Mission Above Method

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Shelterforce is graciously allowing me to weigh in on a current topic of debate within the field of “shared equity homeownership” or “permanently affordable housing,” namely the relative merits of different models and contractual mechanisms (i.e. ground leases or deed covenants) used in the field. Currently, discussions in the field tend to conflate or fail to differentiate organizational values, models, contractual mechanisms, and practices. The result is that discussion, analysis, and conclusions on each become blurred, lacking rigor and precision.

My fear is that some of this existing discussion may contribute to divisiveness in a field that could benefit far more from unification and deliberation on its differences. Collective dialogue and critical contemplation of our diverse philosophies—and the approaches practitioners use to translate their values into practice—could greatly benefit the entire field.

Models Are Not Synonyms for Contractual Mechanisms
First, I believe it is important to be precise. Models and contractual mechanisms are not equivalents. Plenty of community land trusts (CLTs) utilize deed covenants or soft second loans to provide permanently affordable owner-occupied homes. The 2011 Comprehensive CLT Survey of 96 Network members found that 19 percent used a second loan with a promissory note, 18 percent used a deed covenant, and 18 percent used deed covenants for condominium projects. On the other hand, some inclusionary zoning policies explicitly allow the use of ground leases to keep owner-occupied homes affordable, such as in Illinois. And some inclusionary housing programs partner with nonprofits to utilize ground leases, such as Chapel Hill, N.C. The field includes more programs than might be expected that use various combinations of models and legal mechanisms. Particular models are not unilaterally paired with particular legal mechanisms so it would be inaccurate to frame CLTs and ground leases as mutually exclusive from inclusionary housing and deed covenants since models and legal mechanisms are not synonymous.

Correlation Does Not Imply Causation
Second, I believe it is important to not speak past what we know. What we know is that acting as a stewarding organization, or implementing policies or practices to enact effective stewardship, is not solely the purview of CLTs or programs that utilize ground leases. For instance, pre-purchase and post-purchase education, loan approval requirements, maintenance and repair support, intervention with delinquent owners, well-designed resale formulas, and thorough compliance and resale monitoring are all discretionary policies and practices that can be enacted by any program supporting lower income homeowners. And practitioners using deed covenants or ground leases alike will tell you the importance of monitoring, as neither contractual mechanism is “self-enforcing.”

You might be thinking, “But we know that CLTs tend to use ground leases, and CLTs tend to do more stewardship, which results in better outcomes.” However, this fails to acknowledge that correlation does not imply causation. We do not know if the good outcomes are due to particular organizational factors of the CLT, the use of the ground lease as a legal mechanism, particular terms in the ground lease, or certain aspects of programmatic policies or practices. We do not know if the sum of the parts results in positive outcomes or whether particular parts predominantly explain positive outcomes. Research that teases apart what factors optimize outcomes is a critical need in the field that could substantially inform practice; unfortunately, designing and implementing an evaluation study for these purposes is incredibly complicated and costly. Consequently, we must acknowledge that we currently do not have enough firsthand support to draw firm conclusions on the factors that matter to produce positive outcomes.

Simply put, the jury is still out on whether comparably designed ground leases and deed covenants perform the same or differently. What is somewhat more supported—albeit anecdotally and qualitatively—is that implementing well-designed policies and practices that are reinforced by terms within a contract seemingly promotes positive outcomes, such as sustaining homeownership and preventing foreclosure.

There Is No Inherent Good in a Legal Document
Third, I think we need to take a step back and acknowledge that ground leases and deed covenants are nothing more than contractual mechanisms that can be used for a wide array of purposes. It’s their terms and implementation that matter. Technically, every term in the Network’s Model Ground Lease can be written into a deed covenant, including but not limited to use and occupancy restrictions, resale restrictions, the rights of first offer and first refusal, and the survival of resale-restrictions beyond foreclosure. Hence, a ground lease and deed covenant can be designed equally well or poorly for ensuring the lasting affordability of homes.

So what are the technical differences between the two instruments? First, the duration of deed covenants are frequently shorter due to state rules against perpetuities. However, deed covenants can be designed with terms that safeguard against the loss of the permanently affordable home due to the expiration of the contract term (e.g. right of first offer and first refusal, options to renew the deed covenant upon expiration, terms that restart with each buyer). While I am not a lawyer, it certainly seems plausible that ground leases may be more legally defendable; however, I am not aware of adequate legal precedent to state this as a solidly supported conclusion.

Second, and most importantly, a leasehold interest in the land is only possible with a ground lease. Both mechanisms provide the organization with a vested interest in the property; however, only a ground lease makes it possible for the organization to keep title to the land (notably, separation of title to land and improvements is also not permissible in every state).

Technicalities aside, assigning value to legal mechanisms (or extending that value to models associated with particular legal mechanisms) is actually dangerous. The value of any contractual mechanism is not assessed by whether it is used but by how it is used. After all, a hammer can be used to build a house or shatter a window. And, if we start to assume inherent good in any model or legal mechanism, we tend to stop critical analysis and evaluation. Inclusionary housing policies are not, in and of themselves, good. They can result in adverse outcomes if improperly designed and applied, such as gentrification. Conversely, inclusionary housing policies can be administered to increase the ability for lower income households to access asset-rich neighborhoods. The same is true of CLTs; their effects can be positive, negative, or both positive and negative.

There is no community development tool that provides a magic bullet, promising positive results without the potential for unanticipated consequences or adverse outcomes. If we start to believe or advocate that one model or one legal mechanism is the solution, then we will inevitably make the same mistakes that have come before. All we have to do is look into the history of housing interventions, such as urban renewal or HOPE VI, to see what is at stake when ideological certitude overrides critical thinking and ongoing re-evaluation.

The Cost of Obfuscating Values
After differentiating models, contracts, and practices and acknowledging it is how these are implemented that matters, we are now able to isolate and focus on a critical factor that impacts decisions and outcomes: The values and goals of an organization for its permanently affordable homeownership program.

It is the values and goals of an organization that affects what model, contractual mechanisms, and discretionary practices it will choose to use. Models, contractual mechanisms, and practices are the tools that help us realize our values and goals. They are tools that translate our values and goals into actions and outcomes, and translation can be done well or done poorly. However, ultimately, we should not obscure that it is values and goals that are the driving force behind these decisions.

We need to make our missions, goals, and values explicit rather than speaking of legal mechanisms as their proxies. Why? Because it is within each organization’s values and goals that the heart of moral, ethical, social, political, and economic considerations lie. And these are the deep philosophical considerations and pragmatic tensions that the field would benefit from collectively and intentionally discussing. Ultimately, if the conversation is no longer muddled by the jargon of legal technicalities and becomes about complex philosophies of change and pragmatic ethics, what will come to the fore is the diversity of thinking and approaches being utilized across the field. “Right-and-wrong” and “black-and-white” judgments will not really apply, as we will all be challenged by the gray areas and the complexity inherent in our work, and, I argue, be better for it.

Philosophical contemplations on theories of change evoke really big questions, such as: Is your objective to contribute to or effect large-scale, deep transformation? What would transformation of the U.S. housing market, a city, a neighborhood, and/or a household look like? On what scale would change be most powerful and transformative? Does the pursuit of transformation entail subverting the conventional housing market or providing alternatives within it? How do you believe we best pursue transformation? Does radical or incremental change better reach your objectives? Is bottom-up and top-down action necessary? Does transformation require community control, ownership of land, or resident buy-in to the selected theory of change? The questions and their iterations are endless.

And so are the ethical and pragmatic considerations that any organization or program must face when they endeavor to implement their theories of change. For instance: If we can’t garner adequate political or financial support, are we willing to compromise some of our goals or change our approach to implementation? Are we making more of a difference by impacting the largest number of households or holding firm to the ways we believe our values and goals are best enacted? Are we making more of an impact by working with one neighborhood or throughout the whole city? What should we do if residents or members of the community disagree with our change strategy? What if the funding available to grow conflicts with some of our objectives?

I raise these questions not as a comprehensive list of considerations, nor would I say these are even the “right” or most important contemplations. My point is that our philosophical and ethical perspectives—which shape our values, goals, and their translation— are based upon really hard questions. Questions that do not have objective, verifiable, or absolute answers. One practitioner may place more value on producing the most affordable homes as quickly and efficiently as possible, while another may prioritize neighborhood engagement and community control of land. I bet that most of us would learn a lot from listening to these practitioners discuss their values, goals, and how they have opted to put them into practice.

Different beliefs and values lead to different decisions on models, contracts, and discretionary practice, and consequently, they result in different outcomes. Each has qualitatively different merits and faults. It is beyond the scope of this article for me to share my personal opinions on these large questions, but I invite the field to share their beliefs and theories of change through constructive dialogue because we will all benefit from better understanding a diversity of perspectives.

My hunch is that practitioners using different models and contractual mechanisms probably have a lot of the same values in common, but I would venture to guess that they may hold different opinions about how to best enact them. Ultimately, critical contemplation on theories of change and their translation into action could better the entire field, including CLTs and inclusionary housing programs. However, I worry that dichotomous judgments about “right and wrong,” “good and bad,” or “ground lease and deed covenants” will alienate some practitioners who could substantially contribute to our collective thinking and knowledge. In my eyes, no one wins from philosophic uniformity or exclusion.

The Goals and Perspective of the Network
The National Community Land Trust Network’s intention and aim is to support practitioners across permanently affordable housing models or legal mechanisms, so they share and learn from the weaknesses, strengths, and approaches of one another’s organizations and programs. Some CLTs are really good at resident and community governance and engagement, and some are really good stewards of the land. Some inclusionary housing programs are really good at asset management, and some are really good at producing a large number of homes. The majority of CLTs and inclusionary housing programs alike are struggling to adequately involve community and engage residents, to provide comprehensive stewardship services, and to conduct consistent and thorough compliance monitoring.

Disagreement between practitioners and advocates is inevitable, but dialogue on diversity in the field will promote learning to build collective knowledge. This dialogue will be hard work, but we believe that the outcomes of deliberation will be worthwhile.

When the Network’s staff and board have contemplated our philosophical and ethical perspectives, we have collectively agreed that land ownership holds tremendous value for transformation. Consequently, we support the use of ground leases as a vehicle for retaining land. However, we do not believe it is the only way for permanently affordable homeownership programs to be transformative. We also believe that programs utilizing deed covenants can be tremendously effective and touch a lot of households. Consequently, the Network supports the development and success of CLTs, inclusionary housing programs, and other programs working to provide lasting community assets and permanently affordable housing for lower income households and communities.

3 COMMENTS

  1. What a feast — thank you for such a rich and compelling analysis!

    Your thoughts about the primacy of values made me think of the relationship between wealth and housing, and particularly the horrific stripping of wealth through the “great recession”, particularly for lower-income and minority households.

    At ICE we are trying to look at our lending through this lens — what can we do to facilitate financing that promotes long-term asset management (call it stewardship if you like). And that leads us to the fact that wealth always relates to both assets and liabilities (or what you have minus what you owe).

    So as you argue persuasively for more complex considerations and a sort of healthy ambiguity, let me suggest that we also consider the household balance sheet (see: http://www.democracyjournal.org/26/ownership-and-debt-minding-the-balance-sheet.php?page=all ), and how it is likely to be impacted by the chosen housing interventions we facilitate in our work.

  2. Excellent commentary on values in affordable housing and the relationship to the mechanics of achieving them. Thanks, Emily! I’d add a couple of thoughts to the mix: the values intrinsic in an inclusionary housing policy are typically driven by the terms and requirements of an adopted piece of legislation. As such, the values are likely to be reflective of the compromises inherent in law-making, and the political realities of the jurisdiction adopting the policy. This is why it is critical to have a serious inclusionary campaign backing up the adoption of inclusionary housing policy- to ensure a sound law that reflects community values, and fair implementation of the results.

  3. Thanks for a great piece, Emily. It seems to me that in addition to the organization’s values and goals and theories of change, another important variable is the differing needs of the particular community being served. For example, despite the CLT movement’s historical roots in racial justice movements in the South, many communities of color are understandably resistant to the separation of land and improvements, because of a history of systematic exclusion from the right to own property and from the political and economic benefits that full ownership brings. These social considerations deserve a central place in the ongoing conversations you rightly call for.

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