fair access to housing at an affordable price.

In practical terms, here is an example of how it would work: The CLT will acquire a home appraised, for example, at $225,000. The CLT will retain ownership of the land and lease the land to the homeowner at no cost for 99 years. In a home appraised at $225,000, the land value would be approximately $75,000. The homeowner would then purchase the home only for $150,000 (and lease the land at no cost), thus reducing the cost of their mortgage by 42%.

HOW DOES A CLT BUILD COMMUNITY WEALTH AND HOMEOWNER ASSETS?

Community land trusts build wealth for both communities and homeowners. The community, on one hand, gets permanently affordable housing. The homeowners, on the other hand, get all of the advantages of owning a home: security, a chance for appreciated value, tax benefits, and a bridge between renting and market-rate homeownership. Helping low-income and moderate-income families make that transition – from renting what is often substandard housing to owning and taking pride in their own home – is one of the hallmarks of the community land trusts. With the cost of land removed from the home sale price, community land trusts make homeownership a reality for thousands of families who thought it was out of reach.

WHY DO WE NEED CLTs?

Affordable housing advocates are concerned about the rising cost of housing and the declining salaries that collide to keep families out of homes in our city. Only 4% of homes in Maple Grove are priced at $150,000 or less. Ten years ago, 7% of all homes in our city were valued at $70,000, but none remained in that price range by 2000. During this same time, average wages fell behind the rate of inflation, and current wages don’t allow many workers – such as firefighters, police officers, teachers, bus drivers, teachers and retail employees – to afford a home in Maple Grove. Many of these valued employees, then, are forced to live in other communities, adding to their commuting costs, transportation system congestion and air pollution.   

HOW DOES A CLT CONTRIBUTE TO A CITY’S ECONOMIC HEALTH?

A CLT can enhance a city’s financial future by:

  • Removing houses from the speculative market, thus reducing the cost increases found in the conventional market,
  • Providing opportunities for home ownership to people with moderate  incomes who are otherwise unable to own a home,
  • Opening up opportunities for wealth-building for low- to moderate-income people, using a land trust home as their first step into the conventional housing market,
  • Developing a permanently affordable pool of houses.

If you are interested in exploring the opportunity of homeownership through a land trust home, please call Homes Within Reach at 952.401.7071 or go to their website at www.homeswithinreach.org.