Issue #149, Spring 2007
City Hall Steps In
Local governments are embracing community land trusts to promote and preserve affordable housing.
By Rick Jacobus and Michael Brown
Once exclusively a tool for grassroots activists
seeking to change local policies, the community land trust (CLT) is
increasingly being adopted by local governments facing urgent housing-affordability
needs. Frustrated by housing costs that are rising rapidly beyond the
reach of low- and moderate-income families and concerned about the steady
loss of affordable homes created through the dollars or powers of local
government, municipalities as different as Irvine, Calif., Chicago,
Ill., Sarasota County, Fla., Austin, Texas, Delray Beach, Fla., Highland
Park, Ill., Las Vegas, Nev., and Chaska, Minn., have taken the lead
in creating their own CLTs. This trend represents an important evolution
of the CLT model and a significant rethinking of the goals and roles
of municipal government in promoting and preserving affordable housing.
In the 1970s and 1980s, municipal support for neighborhood-based
CLTs was very limited. From the mid-1980s into the 1990s, the number
of CLTs increased and so did the level of municipal support. Since 2000,
however, a growing number of cities and counties have chosen to play
a larger role not only in creating CLTs but also in guiding their development
and sponsoring their affordable-housing initiatives.
Two primary reasons drive this new municipal interest
in - and support for - community land trusts:
Long-term subsidy preservation - As housing
costs rise, the level of subsidies required to create housing affordability
also increases. With much of the burden of creating affordable housing
now shifted to city and county governments, local policymakers are looking
for ways to ensure that their investment has a long-term impact. The
proven ability of the community land-trust model to create a permanent
supply of affordable housing is very attractive to municipalities searching
for long-term solutions.
Long-term stewardship - Preserving long-term
affordability requires long-term monitoring and administration, a workload
that local governments are neither well-equipped to tackle nor interested
in taking on. In addition to developing projects and finding, educating
and screening buyers, CLTs play a long-term stewardship role-monitoring
and enforcing affordability and occupancy restrictions and providing
long-term backstopping support to their low-income homeowners, relieving
local governments from this ongoing responsibility.
The impact of municipal involvement in initiating and supporting community land trusts can be illustrated by two new city-sponsored community land trusts. The governments of Chicago, Ill., and Irvine, Calif., have spurred the creation of citywide CLTs as a means to preserve affordable housing developed through regulatory and financial resources provided by the municipality.
In 1975, housing advocates in southern California sued the still-brand
new City of Irvine. The Irvine Company, the private development company
responsible for the city's planning and construction, was preparing
to build office and industrial parks that would make Irvine a major
regional employment center. But Orange County's tracts of ranch houses
didn't offer reasonable housing options for the people who would work
in the newly created jobs. To settle the suit, Irvine launched one of
the nation's first inclusionary-housing programs. The program's initial
success led the city to expand its scope, requiring that 15 percent
of all newly built housing must be affordable to low- or moderate-income
households. Since the mid-1970s, Irvine has produced more than 4,400
units of affordable housing-a significant achievement for a town of
62,000 housing units.
Unfortunately, Irvine's inclusionary-housing program required the units
to remain affordable for only 13 to 30 years. When the control period
ends, the housing can be converted to market-rate. As a result, more
than 1,000 affordable units already have been lost. Many of the remaining
affordability controls will expire during the next 10 years, leaving
Irvine with little to show for its pioneering effort to make room for
Faced with the impending loss, the Irvine City Council convened a housing
task force in 2005. Led by Mayor Beth Krom, the task force was charged
with searching for strategies to preserve affordable housing and developing
a plan for capitalizing on a unique opportunity to increase the affordable-housing
supply. In 1999, the Marine Corps had closed the El Toro Air Station,
a 4,700-acre military base adjacent to the city. After years of public
debate about how to reuse the El Toro site, including a proposal to
develop an international airport that was rejected by voter referendum,
the city decided to create one of the nation's largest urban parks and
a new mixed-income, mixed-use community surrounding it.
The housing task force drafted a strategy in 2006 that called upon
Irvine to develop 9,700 new affordable-housing units-10 percent of the
city's housing stock-and to place these units under the stewardship
of a municipally sponsored CLT. The community land trust is still a
relatively new idea in California, but the model was familiar to many
in Irvine because the University of California has long used land leases
to preserve faculty housing around its Irvine campus. The task force's
recommendations were unanimously supported by the city council.
The Irvine Community Land Trust (ICLT) was incorporated in March 2006.
The city council budgeted $250,000 in start-up funding for the land
trust. In addition, the city's redevelopment agency is providing staffing
to the organization while the land trust's first projects are developed.
Irvine is well served by existing nonprofit and for-profit developers
of affordable housing, so it is not intended that the ICLT will serve
as a developer. Instead, the land trust will focus on long-term stewardship,
finding and screening buyers for homeownership units and monitoring
those units over time.
Mayor Krom regards the land trust as an integral part of Irvine's sustainability plan. Given the city's history of creating high-quality, affordable housing that is integrated into the community, Krom is excited about the opportunities the Irvine Community Land Trust presents. "Irvine has a once-in-a-lifetime opportunity to significantly expand affordable housing to meet the needs of a broader spectrum of people-particularly those who work in our city but cannot afford housing here," she says. "The city and the land trust board will work with our private and nonprofit developers to effectively leverage our resources, tripling our inventory of affordable housing over the next 15-20 years and establishing permanent affordability."
Alarmed by the loss of housing made affordable through city investment-at
a time when the amount of subsidy needed to make housing affordable
was increasing and public affordable-housing funding was diminishing
at all levels of government-the city began to focus on permanent housing
affordability. The city began to work with Burlington Associates in
Community Development and community constituents to determine how the
city might best support community land-trust development in Chicago's
neighborhoods as a way to maintain long-term affordability.
Through this process, the Chicago Community Land Trust (CCLT) was created
in 2006 to preserve the long-term affordability of housing units developed
by nonprofit and for-profit developers with the financial support of
various city programs. The CCLT will preserve the affordability of single-family
homes that are located on leased land, using a ground lease similar
to those in use by other CLTs across the country, as well as the affordability
of condominium units, using 99-year deed covenants nearly identical
in content and format to the CLT's ground lease.
The city determined that the Chicago CLT would be citywide, in order
to more easily standardize many of the processes associated with resale-restricted
housing. "We were able to work with the county on a standard means
for assessing property taxes based on the home's affordable price. Being
citywide also ensures that the homes are spread out among the city's
neighborhoods," stated Commissioner John G. Markowski of the Chicago
Department of Housing (DOH).
The CCLT is incorporated as a private, nonprofit Illinois corporation
and is currently seeking 501(c)(3) tax-exempt designation. Funding for
start-up costs and operating revenue for CCLT's first several years
was provided through a $396,000 grant from the John D. and Catherine
T. MacArthur Foundation. The board of directors is comprised of community
leaders and public members representing a broad spectrum of interests
and perspectives, with one-third of the seats reserved for lessee
Homes made affordable with DOH funding and targeted for the CLT are currently under construction and will be brought into the CCLT's portfolio upon sale. As a result, it is anticipated that approximately 150 units will be added in 2007, with at least 250 units to be added to the land trust each year thereafter, putting CCLT on track to become one of the nation's largest CLTs within five years.
Opportunities and Challenges
Most CLTs have an open membership made up of community members and
land-trust residents. At the annual membership meeting, the CLT's membership
is responsible for electing the CLT's board of directors. The CLT's
open membership is intended to make it directly accountable to a broader
community of neighborhood residents in which it operates. One-third
of the seats on the CLT's board of directors are generally reserved
for persons living in land-trust housing. The framers of the land-trust
model developed this unique form of governance to ensure that these
organizations would remain responsive to the needs of the communities
they were serving. The governance structure offers balanced accountability:
Giving residents one-third of the board seats provides them with a real
voice in the governance and operation of the organization, while balancing
their concerns with other community interests ensures the long-term
protection of the organization's core values.
Municipalities tend to be more interested in the community land trust's
ability to preserve housing affordability and to retain public subsidies
than they are in the more community-based characteristics of the CLT
model, such as recruiting and nurturing a broadly based membership.
Consequently, the new wave of municipally sponsored CLTs are experimenting
with ways to maintain accountability to the CLT residents and broader
community, while allowing local government to play a greater role in
directing the organization.
In Chicago, the CLT board of directors is comprised of community leaders
and public representatives, with one-third of the seats reserved for
CLT households. Unlike most CLTs, however, the Chicago board of directors
is appointed by the mayor and city council (rather than elected by the
CLT's membership). CCLT's executive director is accountable to the CLT
board and is also a city employee.
In Irvine, the city appointed the initial board and will retain a permanent
right to appoint one-third of the land-trust board. Initially, the mayor
and a city council member are serving on the land-trust board to ensure
close coordination between the new organization and the city's housing
programs. While at some point in the future, the city's board seats
may be filled with appointed representatives rather than elected officials,
Irvine's leaders felt that the CLT should be directly accountable, at
least in part, to the city. Like Chicago, Irvine has also reserved one-third
of the board seats for land-trust residents.
While sponsoring municipalities require some degree of control over
the CLT's governance and operation, these new partnerships between local
governments and CLTs are creating exciting new opportunities for spurring
the growth and development of this innovative model of housing, including:
Removing competing municipal programs. A major distinguishing
factor of the new municipal land trusts is the local government's commitment
to use it as its primary tool for preserving the affordability of housing
created with municipal assistance. Local governments invest in the creation
of new, affordable homeownership units, and the CLT plays a long-term
stewardship role for virtually all of these new units.
The participation of a community land trust saves local governments
from having to create their own administrative structure to monitor
and enforce long-term affordability provisions. Programs like the new
Chicago and Irvine land trusts formalize such close coordination by
allowing their municipalities to influence the organization's direction.
And in exchange for this accountability, the land trusts expect their
local governments to provide long-term operating support and ongoing
access to housing subsidies.
Raising the profile and productivity of CLTs. For a variety
of reasons, the growth of the community land-trust movement has been
slow. Local governments often are unfamiliar with the model, and the
public sector is frequently reticent or unwilling to support the creation
of permanently affordable housing. As a result, there is a relatively
small number of CLT homes nationwide-a major criticism of efficacy of
the CLT model.
The growth of high-profile, municipally sponsored CLTs that will quickly
have hundreds of permanently affordable housing units in their portfolios
will serve to enhance the model's credibility and to expand the commitment
to permanent housing affordability. The new phenomenon of larger, well-capitalized
community land trusts may, in rather short order, double or triple the
number of permanently affordable CLT homes nationwide, helping to bring
the community-land-trust approach into the mainstream. Furthermore,
CLTs with a sufficient number of homes should be able to generate enough
revenue internally to support their organizational operating budgets-leading
to the financial sustainability of these individual CLTs and a strengthening
of the CLT movement.
Municipal engagement in the creation and sponsorship of community land
trusts represents a significant rethinking of the role of local government
in meeting the need for affordable homeownership. At a time when the
gap between what housing costs and what many working families can afford
to pay is increasing and there is spiraling demand for limited public
resources, local governments are increasingly recognizing the critical
importance of preserving housing affordability created through the investment
of public funds.
While many jurisdictions work closely with nonprofit housing developers
to build and manage rental housing, most local governments still manage
their homeownership programs in-house. Long-term affordability in homeownership
programs, however, creates a new set of long-term management and administration
responsibilities for which many jurisdictions are simply not prepared.
As a result, we are likely to see more municipalities form creative
partnerships with community land trusts to preserve the affordability
of homeownership units over the long term and ensure the lasting benefit
of public investment.
Rick Jacobus and Michael Brown are partners in Burlington Associates in Community Development, LLC, a national consulting cooperative that specializes in community land trusts and other permanently affordable homeownership programs. Burlington Associates has been working with Chicago, Irvine and other municipalities on the development of new land trusts. (www.burlingtonassociates.com).
A Win-Win Formula
A community land trust (CLT) is a nonprofit organization formed to hold title to land to preserve its long-term availability for affordable housing or other community uses. Typically structured as a community-based, open-membership organization with a broadly representative board of directors, a land trust receives public or private donations of land or uses government subsidies to purchase land on which housing can be built. The homes are sold to lower-income families, but the CLT retains ownership of the land, entering into a long-term lease with the homebuyer. The CLT also retains a long-term option to repurchase the home at a below-market price, should the homeowner decide to move. Ownership of the land, along with the imposition of durable affordability controls over the resale of any housing located on its land, allows the CLT to ensure that homes will remain available for lower-income homebuyers for generations to come. CLTs can play a similar role in preserving the affordability of rental housing, limited equity co-ops and condominiums and even commercial property.
Shelterforce: In an environment of competing needs, such as education, safety and parks, how do you prioritize the development and preservation of affordable housing against other important needs?
Mayor Krom: With a median housing price in Irvine of about
$800,000, "affordable" becomes a relative term. In 2005,
the City of Irvine created a housing task force. That effort produced
a "full-spectrum" housing strategy that set a goal of
tripling our inventory of affordable housing to about 9,700 units
by 2025. The strategy was unanimously adopted by our city council,
and we had no public opposition owing to the public process and
community education we employed.
Part of the strategy was to create a community land trust to support the interest of permanent affordability. Irvine is a jobs-rich city with three jobs for every housing unit. A mix of affordability in our housing is critical to the long-term success of our economy and our community.
SF: A land trust is only one way to preserve or develop affordable housing. Your city has numerous programs and policies that address this need. Were there any specific problems or needs that weren't being met that drew you to the land-trust model?
Krom: We had been successful in creating affordable housing over the years through inclusionary zoning and collaboration with local developers-primarily the Irvine Company, which is the primary landowner in our city. Our city is 35 years old, so some of the initial inventory of affordable housing has already lost its affordability. We wanted to expand inventory and ensure long-term affordability.
SF: What was the political "sell" like? In light of competing interests-all valid and important-how did your administration promote the commitment to both affordable housing and the CLT model?
Krom: We are the only city in Orange County with inclusionary
zoning that requires 15 percent of all new development to be affordable
and an in-lieu fee program for developers who prefer to provide
cash rather than units. We leverage the in-lieu dollars to build
affordable housing and bridge financing for affordable-housing projects.
The land trust provides the opportunity to seek land in-lieu of
units that we can develop under the trust. Our citizens are educated
and they recognize that, as long as we maintain our commitment to
high-quality, well-integrated affordable housing, the community
needs a broader spectrum of housing resources.
Krom: We have a unique opportunity. The City of Irvine is redeveloping a closed Marine base into the first great metropolitan park of the 21st century. It is a public-private partnership, with limited commercial and residential development at the edges of a 1,347-acre park (twice the size of New York's Central Park). Through the 20-percent housing set-aside funds that come from the redevelopment agency, we will have a minimum of $150 million to invest in affordable housing. By leveraging resources wisely, we believe we can reach our goal.
SF: Given the complexities of affordable housing, especially for low- and very low-income households, what do you see is the role of other key players such as state and federal government, the nonprofit sector and for-profit developers? And what more can and should each be doing?
Krom: We need to stop looking at issues out of context with
one another. Without housing for the people who work in our communities,
we create imbalance. Community development is not just about buildings-it's
about the people who become the human energy that drives a city
forward. The need for housing close to the job centers becomes even
more important here in Southern California, where freeway gridlock
affects quality of life for everyone. We need a national tool kit
for creating a full spectrum of housing opportunities in every city
Our city is fortunate to have unique resources, a progressive perspective, a diverse and educated electorate and a coalition of partners in the business and development community. Building the political will for elected officials to take on this issue will require a higher level of support and participation from every level of government and an advocacy environment that is driven by creativity and collaboration rather than conflict.
SF: Finally, what do you see as the explicit benefit of providing an economically diverse housing stock to your city?
Krom: Irvine is a wonderful city, anchored by a major university
and home to 13,000 businesses and more than 100 national headquarters.
Our long-term success requires housing for the people who work in
our city. It's that simple.