CLTs’ dependence on external grant funding to acquire land and maintain their operations make them particularly susceptible to mission drift. Coming in with this knowledge, organizers may still be able to use the tool adequately or opt for other collective land ownership strategy. By Olivia Williams -August 30, 2019
“Community control of land” sounds straightforward, but in practice it can be limited, fleeting, or difficult to achieve due to high property costs and the social, legal, and financial challenges of collectivizing property ownership.
As a Ph.D. student studying the inequities of urban development, I was drawn to the community land trust (CLT) model for its roots in the civil rights movement and the founders’ intentions to decommodify land and provide for community ownership of property in a permanent way. When I dove into my Ph.D. research on CLTs in 2014, I was idealistic about the CLT model, and imagined CLT neighbors sharing backyards, eating community meals, and making collective decisions about how to use land in their neighborhood.
The vast majority of CLTs today don’t operate that way, though. When I asked homeowners in CLTs about their CLT community, they said things like:
[O]nce people are in their house, given that most people who go into their houses are couples with children, working—almost by definition—low-income jobs, […] I think the “community” part, once they’re in the house, is mostly in name.
And even when the CLT staff tried to foster community involvement, they had a hard time doing it. Another CLT homeowner said:
They tried to generate a homeowners’ kind of committee, and people just don’t want to do it […] and I get it because the goal isn’t to be on the committee. It’s to have your home, and once you have your home you’re done and so why would you do something more?
What was going on? How did a model for community land ownership and local democracy become so diluted that “community” was hardly part of the process at all anymore?
Over the course of my research project, the tensions inherent in the community land trust model became clear. CLTs’ dependence on external grant funding to acquire land and maintain their operations make them particularly susceptible to mission drift. In short, CLTs have largely followed the path of their Community Development Corporation (CDC) predecessors: losing their focus on grassroots community organizing in favor of professionalization to chase grant opportunities.
For those of us seeking to change the way land is owned, developed, and stewarded, CLTs carry baggage and challenges that must be understood. Coming into a CLT with this knowledge, organizers may still be able to use the tool adequately, or else opt for some other collective land ownership strategy.
Inherent Challenges in the Community Land Trust Model
This research was based on a group project funded by the National Science Foundation and included 124 interviews of people involved in eight CLTs in Minnesota. The CLT owners quoted above were some of the least community-focused in the study, but their perspectives are not unusual in the wider field of U.S.-based CLTs. Still, I saw a variety of ways that CLTs have been successful in engaging residents in governance and community events.
There is also a vocal and persistent group of land trust organizations and advocates across the U.S. who stay true to their values of community control despite the trends of the field. My purpose is not to lump all CLTs together, but to critique the structural problems in the model that led to the lack of community focus in the instances I highlight here. It’s worth it to go into detail about how CLTs work to highlight the shortcomings of the model’s design before offering suggestions on ways forward for community-owned land, with or without CLTs.
CLTs are nonprofit organizations that own land in perpetuity and keep prices affordable for the use of low-income people. The CLT model is otherwise very flexible: CLTs can be used for commercial space, multifamily rental housing, housing cooperatives, urban farms, community centers, playgrounds, or any other use the board sees fit. Most often, however, CLTs are used as a vehicle for affordable homeownership, where the land is owned by the CLT and the house is owned by an individual. A qualifying individual (typically a moderately low-income person with a decent credit history) can purchase a CLT house at a price significantly below market value. The homebuyer gets a special mortgage for the house minus the land, and they pay a small lease fee to use the land under their house as if it were their own. The CLT stewards the property long-term, making sure that it stays in good condition—though the homeowner is responsible for most maintenance and repairs—and that the next homeowner qualifies for and understands the terms of CLT housing. When the homeowner is ready to sell to the next qualifying buyer, they get the equity they put in plus a portion (typically about 30 percent) of the increase in value of the home. CLTs therefore allow homeowners to build some equity while keeping property permanently affordable, according to the resale formula, which is enforced by the ground lease.
Most, if not all, CLTs face a common financial problem: the monthly lease fees (for the land) paid by residents to a CLT organization are so modest—typically $25 to $50 per month—that they cannot sustain the organization. Theoretically, there’s a point at which the number of housing units would be enough to sustain the CLT on lease fees alone, but the number of houses required to sustain the organization (the “magic number” as some have called it) may be well into the thousands, and few CLTs have reached it. So if the CLT wants to sustain itself, it has to bring in external grant money by actively pursuing new development projects on a rolling basis. The most readily available sources of grant funding for CLTs in the United States are from the U.S. Department of Housing and Urban Development (HUD) or foundations focused on affordable housing, so most CLTs stay alive by continually acquiring land and adding housing to their portfolios to bring in grant money.
The focus on grant writing and housing development means that CLTs often become highly professionalized affordable housing organizations with staff-focused operations and boards that prioritize the involvement of lawyers, housing developers, and sometimes public officials and direct funders. The increasingly competitive nature of most grants and the high price of land and housing development means that CLTs sometimes struggle to make ends meet.
Often, CLTs find they are better off supplementing their affordable housing projects with a more profitable side venture, so they also become a developer, lender, real estate agency, or other service provider to help pay for the operation costs of the CLT. This process leads the organization toward even greater professionalization, even if it helps ease the burden of the need for grant income. CLTs, while flawed, do important work in the context of rapidly rising land and housing values. They take property off the speculative market and hold it in perpetuity for low-income people. No developer can snatch up a plot of land once it is part of a CLT portfolio. No real estate giant can develop that corner into luxury condos. The neighborhood around a CLT parcel may become pricy, and gentrified, but the CLT-held land will remain more affordable and accessible. This function of CLTs is what gets organizers and activists excited about the model, and for good reason. The acceleration of land and housing costs has displaced countless individuals and communities, especially in the cities with the most employment opportunities.
CLTs can take land out of the speculative market and develop affordable housing, but their dependence on external institutional sources of funding make the goals of community control, and even non-housing developments, difficult to achieve, since foundation and government funders tend to be most interested in encouraging CLTs to develop housing as quickly as possible. Financing the development of affordable commercial space, for example, can be more logistically challenging and financially risky than developing housing, so most CLTs stick to housing. Similarly, keeping CLT land for the use of community gardens is not a lucrative use of valuable property, so that idea is often nixed by CLT boards in favor of more housing.
Building affordable housing as prices rapidly rise is not bad, to be clear. But neighborhoods are so much more than housing. To radically change the way decisions are made about what we want our neighborhoods to be—and to create and maintain community-owned institutions and common amenities that are accessible—requires community land movements to look beyond the generic housing CLT model and seek more independence from external funders.
Community Land Ownership Beyond Grant Funding: Possible New Models
Collective ownership of land without grant funding has long been proven possible, most notably in the housing cooperative field. Housing cooperatives have, for many generations, relied upon the capital of their founding members to acquire buildings without using external grant funding. But for low-income residents, finding the capital for a down payment on a building can be nearly impossible, and getting a group of people to commit to buying a building together can feel like a pipe dream.
Even when efforts to collectively buy property are successful at first, they are at high risk for failure if there isn’t a backstop. In the field of housing cooperatives, close to half of Limited Equity Cooperatives (LECs) eventually demutualize their assets (their owners decide to buy them out at market rate so they are no longer affordable), and group equity cooperatives (independent group-owned houses) often run into legal and financial hurdles that make organizational sustainability, independence, and growth challenging.
Recognizing these challenges with independent housing cooperatives and the shortcomings of the CLT model, new visionaries are developing community-funded models for land ownership, like the East Bay Permanent Real Estate Cooperative and the Community Land Cooperative in development by Ecovillagers Alliance.
While some of the details of these models-in-development differ, both involve different membership categories, including (residential and commercial) tenant members and investor members—and individuals who choose to be both tenants and investors. With equity sourced from the community outside of the tenant pool, these organizations can grow without appeasing institutional funders for grant money to buy property, and they ideally won’t have to work with banks to finance property development either.
Importantly, these models act as an investment vehicle for people who want to pull their money out of ethically questionable markets and invest in affordable, sustainable, democratic land stewardship. Even tenants can build wealth this way by investing equity into cooperative land ownership, where they can receive dividends from the rent pool. They become tenants and landlords simultaneously, making decisions about their neighborhood development collectively. Still, each tenant member gets only one vote in local decisions, no matter how much equity they invest. In terms of governance, tenant control is prioritized, with community investors having appropriately limited voting power.
Time will tell how these new efforts for community-funded and -controlled land play out.
Of course, no one model is the be-all and end-all. Maintaining a culture of participation and collective support must be both an ongoing goal and practice of any community-owned land initiative, through social organizing, co-learning, inclusive leadership, and community-building activities, not unlike successful political or labor organizing efforts. Aside from the structural issues with the CLT model, a culture shift may also be happening in the CLT field, in which staff, boards, and advocates may be less interested in community organizing and more concerned with brick-and-mortar housing production.
New Opportunities for Creative Uses of CLTs
While the CLT model faces some inherent challenges, we should not throw the baby out with the bathwater. The tendency of CLTs to professionalize need not preclude their support of and partnership with other grassroots community groups or collective ownership models that foster more authentic and grounded community control of land. Some CLTs are proving they can achieve those goals despite the model’s shortcomings, and more than a few CLTs across the United States (Bay Area CLT, San Francisco CLT, Champlain Housing Trust, Cooper Square CLT, Oakland CLT, and East Harlem/El Barrio CLT are some examples) have found ways to support housing cooperatives and mutual housing associations (MHAs) by owning the land beneath them. This dual-organizational structure is often mutually beneficial: the CLT can access financing and other development funding sources and provide a backstop against cooperative housing failure long-term. The cooperative or MHA, then, can reduce the property management burden on the CLT and (in many cases) provide some rental income to the CLT, which can more adequately pay for CLT operations than ground lease fees alone. Oakland CLT has additionally begun partnering with other community groups and cooperatives to purchase properties using Regulation Crowdfunding, a new community financing strategy, to keep commercial rent affordable for important community-based institutions in a rapidly gentrifying city.
On a larger scale and in a different context, Caño Martín Peña Community Land Trust in Puerto Rico secured legal title for residents on previously informal settlements when the government initiated an ecological restoration and infrastructure development project. The CLT’s efforts involved an extensive organizing campaign to support residents’ needs in the transition to CLT ownership, and the CLT has proven essential in working with FEMA and residents to rebuild in the aftermath of Hurricane Maria.
On the whole, the dominant, formulaic approach to CLT development does not encourage the creative and difficult work these CLTs are pursuing to identify needs in their communities, support the mobilization of marginalized populations, and cultivate local democracy through collective ownership.
As my co-authors and I state in a research article:
[C]ommunity control of development can be an organizational priority [for CLTs], but the economic incentives are often antithetical to community control efforts. Therefore, CLTs that foreground community control may have to push against structural incentives to achieve it, and risk being perceived as somehow less successful as a CLT among peers and funders in pursuing agendas that work against dominant measures of success (that is, having large numbers of properties for single family home ownership).
This is a critical time in the movement for affordable land and housing; as real estate prices soar and wages stagnate, activists seeking a way forward often fixate on CLTs. But as Oksana Miranova argues, CLTs must be part of a comprehensive strategy involving rent control, public housing, and a network of other community ownership strategies. Organizers looking to keep land democratically controlled should be aware of the structural limitations of the CLT model and the limited funding environment we currently find ourselves in. Even if more funding sources are dedicated to CLT expansion, more CLTs will not necessarily mean more community-controlled development or grassroots planning efforts. For these reasons, I highlight a couple of new models for community-financed development focused on local needs and tenant control. Those of us who are passionate about democratic control of development must be willing to find creative ways to use CLTs or think beyond the CLT model completely to hold fast to the original intentions of the CLT founders.
An earlier version of this article first appeared in Communities: Community Land, Spring 2019 issue TAGS: community control, community land trust
Olivia Williams is an independent scholar and organizer living in a cooperative house in Madison, Wisconsin. She received a PhD in geography in 2017 from Florida State University with research on community land trusts, and currently serves on the board of Madison Area CLT. Olivia also works to sustain and promote group equity housing cooperatives through board work at North American Students of Cooperation (NASCO) Development Services and is actively developing a new model of community land investment and ownership with Ecovillagers Alliance.