What’s a community land trust? An explanation of the model GSO leaders are looking into to increase affordable housing

The city of Greensboro is researching whether community land trusts can help increase affordable housing.

City leaders in Greensboro are looking into ways to provide diverse affordable housing options in the community.

On March 16 during a work session, city council members discussed the possibility of establishing a community land trust.

A  community land trust or a CLT is a nonprofit organization that holds land on behalf of a community as a long-term steward to preserve community assets such as affordable housing.

According to the city’s website, many Greensboro properties are “vacant, abandoned, or tax delinquent,” and that these properties are worth less than the amount of money owed in taxes, liens and property repairs. A CLT would be a means of freeing up the properties to provide affordable housing for current and future generations.

During the work session, the department’s director Michelle Kennedy commented that they are currently in the “education phase” and are partnering with Grounded Solutions Network, a national nonprofit organization that helps local and state governments “identify and implement policies to build and preserve equitable neighborhoods,” according to their website.

Kennedy added that they are currently in the “outreach portion” and that there are “no big decisions that have to be made at this point.”

Jason Webb, Community and Technical Assistance Principal for Grounded Solutions Network, told city leaders that the timeline to have a CLT “up and running” could be between six and eight months. “I can work as fast as you guys want me to work,” Webb said.

The city’s website says that initial focus areas for the city’s CLT will be in District 1, represented by Sharon Hightower; District 2, represented by Goldie Wells; and District 5, represented by Tammi Thurm. Redevelopment will be focused in Eastside Park, Ole Asheboro and Willow Oaks areas, while reinvestment focus areas will include Dudley Heights, Glenwood, Kings Forest, Mill District and Random Woods.

Two virtual sessions over Zoom on March 29 will take place for residents interested in learning more about CLTs. The first is from 10 a.m.-12 p.m. and the second is from 6-8 p.m.

How does a Community Land Trust work?

Webb said that a CLT is traditionally created using a “tripartite board of directors” comprised of the community members, the property owners and local stakeholders.

If a home in the community is in danger of being foreclosed, under a CLT model, banks must give the CLT an opportunity to intervene, and if for some reason the homeowner can’t afford the home anymore, “the CLT can step in and purchase that home from the bank,” Webb said.

Webb said that the first step in the process is to make sure that leadership and the community is “comfortable with the model.” The next phase of the process will be about “feasibility and business planning.

Next, they will “hone in on program design,” Webb said, adding that it will focus on how many units the CLT will have and where the assets are coming from.

Assistant Director of Housing and Strategy Cynthia Blue said the city gets properties from a variety of different sources, some of them come through Guilford County tax foreclosures.

“Those that don’t sell come into the city,” she said.

The last phase will be centered on “support, implementation, and launch,” Webb said, with Grounded Solutions Network helping to “onboard the new CLT staff, coach them, making sure that we’re continuing to build the capacity of this new organization so that they can be set up for success.”

“Land can come from a number of different ways,” Webb said during the work session, adding that it can come from the city. Webb also said that the CLT can come up with an acquisition strategy on its own, as well as receive donations from individuals. District 1 representative Sharon Hightower commented, “So it won’t be the city that owns the land, it’ll be the CLT, but we could donate the land into the CLT for them to then build a house on.”

Smalls told TCB that “a lot of decisions will be determined once the initiative is to move forward” and that the land on which the homes would be built has not been chosen yet.

Residences that are bought or built on CLT-owned land using one-time public or private investment are sold to low-income buyers. The buyer only purchases the house, not the land it is built on. The homeowner leases the land from the CLT in an affordable 99-year ground lease that can be calculated based on the buyer’s income, Webb said. When the buyer decides to resell, the CLT will manage the sale’s process and sell the home to another low-income buyer. While the homeowners agree to sell the home at an affordable price, improvements they make to the house can be considered upon resale.

Webb clarified that they want to be “very deliberate” about ensuring that these properties can be generational, held within families, adding that every homeowner will go through proper estate planning and get things down in writing because they “don’t want these properties to wind up in probate — to be argued and everything else.”

Webb said that “while the income qualification does not apply” to the heirs, “the primary residence does,” adding that the heirs would have to live in the home and cannot utilize it as a rental property.

“We see this as an important stepping stone toward full homeownership by giving folks the ability to come in and be supported,” Webb said.

Webb also mentioned that the model of the CLT itself is flexible, adding that “none of this stuff is etched in stone” and that the CLT could be designed to suit Greensboro’s needs.

Past and present of CLTs, future in Greensboro?

The origins of community land trusts go back several decades. Founded in 1969, one of the earliest CLTs was New Communities — a 5,700-acre land trust and farm collective owned and operated by Black farmers in Southwest Georgia.

Dr. Stephen Sills — vice president of the Research, Policy and Impact Center and former director at the Center for Housing and Community Studies at UNCG — told TCB that it takes “a significant amount of capital to seed the start of a community land trust [and] it takes properties that are available for rehab. And the city certainly has both of those things.”

As one of the tools that can help create affordable housing, Sills mentioned that CLTs can also serve as a way to “stop the bleeding” of converting single-family units into rental homes.

“When you’re in a rental, you’re paying an excess of the mortgage,” Sills said. “That’s the profit margin that the landlord is seeking. When you’re a homeowner, you’re paying the mortgage and the upkeep, and the profit that the landlord would be getting is going into your pocket.”

Sills said that CLTs can help families save money and build resources for a future downpayment, as well as build some equity in the home.

But one of the most important aspects of a CLT is that it helps people build credit, said Sills, who has analyzed Home Mortgage Disclosure Act data from the Piedmont Triad region since 2006.

“The No. 1 barrier for minority homebuyers in getting approved for a loan is credit,” he said, adding that his research showed that “minority home buyers are 25 percent less likely to be approved for a home.”

One of the ways people can accumulate wealth is by inheriting it through homeownership.

However, the country’s history of discrimination against minorities including redlining — the systematic denial of services such as mortgages, insurance loans and other financial services to residents of certain areas, races or ethnicities — has restricted their opportunities to buy homes. The affordability provided by a CLT could help reduce barriers that stand in the way of potential buyers.

“Owning a home, being able to pay off that mortgage… in a timely fashion really does build credit that they would not have had access to as a renter,” Sills concluded.

A 2007 study conducted by the Lincoln Institute of Land Policy on the effectiveness of CLTs found that on average, homes were resold to households earning 4 percent lower on the median household income scale than the original purchasing household, and the homes sold at prices averaging $17,317 less than the original purchase price. 

“These numbers support the claim that CLTs can in fact preserve affordability for subsequent generations of low income home buyers,” the study stated.

According to Webb, there are more than 300 CLTs nationwide.

CLTs have been established all over the state in cities like Asheville, Charlotte, Durham and Chapel Hill. 

In May, Charlotte’s West Side Community Land Trust secured land for 120 affordable senior apartments and broke ground on the project in November. With expected completion in spring 2024, the apartments will be rented by the CLT to seniors 55 and older who make between 30-80 percent of the area’s median income. Monthly rent will range from $474 to $1,500.

Assistant Director of Finance and Administration Eunika Smalls said that the community is “vitally important to setting up these organizations, but we haven’t even gotten there yet.

“We’re just introducing the concept,” Smalls said.

Make your voice heard: The department will host two public input sessions over Zoom on March 29. The first is from 10 a.m.-12 p.m. and the second is from 6-8 p.m.

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